Ranjith Complete Project

PORTFOLIO MANAGEMENT SERVICES
The Project report

On
At
(Finance)
M RANJITH KUMAR
(212611672010)
Project submitted in partial fulfillment for the award of the degree of

MASTER IN BUSINESS ADMINISTRATION
(2011-13)
GRAHAMBELL INSTITUTE OF TECHNOLOGY AND SCIENCE
Osmania University , Hyderabad -500007
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DECLARATION
I hereby declare that this project report titled PORTFOLIO MANAGEMENT SERVICES at
Reliance Capital, submitted by me to the Department of GRAHAMBELL P.G COLLEGE, , Shamirpet
Road, Secunderabad,
is a bonafide work undertaken by me as a partial requirement of the academic
purpose for the grant of the Post Graduate degree of Master of Business Administration, and it is not
submitted to any other University or institution for the award of any degree/ diploma/certificate of
published any time before.
M RANJITH KUMAR
Signature of the student
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CERTIFICATE
This is to certify that the Project Report titled PORTFOLIO MANAGEMENT

SERVICES with reference to Reliance Capital is submitted in partial requirement of the academic
purpose for the award of the Post Graduate degree of Master of Business Administration is submitted by
M RANJITH KUMAR under my guidance. This has not been submitted to any other University or
Institution for the award of any degree/diploma/certificate.
Signature of Associate Professor of Management
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ABSTRACT
Portfolio management can be defined and used in many a ways, because the basic meaning of the word is
combination of the various things keeping intact. So I considered and evaluated this from the perspective
of the investment part in the securities segment.
From the investor point of view this portfolio followed by him is very important since through this way one
can manage the risk of investing in securities and thereby managing to get good returns from the investment
in diversified securities instead of putting all the money into one basket. Now a days investors are very
cautious in choosing the right portfolio of securities to avoid the risks from the market forces and economic
forces. So this topic is chosen because in portfolio management one has to follow certain steps in choosing
the right portfolio in order to get good and effective returns by managing all the risks.
This topic covers the how a particular portfolio has to be chosen concerning all the securities individual
return and thereby arriving at the overall portfolio return. This also covers the various techniques of
evaluation of the portfolio with regarding to all the uncertainties and gives an edge to select the right one.
The purpose of choosing this topic is to know how the portfolio management has to be done in arriving at
the effective one and at the same time make aware the investors to choose the securities which they want to
put them in their portfolio. This also gives an edge in arriving at the right portfolio in consideration to
different securities rather than one single security. The project is undertaken for the study of my subject
thoroughly while understanding the different case studies for the better understanding of the investors and
myself.
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ACKNOWLEDGEMENT
I hereby, would like to deliver my vote of thanks to everyone who helped me and were a part of this
project study either directly and indirectly in completing my project work successfully.
I would like to thank Prof. MOHANRAO, Principal, Mr. Mahesh, Head of Department and all the
faculty members of GRAHAMBELL P.G COLLEGE for throughout support and encouragement in the
successful completion of my project.
I convey my heartful thanks to Mrs. Shailaja, Lecturer and Mrs. Ashwini, Lecturer in Finance
Department, for their essential guidance in planning, organizing and managing in the successful completion
of my project.
I convey my heartful thanks to Mr. Ramesh Kumar (Centre Head & Project Head, Reliance
Capital) for giving me an opportunity to undertake the project in their esteemed company. It is with his
cooperation and support that we are able to gain the knowledge and experience that are everlasting and the
entire staff for guiding me and extending their support in completion of my project successfully.
I am indebted to my family members and friends for their moral support and encouragement in
completing my project work.
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INDEX
CHAPTER
NO
1
2
3
4
5
6
7
TITLE
PAGE NO
INTRODUCTION
1.1 Importance of the study
2
4
1.2 Need for the study
1.3 Objective of the study
1.4 Research methodology
1.5 Scope of the study
1.6 Limitation of the Project
REVIEW OF LITERATURE
THE COMPANY PROFILE
DATA ANALYSIS AND INTERPRETATION
FINDINGS, SUGGESTIONS & CONCLUSIONS
BIBLIOGRAPHY
APPENDIX
7.1 QUESTIONNAIRE
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10
33
45
74
80
87
CHAPTER - I
INTRODUCTION
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INTRODUCTION
Portfolio Management Services (PMS) is an investment portfolio in stocks, fixed income, debt, cash,
structured products and other individual securities, managed by a professional money manager, which can
potentially be tailored to meet specific investment objectives.
Investment is the employment of funds with the aim of achieving additional income or growth in
value.
The essential quality of an investment is that it involves waiting for a reward.
The term
Investment does not appear to be as simple as it has been defined. Investment has been further categorized
by financial experts and economists. It has also often been confused with the term Speculation. The
following discussion will give an explanation of the various ways in which investment is related or
differentiated from the financial and economic sensex and how speculation differs from investment.
However, it must be clearly established that investment involves long-term commitment.
A combination of securities with different risk- return characteristics will constitute the portfolio
of the investor. A portfolio is a combination of various assets and/or instruments of investments. The
portfolio is also built up out of the wealth or income of the investor over a period of time with a view to suit
his risk and return preferences to that of the portfolio that he holds. The portfolio analysis is an analysis of
the risk-return characteristics of individual securities in the portfolio and changes that may take place in
combination with other securities due to interactions among themselves and impact of each one of them on
others.
As individuals are becoming more and more responsible for ensuring their own financial future,
portfolio or fund management has taken on an increasingly important role in banks ranges of offerings to
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their clients. In addition, as interest rates have come down and the stock market has gone up and come down
again, clients have a choice of leaving their saving in deposit accounts, or putting those savings in unit trusts
or investment portfolios which invest in equities and/or bonds. Investing in unit trusts or mutual funds is one
way for individuals and corporations alike to potentially enhance the returns on their savings.
IMPORTANCE OF THE STUDY

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A portfolio is a collection of investments held by an institution or a private individual. Holding a

portfolio is part of an investment and risk-limiting strategy called diversification. By owning several assets,
certain types of risk (in particular specific risk) can be reduced. The assets in the portfolio could include
stocks, bonds, options, warrants, gold certificates, real estate, futures contracts, production facilities, or any
other item that is expected to retain its value.
A portfolio management service involves deciding what assets to include in the portfolio, given the
goals of the portfolio owner and changing economic conditions. Thus, portfolio management is all about
strengths, weaknesses, opportunities and threats in the choice of debt vs. equity, domestic vs. international,
growth vs. safety and numerous other trade-offs encountered in the attempt to maximize return at a given
appetite for risk.
NEED FOR THE STUDY

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Value and thereby create for the company is now considered the principal objective of a business
firm and in achieving such objective, proper and efficient management of finance is quite essential. The four
most vital and important aspects of portfolio management are:
1. Portfolio risk
2. Expected return
3. Systematic and unsystematic risk
4. Liquidity
In order to facilitate the realization of the objective of maximization of investors wealth, every
business firm should devote considerable attention towards the effective as well as efficient management of
investments. In the management of investments both risk and return are vital, to a great extent in creating
value of the company.
OBJECTIVES OF THE STUDY
To study about the portfolio management services provided by Reliance Money.
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To study about the interest and awareness of the general investors in stock market and their
investment choices and investment pattern.
To study the various stages involved in portfolio management services.
To study the benefits of creating an investment portfolio.
To study the investment pattern, its related risks & returns and finding out the optimal
portfolio with minimum risk associated to the investor.
RESEARCH METHODOLOGY
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Research design or research methodology is the procedure of collecting, analyzing and interpreting
the data to diagnose the problem and react to the opportunity in such a way where the costs can be
minimized and the desired level of accuracy can be achieved to arrive at a particular conclusion.
A structures questionnaire is distributed to a sample size of 30 respondents of young and

middle aged working people to study their view on stock market, their preferred investment
choices and investment pattern.
Market prices of the companies have been taken for the years of different dates, there by
dividing the companies into 5 sectors.
A final portfolio is made at the end of the year to know the changes (increase/decrease) in the
portfolio at the end of the year.
SOURCES OF DATA
Primary Data: - Interviews
Structured interviews with the respondents of the questionnaire.
Collecting the values the shares of the company from the NSE website and doing the comparative
data analysis.
Secondary Data: - Referring to
Case study
Company Brochures
Website of the company
Induction Handbooks
Other project works.
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SCOPE OF THE STUDY
The scope of the study is limited to the objectives undertaken for the pursuance of this study. The
study is limited to the data collected from the primary and secondary sources. This study cannot be
generalized as the actual reality. The project is limited to the work undertaken at Reliance Money as a part
of the summer internship.
The actual purpose of this study is to satisfy the requirement of the award of the postgraduate degree
of Master in Business Administration.
LIMITATIONS OF THE PROJECT
This study has been conducted purely to understand Portfolio Management for investors and for
requirement for the grant of the postgraduate degree of Master in Business Administration.
This study is limited to the objectives defined for the purpose of this study. The conclusions
thereafter reflect the hypothetical analysis for the objectives defined.
Construction of Portfolio is restricted to randomly selected company scrips based on Markowitz

Model of portfolio theory.
Detailed study of the topic was not possible due to limited size of the project.
The questionnaire analysis is based on the responses provided by the respondents.
There was a constraint with regard to time allocation for the research study i.e. for a period of 45
days.
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CHAPTER - II
REVIEW OF LITERATURE
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LITERATURE REVIEW
According to the Websters dictionary, literature is the writings that pertain to a particular branch of
learning, and printed matter. And review means to examine again, to study carefully.
Therefore literature review is the printed matter which we study very carefully during our work. This
project is also a collection of insight into the different printed material.
PORTFOLIO THEORY - INTRODUCTION

Whether its retiring early, saving for childrens education, paying off a loan or to live a secured and
satisfied life everyone has dreams they can achieve by investing their savings. However, the question that
arises is that, should one leave his money tucked away in the bank or plough it into the stock market where
the potential for higher returns is greater but the chances of losing money is higher? Deciding where to
invest depends on ones attitude towards risk (ones capacity to take risk and ones tolerance towards risk)
and the investment horizon and non-availability of guaranteed-return investment products.
In such a scenario, investing in equity, which offers returns that are higher than the inflation rate,
help to build wealth and to improve the standard of living. It is fine that stock market fluctuates over time.
At present as far as the world economy is concerned it is on a boom. As soon as globalization and
liberalization has come into act it has well shaped the economy. India has turned out to be the hot
destination for the money investors and this has resulted growth in the sensex .It was never hoped before
that BSE will ever touch the mark of 16000 points. But only due to the new economic opportunities and the
confidence of people in Indias economic future it has been successfully lead to cross even 20000 points.
Investing in equity is the way to earn money and to fulfill the dreams. The risk involved with investing in
equity can be moderated by careful stock selection and close monitoring.
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INVESTMENT AVENUES AND ALTERNATIVES
Investment alternatives vary from fixed income to variable income which includes RBI bonds,
government securities, fixed deposit, equity investments, property and so on.
In recent years the 6.5 percent tax-free RBI Bonds have become a very popular saving instrument -especially amongst individuals. Till 1996, these bonds gave returns of 10 per cent. This came down to 9 per
cent and then 8 percent and then in 2003 it was reduced to 6.5 per cent (tax free). Nowadays, 8 percent
taxable Government of India bonds are also doing well to attract investors who want safe and higher yield.
However, with inflation at nearly 4.5%, the return offered by these instruments were still attractive.
However, with the scrapping of the tax-free bonds, safe investment options for individuals have become
very limited and people are now choosing to go with either post office saving schemes or equity related
instruments.
Take a look at what is happening- Debt funds, which were said to be relatively risk-free, are giving
very less returns. Monthly Income Plans offered by mutual funds are also not attractive as their portfolio is
made up of 80 percent debt and 20 percent equity. With debt giving very less returns and returns from equity
becoming stagnant, the returns from MIPs are also very attractive. The returns offered by MIPs are totally
dependant upon the type of security and debt instruments held by the fund But with recent rally in the stock
market, very few people are now going for MIPs and have a very positive sentiment about the market and
would like to stay with the market for long. But continuously we still have a single question in mind:
So where should individuals park their money now?

"The 8 per cent taxable RBI Bonds seem to be one of the best options right now looking for safe
avenues."
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The person in the 30 percent tax bracket, the 8 per cent RBI bonds will give returns of approximately
5.6 per cent. Though this is much lower than the previous 6.5 percent, it is still a better than most other
options. If you are a senior citizen, the Senior Citizens Savings scheme offering a 9 Percent yearly interest is
a good investment option. The scheme was announced in the Budget 2006-2007 and was meant for people
above the age of 60. However, this scheme has a maximum deposit limit of Rs. 15 lacs while RBI Bonds do
not have any limit. In this case, the term for deposit is five years with a facility for premature withdrawal.
The 9 percent returns are subject to tax, so if you are in the 30 percent tax bracket, you will effectively get
returns of 6.3 per cent.
Another option can be Floating Rate Bond Fund offered by mutual funds. Basically, these funds
invest in floating rate instruments and therefore have a direct correlation to interest rates. If interest rates go
up the returns from these funds rise and returns fall with a fall in interest rates. This is unlike debt funds,
where there is a reverse relationship between interest rates and returns. A rise in interest rates results in a fall
in returns. In the current scenario, these funds are likely to give returns of 5 percent to 5.5 percent.
The dividends are tax-free in the hands of the investor and most importantly, there is complete liquidity.
Again, there is no limit on the amount that can be deposited. Also, there is hardly any volatility making it a
safe option. If you are willing to take a bit of risk, you can divide your portfolio in such a way that 60
percent is invested in floating rate bond funds and the remaining 40 percent in equity. That's like having an
MIP except that instead of 80 percent in debt and 20 percent in equity, here the 60 percent is in floating rate
bond funds. Such a portfolio can give you returns of aprox. 8.5 % to 9.5 %.
Investment Alternatives
Investment
Avenues
NonMarketable
Financial
Equity Shares
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Bonds
Life Insurance
Policies
Mutual Fund
Schemes
Money
Market
Real Estate
Precious
Objects
Financial Derivatives
(Fig 1)
Non-marketable Financial Assets - A good portion of financial assets is represented by nonmarketable financial assets. These can be classified into the following broad categories:
Bank deposits
Post office deposits
Company deposits
Provident fund deposits
Equity Shares - Equity shares represent ownership capital. As an equity shareholder, you have an
ownership stake in the company. This essentially means that you have a residual interest in income and
wealth. Perhaps, the most romantic among various investment avenues, equity shares are classified into the
following broad categories by stock market analysts:
Blue chip shares
Growth shares
Income shares
Cyclical shares
Speculative shares
Bonds - Bonds or debentures represent long-term debt instruments. The issuer of a bond promises to pay a
stipulated steam of cash flow. Bonds may be classified into the following categories:
Government securities
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Government of India relief bonds
Government agency securities
PSU bonds
Debentures of private sector companies
Preference shares
Money Market Instruments - Debt instruments which have a maturity of less than one year at the time of
issue are called money market instruments. The important money market instruments are:
Treasury bills
Commercial paper
Certificates of deposits
Mutual Funds - Instead of directly buying equity shares and/or fixed income instruments, you can
participate in various schemes floated by mutual funds which, in turn, invest in equity shares and fixed
income securities. There are three broad types of mutual fund schemes:
Equity schemes
Debt schemes
Balanced schemes
Life Insurance - In a broad sense, life insurance may be viewed as an investment. Insurance premiums
represent the sacrifice and the assured sum the benefit. The important types of insurance policies in India
are:
Endowment assurance policy
Money back policy
Whole life policy
Term assurance policy

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Real Estate - For the bulk of the investors the most important asset in their portfolio is a residential house.
In addition to a residential house, the more affluent investors are likely to be interested in the following
types of real estate:
Agricultural land
Semi-urban land
Time share in a holiday resort
Precious Objects - Precious objects are items that are generally small in size but highly valuable in
monetary terms. Some important precious objects are:
Gold and silver
Precious stones
Art objects
Financial Derivatives - A financial derivative is an instrument whose value is derived from the value of an
underlying asset. It may be viewed as a side bet on the asset. The most important financial derivatives from
the point of view of investors are:
Options
Futures
Since every individual would like to earn return on their investment but where to invest has always
been a problem. There has always been a confusion as to which instrument to invest, which instrument will
give me higher returns, etc. Even now nuclear families are in and so are longer life spans. Even inflation is
increasing and so do the standard of life, medical costs, and other things. In such a scenario, one need to
think as to how he will take care of all his future needs and build up a corpus that will not only take care of
routine expenses but also provide for extra costs, especially of health care. One need to have a corpus of
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funds, post-retirement, which will give him close to 100% of the salary to preserve the lifestyle he has
grown to enjoy.
Thus, portfolio management is all about strengths, weaknesses, opportunities and threats in the
choice of debt vs. equity, domestic vs. international, growth vs. safety and numerous other trade-offs
encountered in the attempt to maximize return at a given appetite for risk.
Aspects of Portfolio Management:

Basically portfolio management involves
A proper investment decision making of what to buy & sell.
Proper money management in terms of investment in a basket of assets so as to satisfy the

asset preferences of investors.
Reduce the risk and increase returns.
OBJECTIVES OF PORTFOLIO MANAGEMENT:

The basic objective of Portfolio Management is to maximize yield and minimize risk. The other ancillary
objectives are as per needs of investors, namely:
Regular income or stable return
Appreciation of capital
Marketability and liquidity
Safety of investment
Minimizing of tax liability.
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ELEMENTS:
Portfolio Management is an on-going process involving the following basic tasks.
Identification of the investors objective, constrains and preferences which help formulated the
invest policy.
Strategies are to be developed and implemented in tune with invest 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, companys performance and investors circumstances.
Finally, the evaluation of 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 achievements (targets).
QUALITIES OF PORTFOLIO MANAGER

1. SOUND GENERAL KNOWLEDGE: Portfolio management is an exciting and challenging job.
He has to work in an extremely uncertain and confliction environment. In the stock market every
new piece of information affects the value of the securities of different industries in a different way.
He must be able to judge and predict the effects of the information he gets. He must have sharp
memory, alertness, fast intuition and self-confidence to arrive at quick decisions.
2. ANALYTICAL ABILITY: He must have his own theory to arrive at the intrinsic value of the
security. An analysis of the securitys values, company, etc. is a continuous job of the portfolio
manager. A good analyst makes a good financial consultant. The analyst can know the strengths,
weaknesses, opportunities of the economy, industry and the company.
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3. MARKETING SKILLS: He must be good salesman. He has to convince3 the clients about the
particular security. He has to compete with the stock brokers in the stock market. In this context, the
marketing skills help him a lot.
4. EXPERIENCE: In the cyclical behavior of the stock market history is often repeated, therefore the
experience of the different phases helps to make rational decisions. The experience of the different
types of securities, clients, market trends, etc., makes a perfect professional manager.
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Schematic diagram of stages in portfolio management
Specification and
quantification of
investor
objectives,
constraints, and
preferences
Portfolio policies
and strategies
Capital market
expectations
Relevant
economic, social,
political sector
and security
considerations
Monitoring investor
related input factors
Portfolio construction
and revision asset
allocation, portfolio
optimization, security
selection,
implementation and
execution
Monitoring
economic and
market input factors
Fig. 2
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Attainment of
investor
objectives
Performance
measurement
PROCESS OF PORTFOLIO MANAGEMENT:

The Portfolio Program and Asset Management Program both follow a disciplined process to establish and
monitor an optimal investment mix. This six-stage process helps ensure that the investments match
investors unique needs, both now and in the future.
(Fig 3)
1. IDENTIFY GOALS AND OBJECTIVES

When will you need the money from your investments? What are you saving your money for? With the
assistance of financial advisor, the Investment Profile will guide through a series of questions to help
identify the goals and objectives for the investments.
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2. DETERMINE OPTIMAL INVESTMENT MIX
Once the Investment Profile is completed, investors optimal investment mix or asset allocation will be
determined. An asset allocation represents the mix of investments (cash, fixed income and equities) that
match individual risk and return needs.
3. CREATE A CUSTOMIZED INVESTMENT POLICY STATEMENT

When the optimal investment mix is determined, the next step is to formalize our goals and objectives in
order to utilize them as a benchmark to monitor progress and future updates.
4. SELECT INVESTMENTS
The customized portfolio is created using an allocation of select QFM Funds. Each QFM Fund is
designed to satisfy the requirements of a specific asset class, and is selected in the necessary proportion
to match the optimal investment mix.
5 MONITOR PROGRESS
Building an optimal investment mix is only part of the process. It is equally important to maintain the
optimal mix when varying market conditions cause investment mix to drift away from its target. To
ensure that mix of asset classes stays in line with investors unique needs, the portfolio will be
monitored and rebalanced back to the optimal investment mix
6. REASSESS NEEDS AND GOALS

Just as markets shift, so do the goals and objectives of investors. With the flexibility of the Portfolio
Program and Asset Management Program, when the investors needs or other life circumstances change,
the portfolio has the flexibility to accommodate such changes.
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RISK:
Risk refers to the probability that the return and therefore the value of an asset or security may have
alternative outcomes. Risk is the uncertainty (today) surrounding the eventual outcome of an event which
will occur in the future. Risk is uncertainty of the income/capital appreciation or loss of both. All
investments are risky. The higher the risk taken, the higher is the return. But proper management of risk
involves the right choice of investments whose risks are compensation.
RETURN:
Return-yield or return differs from the nature of instruments, maturity period and the creditor or debtor
nature of the instrument and a host of other factors. The most important factor influencing return is risk
return is measured by taking the price income plus the price change.
PORTFOLIO RISK:
Risk on portfolio is different from the risk on individual securities. This risk is reflected by in the variability
of the returns from zero to infinity. The expected return depends on probability of the returns and their
weighted contribution to the risk of the portfolio.
RETURN ON PORTFOLIO:
Each security in a portfolio contributes returns in the proportion of its investment in security. Thus the
portfolio of expected returns, from each of the securities with weights representing the proportionate share
of security in the total investments.
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RISK RETURN RELATIONSHIP:
The risk/return relationship is a fundamental concept in not only financial analysis, but in every
aspect of life. If decisions are to lead to benefit maximization, it is necessary that individuals/institutions
consider the combined influence on expected (future) return or benefit as well as on risk/cost. The
requirement that expected return/benefit be commensurate with risk/cost is known as the "risk/return tradeoff" in finance. All investments have some risks. An investment in shares of companies has its own risks or
uncertainty. These risks arise out of variability of returns or yields and uncertainty of appreciation or
depreciation of share prices, loss of liquidity etc. and the overtime can be represented by the variance of the
returns. Normally, higher the risk that the investors take, the higher is the return.
Fig 4
TYPES OF RISKS: Risk consists of two components. They are

1.
Systematic Risk
2.
Un-systematic Risk
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1. SYSTEMATIC RISK:
Systematic risk refers to that portion of total variability in return caused by factors affecting the prices of all
securities. Economic, Political and sociological changes are sources of systematic risk. Their effect is to
cause prices of nearly all individual common stocks and/or all individual bonds to move together in the
same manner.
i.
Market Risk: Variability in return on most common stocks that are due to basic sweeping changes
in investor expectations is referred to as market risk. Market risk is caused by investor reaction to
tangible as well as intangible events.
ii.
Interest rate-Risk:
Interest rate risk refers to the uncertainty of future market values and of the size of future income, caused
by fluctuations in the general level of interest rates.
iii.
Purchasing-Power Risk:
Purchasing power risk is the uncertainty of the purchasing power of the amounts to be received. In more
events everyday terms, purchasing power risk refers to the impact of or deflation on an investment.
2. UNSYSTEMATIC RISK:
Unsystematic risk is the portion of total risk that is unique to a firm or industry. Factors such as management
capability, consumer preferences, and labor strikes Cause systematic variability of return in a firm.
Unsystematic factors are largely independent of factors affecting securities markets in general. Because
these factors affect one firm, they must be examined for each firm. Unsystematic risk that portion of risk
that is unique or peculiar to a firm or an industry, above and beyond that affecting securities markets in
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general. Factors such as management capability, consumer preferences, and labor strikes can cause
unsystematic variability of return for a companys stock.
i.
Business Risk:
Business risk is a function of the operating conditions faced by a firm and the variability these conditions
inject into operating income and expected dividends.
Business risk can be divided into two broad categories
a. Internal Business Risk

b. External Business Risk
a. Internal business risk is associated with the operational efficiency of the firm. The operational
efficiency differs from company to company. The efficiency of operation is reflected on the companys
achievement of its pre-set goals and the fulfillment of the promises to its investors.
b. External business risk is the result of operating conditions imposed on the firm by circumstances
beyond its control. The external environments in which it operates exert some pressure on the firm.
Financial Risk:
Financial risk is associated with the way in which a company finances its activities. Financial risk is avoided
risk to the extent that management has the freedom to decide to borrow or not to borrow funds. A firm with
no debit financing has no financial risk.
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EVALUATION OF PORTFOLIO
Portfolio manager evaluates his portfolio performance and identifies the sources of strengths and weakness.
The evaluation of the portfolio provides a feed back about the performance to evolve better management
strategy. Even though evaluation of portfolio performance is considered to be the last stage of investment
process, it is a continuous process. There are number of situations in which an evaluation becomes
necessary and important.
Self Valuation: An individual may want to evaluate how well he has done. This is a part of the
process of refining his skills and improving his performance over a period of time.
Evaluation of Managers: A mutual fund or similar organization might want to evaluate its
managers. A mutual fund may have several managers each running a separate fund or sub-fund. It is
often necessary to compare the performance of these managers.
Evaluation of Mutual Funds: An investor may want to evaluate the various mutual funds operating
in the country to decide which, if any, of these should be chosen for investment. A similar need
arises in the case of individuals or organizations who engage external agencies for portfolio advisory
services.
Evaluation of Groups: Academics or researchers may want to evaluate the performance of a whole
group of investors and compare it with another group of investors who use different techniques or
who have different skills or access to different information.
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THE MARKOWITZ MODEL THE MODERN PORTFOLIO THEORY
Harry Markowitz is generally acknowledged as the father of modern portfolio theory after
publishing his seminal paper in 1952, for which he (jointly) received a Nobel Prize in 1990. Markowitz
(1952) and Tobin (1958) showed that it was possible to identify the composition of an optimal portfolio of
risky securities, given forecasts of future returns and an appropriate covariance matrix of share returns. This
research endeavours to apply the theory of Markowitz to the Johannesburg Securities Exchange (JSE) to
establish whether an optimal portfolio can be identified and used as an effective trading rule. Weekly data
over 11 years on the top 40 JSE listed companies was analysed to construct the study found that the trading
strategy significantly outperformed the market in the period under review Most people agree that holding
two stocks is less risky than holding one stock.
For example:Holding stocks from textile, banking and electronic companies is better than investing all the money on the
textile companies stock. But building up the optimal portfolio is very difficult. Markowitz provides an
answer. It is also known as modern portfolio theory. Modern portfolio theory (MPT) is a theory of
investment which tries to maximize portfolio expected return for a given amount of portfolio risk, or
equivalently minimize risk for a given level of expected return, by carefully choosing the proportions of
various assets. Although MPT is widely used in practice in the financial industry and several of its creators
won a Nobel Prize for the theory, in recent years the basic assumptions of MPT have been widely
challenged by fields such as behavioral economics. MPT is a mathematical formulation of the concept of
diversification in investing, with the aim of selecting a collection of investment assets that has collectively
lower risk than any individual asset. That this is possible can be seen intuitively because different types of
assets often change in value in opposite ways.
For example, when prices in the stock market fall, prices in the bond market often increase, and vice versa].
A collection of both types of assets can therefore have lower overall risk than either individually. But
- 33 -

diversification lowers risk even if assets' returns are not negatively correlatedindeed, even if they are
positively correlated. More technically, MPT models an asset's return as a normally distributed (or more
generally as an elliptically distributed random variable), defines risk as the standard deviation of return, and
models a portfolio as a weighted combination of assets so that the return of a portfolio is the weighted
combination of the assets' returns. By combining different assets whose returns are not perfectly positively
correlated, MPT seeks to reduce the total variance of the portfolio return. MPT also assumes that investors
are rational and markets are efficient.
Assumptions underlying Markowitz Theory:

Portfolio theory in the shape of Markowitz Theory makes the following assumptions concerning the
investment market and investors behavior within those markets.
We summaries these assumptions below:
Investors seek to maximize the expected return of total wealth.
All investors have the same expected single period investment horizon.
All investors are risk-adverse, that is they will only accept greater risk if they are compensated with
a higher expected return.
Investors base their investment decisions on the expected return and risk
(I.e. the standard deviation of assets historical returns).
All markets are perfectly efficient (e.g. no taxes and no transaction cost).
Literature Review of Case Studies in Portfolio Management
- 34 -
1. Keynes Meets Markowitz: The Tradeoff Between Familiarity and

Diversification
Model also has empirically testable implications for trading behavior: in response to a change in
idiosyncratic risk the Keynesian portfolio always exhibits more trading than the Markowitz portfolio, while
the opposite is true for a change in systematic volatility. In the equilibrium version of the model with
heterogeneous agents who are familiar with different assets, we find that the risk premium of stocks depends
on both systematic and idiosyncratic volatility, and that the equity risk premium is significantly higher than
in the standard model out ambiguity.
2. Portfolio Optimization Using Markowitz Model: An Application of

the Bucharest Stock Exchange
The Bucharest Stock Exchange, with all its economical, social and political problems and sudden ups and
downs, is a good reflection of the transition period that emerging economy is currently undergoing. This
study focuses on the use of an appropriate methodology for constructing efficient stock portfolios in an
extremely unstable market that makes the trade-off between risk and return even more difficult to achieve.
The objective is set in order to assess the market behavior: employing the Markowitz model, to construct a
set of optimum portfolios under a number of varying constraints and to compare them with the market
portfolio
3. Portfolio analysis based on Markowitz model
- 35 -

This paper focused on Portfolio Analysis that set-up among 15 selected stocks traded in Kuala Lumpur
Stock Exchange (KLSE). Markowitz model (1959) is the main idea which used to build up the optimal
portfolio in order to achieve the objective of maximizes the return and minimizes the risk. There are few
scenarios are considered in constructing the optimal portfolio, such as risk-free, taxes, transaction cost and
benchmark portfolio.
4. On the Markowitz mean-variance analysis of self-financing Portfolios

This paper extends the work of Markowitz (1952), Korkie and Turtle (2002) and others by first proving that
the traditional estimate for the optimal return of self-financing portfolios always overestimates from its
theoretic value. We further demonstrate the superiority of our proposed estimate over the traditional estimate
by simulation.
5. The Perfect Portfolio

Abstract: Nowadays investors have a large number of choices of how they can invest their money. One of
their biggest challenges is how to allocate their portfolio between equities, bonds and properties. It can only
be shown afterwards, which was the best allocation. That is why it is so popular to look at historical meanvariance to predict the future.
Last but not the least, the practical experiences of reliance money has given the best ever exposure
on the actually market works in financial products and services.
Our Work at RELIANCE MONEY
- 36 -

My task was divided in 4 phases:
1. Product knowledge: This included the theoretical knowledge about the field and products which need to
know as a part of the project.
2. Pitching in retail sector: This included the implementation of the knowledge imparted to us and the test
of our marketing skills. i was given target of making 3 demat accounts for the company . This also enhanced
our interpersonal skills and confidence level.
3. Implementation in retail sector and pitching in corporate: I need to explain the product - demat to
prospective investors and convince them to open a demat account with Reliance Money by explaining about
the company benefits to the investors. This also included of the ways we should pitch the corporate.
4. Implementation at corporate levels: This included the implementation of the all the knowledge and
ways learnt for the pitching and extracting business out of the prospective investors.
With the end of 6 weeks, every phase was completed and it gave me the real experience of retail as
well as corporate world.
- 37 -
CHAPTER III
THE COMPANY PROFILE
- 38 -

INDUSTRY PROFILE
The only stock exchanges operating in the 19th century were those of Bombay set up in 1875 and
Ahmedabad set up in 1894. These were organized as voluntary non profit making organization of brokers to
regulate and protect their interests. Before the controls on securities trading become a central subject under
the constitution in 1950, it was a state subject and the Bombay securities contract (control) Act of 1952 used
to regulate trading in securities. Under this Act, the Bombay stock exchange in 1972 and the Ahmedabad in
1973.
During the war boom, a number of stock exchanges were organized in Bombay, Ahmedabad and
other centers, but they were not organized. Soon after it become a central subject, central legislation
proposed on a committee headed by A.D. Gorwala went into the bill securities regulation. On the basis of
committees recommendations and the public discussion the securities contract (regulation) Act become law
in 1956.
DEFINITION OF THE STOCK EXCHANGE
Stock exchange means any body or individuals whether incorporated or not, constituted for the
purpose of assisting, regulating or controlling the business of buying, selling or dealing in securities.
It is an association of member brokers for the purpose of self regulation and protecting the interest of
its members. It can operate only if the government recognizes it. Under the securities contract (regulation)
act 1956, the recognition is granted under section 3 of the act by central finance ministry.
- 39 -

BY-LAWS
Beside the above act, the securities contract (regulations) rules were also made in 1975 to regulate
certain matters of trading of stock exchanges, which are concerned with following subjects.
Opening/closing of stock exchanges, timing of trading, regulation of bank transfer, regulation of
carryover business, control of settlement, and other actives of stock exchanges, fixation of margins, fixation
of market prices or making prices, regulation of taravani business (jobbing), regulation of broker trading,
brokerage charges, trading rules on exchanges, arbitration and settlement of disputes, settlement and
clearing of the trading.
REGULATIONS OF STOCK EXCHANGES:
The securities contract (regulation) is the basis for operations of the stock exchange of India. Stock
exchanges are given monopoly in certain areas under section 19 of the above act is to ensure that the control
and regulation are facilitated. Recognition can be granted to a stock exchange provided certain conditions
are satisfied and the necessary information is supplied to the government. Recognition can be withdrawn, if
necessary. Where there is no stock exchange, the government can license some to the brokers to perform the
function of a stock exchange in its absence.
SECURITIES EXCHANGE BOARD OF INDIA (SEBI)
SEBI was set up as an autonomous regulatory authority by the government of India in 1988 to
perform the interest of investors in securities and to promote the development of and to regulate the
securities the securities markets and for matters connected therewith or incidental thereto. It is empowered
by, to acts namely the SEBI Act, 1982 and the securities contract (regulation) Act, 1956 to perform the
function of protecting investors rights and regulating the capital market.
- 40 -

NATIONAL STOCK EXCHANGE (NSE):
The NSE was incorporated in NOVEMBER 1994 with an equity capital of Rs.25 Crores. The
International Securities Consultancy (ISC) of Hong Kong has helped in setting up NSE. ISC has prepared
the detailed business plans and installation of hardware and software systems. The promoters for NSE were
financial institutions, insurance companies, banks and SEBI capital market ltd, Infrastructure leasing and
financial services ltd., and Stock Holding Corporation Ltd.
BOMBAY STOCK EXCHANGE (BSE):
This stock exchange, in Mumbai popularly known as BSE was established in 1875 as The native
share and stock brokers association, as a voluntary non-profit making association .It has evolved over the
years into its present status as the premier stock exchange in the country. It may be noted that Bombay Stock
Exchange is the oldest one in Asia, even older than the Tokyo Stock Exchange, this was founded in 1878.
A governing board comprising of 9 elected directors, 2 SEBI nominees, 7 public representatives and an
executive director is the apex body, which decides the policies and regulates the affairs of the exchange.
- 41 -
COMPANY PROFILE
Reliance Securities Limited is a Reliance Capital company and part of the Reliance Anil Dhirubhai
Ambani Group. Reliance Securities is a permitted user of the brand "Reliance Money" for promoting its
various products and services.
Reliance Securities endeavors to change the way investors transact in equities markets and avails
services. It provides customers with access to Equity, Derivatives, Portfolio Management Services,
Investment Banking, Mutual Funds & IPOs. It also offers secured online share trading platform and
investment activities in secure, cost effective and convenient manner. To enable wider participation, it also
provides the convenience of trading offline through variety of means, including Call & Trade, Branch
dealing Desk and its network of affiliates. Reliance Money through its pan India presence with 6,233 outlets
has more than 3.5 million customers.
Reliance Capital is one of India's leading and fastest growing private sector financial services
companies, and ranks among the top 3 private sector financial services and banking groups, in terms of net
worth.
Awards and Achievements
India's largest e-broking house and Best Equity House 2009 - Awarded by Dun and Bradstreet 2009
Reliance Money is rated no. 1 by Starcom Worldwide for online security and cost effectiveness
Reliance Money has been awarded Debutant Franchisor of the Year 2007 by Franchise India
Holdings Ltd.
A short brief on Reliance Capital Limited

Reliance Capital Limited (RCL) was incorporated in year 1986 at Ahmedabad in Gujarat as Reliance
Capital & Finance Trust Limited. The name RCL came into effect from January 5, 1995. In 2002, RCL
- 42 -

shifted its registered office to Jamnagar in Gujarat before it finally moved to Mumbai in Maharashtra, in
2006.
In 2006, Reliance Capital Ventures Limited merged with RCL and with this merger the shareholder
base of RCL rose from 0.15 million shareholders to 1.3 million.
RCL entered the Capital Market with a maiden public issue in 1990 and in subsequent years further
tapped the capital market through rights issue and public issues. The equity shares were initially listed on
the Ahmedabad Stock Exchange and The Stock Exchange Mumbai. Presently the shares are listed on The
Stock Exchange Mumbai and the National Stock Exchange of India.
RCL in the initial years engaged itself in steady annuity yielding businesses such as leasing, bill
discounting, and inter-corporate deposits. Later, in 1993 diversified its business in the areas of portfolio
investment, lending against securities, custodial services, money market operations, project finance advisory
services, and investment banking.
RCL was accredited a Category 1 Merchant banker by the Securities Exchange Board of India
(SEBI). It had lead managed/co-managed 15 issues of an aggregate value of Rs. 400 crore and had
underwritten 33 issues for an aggregate value of Rs. 550 crore. All these companies were listed on various
exchanges. RCL obtained its registration as a Non-banking Finance Company (NBFC) in December 1998.
In view of the regulatory requirements RCL surrendered its Merchant Banking License.
RCL has since diversified its activities in the areas of asset management and mutual fund; life and
general insurance; consumer finance and industrial finance; stock broking; depository services; private
equity and proprietary investments; exchanges, asset reconstruction; distribution of financial products and
other activities in financial services.
Reliance Capital's vision is that: By 2012, it will be a company that is known as:
- 43 -

"The largest, most profitable, innovative, and most trusted financial services company in India and in the
emerging markets".
In doing so, the company expects to reach the following targets by 2012:
1. 50 million customers.
2. 75,000 employees
3. A profit after tax of Rs. 5,000 crore for that financial year.
4. A valuation of Rs. 100,000 crore for the company and its subsidiary businesses.
In achieving this vision, the company will be both customer-centric and innovation-driven.
Reliance money Now
Reliance Capital, a constituent of S&P CNX Nifty and MSCI India, is a part of the Reliance Anil
Dhirubhai Ambani Group. It is one of India's leading and amongst most valuable financial services
companies in the private sector.
Reliance Capital has interests in asset management and mutual funds; life and general insurance;
commercial finance; stock broking; investment banking; wealth management services; distribution of
financial products; exchanges; private equity; asset reconstruction; proprietary investments and other
activities in financial services.
Reliance Mutual Fund is India's largest Mutual Fund with over seven million investor folios.
Reliance Life Insurance is amongst the leading private sector life insurers. Reliance General Insurance is
amongst the leading private sector general insurers. Reliance Securities is one of Indias leading broking
houses. Reliance Capital is one of Indias leading distributors of financial products and services.
Reliance Capital has a net worth of Rs. 8,126 crore (US$ 2 billion) and total assets of Rs. 30,393
crore (US$ 7 billion) as on December 31, 2010.
- 44 -

Business mix of Reliance Capital
Asset Management
Mutual Fund, Offshore Fund, Pension fund, Portfolio

Management
Insurance
Life Insurance, General Insurance
Commercial Finance
Mortgages, Loans against Property , SME Loans, Loans for

Commercial Vehicles, Loans for Construction Equipment, Auto
Loans, Business Loans, Loans against Securities
Broking and Distribution Equities, Commodities and Derivatives, Wealth Management

Services, Portfolio Management Services, Investment Banking,
Foreign Exchange and Offshore Investment, Third Party
Products
Other Businesses
Exchanges, Private Equity, Institutional Broking, Asset

Reconstruction, Venture Capital
(Table 1)
Reliance Capital is anchored by a team of experienced and committed visionaries who are dedicated
towards scaling the company to greater heights through innovation and excellence; thereby creating value
for all our stakeholders.
Executive names in Reliance Capital
Amit Bapna (Chief Financial Officer, Reliance Capital)
Arun Hariharan (President, Quality and Knowledge Management, Reliance Capital)
K. Achuthan (Chief People Officer, Reliance Capital)
K. V. Srinivasan (Chief Executive Officer, Reliance Commercial Finance)
Lav Chaturvedi (Chief Risk Officer, Reliance Capital)
Madhusudan Kela (Chief Investment Strategist, Reliance Capital)
- 45 -
Malay Ghosh (Executive Director & President, Reliance Life Insurance Company)
Rajnikant Patel (President and Chief Executive Officer, Reliance Spot Exchange)
Sam Ghosh (Chief Executive Officer, Reliance Capital)
Sandeep Phanasgaonkar (Chief Technology Officer, Reliance Capital)
Sanjay Jain (Chief Marketing Officer, Reliance Capital)
Sundeep Sikka (Chief Executive Officer, Reliance Capital Asset Management)
Vijay Pawar (Executive Director & Chief Executive Officer, Reliance General Insurance)
Vikrant Gugnani (Chief Executive Officer, International Business- Reliance Capital) (Executive
Director, Reliance Securities Ltd)
V. R. Mohan (Company Secretary, Reliance Capital)
Reliance Money Services

Reliance Money is promoted by Reliance Capital; one of India's leading and fastest growing
private sector financial services companies, ranking among the top 3 private sector financial services and
banking companies, in terms of net worth. Reliance Capital is a part of the Reliance Anil Dhirubhai Ambani
Group.
Thus, Reliance Money provides a comprehensive platform, offering an investment avenue for a wide
range of asset classes. Its endeavor is to change the way India transacts in financial market and avails
financial services. Reliance Money offers a single window facility, enabling you to access amongst others,
- 46 -

Equities, Equity and Commodity derivatives, Offshore Investments, IPOs, Mutual Funds, Life Insurance
and General Insurance products.
Advantages offered by Reliance money over other companies :
Cost Effective
Convenience
Security
Single Window for Multiple Products
3 in 1 Integrated Access
Demat Account with Reliance Capital
Other Services like research, live news from Reuter and Dow Jones, etc.
PRODUCT OFFERING
1. Trading Portal (with almost negligible brokerage )
Equity Broking
Commodity Broking
Derivatives ( Futures & Options )
Offshore Investments (Contract For Differences)
Demat Account.
2. Financial Products
Mutual Funds
- 47 -
Life Insurance
o ULIP plan
o Term Plan
o Money Back Plan
General Insurance
o Vehicle/Motor Insurance
o Health Insurance
o House insurance
IPOs
NFOs
3. Value-Added Services
Retirement Planning
Financial Planning
Tax Saving
Children Future Planning
4. Credit Cards
5. Gold coins retailing
What is Portfolio Management Services (PMS)?

The Management of investments in equities requires time, knowledge, experience and constant
monitoring of stock market. It is the services provided by the market professionals to those who need an
expert to help to manage their investments.
- 48 -
The business of portfolio management has never been an easy one. Juggling the limited choices at
hand with the twin requirements of adequate safety and sizeable returns is a task fraught with complexities.
Given the unpredictable nature of the share market it requires solid experience and strong research to make
the right decision. In the end it boils down to make the right move in the right direction at the right time.
That's where the expert comes in.
Reliance Portfolio Management Services (PMS) is a premium financial service, offering innovative
& exclusive products through discretionary & advisory services. Our expertise has earned the trust of
thousands of high net-worth individual/ institutional investors and created a family that is constantly
growing. Reliance Portfolio Management Services can conduct your investments with true finesse coupled
with passion and innovation.
Reliance Portfolio Management Services is a part of Reliance Capital Asset Management Ltd., a
wholly owned subsidiary of Reliance Capital Ltd. Reliance Capital Ltd. is one of India's leading and fastest
growing private sector financial services companies, and ranks among the top 3 private sector financial
services and banking companies, in terms of net worth. Reliance Capital Ltd. has interests in asset
management, life and general insurance, private equity and proprietary investments, stock broking and other
financial services.
Our vision
"To be a globally respected wealth creator with an emphasis on customer care and a culture of good
corporate governance"
Our Mission
"To be a multi-asset class player with a significant presence in domestic market & expand horizons
in International markets through Advisory services."
- 49 -
CHAPTER - IV
DATA ANALYSIS AND
INTERPRETATION
- 50 -
Portfolio A
Beta
Un
Excess
Syste
Return
Securities Returns Values metic

R%
Risk
()
2e (%)
Over ()
Ri Rf
(Ri-Rf)
_____________
2e
_____________
Cu
mulative
(Ri-Rf)
_____________
Cumulative
__________
e
2
C=
n
m t=1 (Ri-Rf)
2
____________________
__________
2e
2e
2e
1+ m t=1 2
2
________
2e
Bharti
14.2
0.88
29
10.5
0.2822
0.2822
0.0286
0.0288
2.19
Airtel
ITC
Guj
10.1
10.5
0.99
1.03
18.65
35
5.2
4.5
0.2654
0.1618
0.5476
0.7094
0.1133
0.0303
0.1420
0.1723
2.26
2.606
Amb.com
ICICI
8.8
0.91
12.33
4.3
0.2878
0.9972
0.0801
0.2524
2.830
Bank
BHEL
1.06
30.5
4.24
0.1564
1.1536
0.0368
0.2892
2.964
9.4
- 51 -

HDFC
Bajaj
9.1
8.4
0.96
1.03
14.83
14
4.2
3.39
0.2590
0.2575
1.4126
1.6701
0.1908
0.1326
0.4799
0.6124
2.45
2.34
Auto
Acc
8.6
Hindalco 8.3
1.06
1.29
28
12
3.30
2.7
0.1325
0.3762
1.8026
2.1788
0.0401
0.1664
0.6526
0.8190
2.39
2.37
HDFC
6.6
0.82
32
2.39
0.0461
2.2249
0.0210
0.84
2.36
Bank
HLL
Dr.
7.1
6.1
1.03
0.69
26
20
1.9
1.5
0.0792
0.0345
2.3041
2.3386
0.0408
0.0238
0.8808
0.9046
2.34
2.32
c*
Reddys
Note: -C* is the cut-off point to include the securities in to portfolio.
INTERPRETATION:
Construction of optimal portfolio starts with determines which securities are
included in the portfolio, for this the following steps necessary.
Calculation of excess return to beta ratio for each securities under review and
rank from highest to lowest.
The above table shows that the construction of optimal portfolio from BSE
SENSEX scripts.
In the above table all the securities whose excess return to beta ratio are
above the cut-off rate are selected and all those whose ratios are below are
rejected.
For the portfolio-A selected scripts are 10 out of twelve whose excess return to
beta ratio are above the cutoff rate (2.36 C*) are included in the portfolio
- 52 -

basket. HLL (1.9 < 2.34) Dr.Reddys (1.5 < 2.32) securities excess return to
beta ratios are less than the cut-off so those are excluded from the portfolio.
Beta
Un
Excess
Syste
Return
Securities Returns Values metic

R%
Risk
()
2e (%)
Over ()
Ri Rf
(Ri-Rf)
_____________
2e
_____________
Cu
mulative
(Ri-Rf)
_____________
Cumulative
__________
e
2
C=
n
m t=1 (Ri-Rf)
2
____________________
__________
2e
2e
2e
1+ m t=1 2
2
________
2e
Bharti
14.2
0.88
29
10.5
0.2822
0.2822
0.0286
0.0286
2.19
Airtel
ITC
Guj
10.1
10.5
0.99
1.03
18.65
35
5.2
4.5
0.2654
0.1618
0.5476
0.7094
0.1133
0.0303
0.1419
0.1722
2.26
2.606
Amb.com
ICICI
8.8
0.91
12.33
4.3
0.2878
0.9972
0.0801
0.2523
2.830
Bank
BHEL
HDFC
Bajaj
1.06
0.96
1.03
30.5
14.83
14
4.24
4.2
3.39
0.1564
0.2590
0.2575
1.1536
1.4126
1.6701
0.0368
0.1908
0.1326
0.2891
0.479
0.6125
2.964
2.45
2.34
9.4
9.1
8.4
- 53 -

Auto
Acc
8.6
Hilbalco 8.3
1.06
1.29
28
12
3.30
2.7
0.1325
0.3762
1.8026
2.1788
0.0401
0.1664
0.6525
0.8190
2.39
2.37
HDFC
6.6
0.82
32
2.39
0.0461
2.2249
0.0210
0.84
2.36
Bank
HLL
Dr.
7.1
6.1
1.03
0.69
26
20
1.9
1.5
0.0792
0.0345
2.3041
2.3386
0.0408
0.0238
0.8808
0.9046
2.34
2.32
c*
Reddys
PORTFOLIO B
Note: -C* is the cut-off point to include the securities in to portfolio.
INTERPRETATION:
The desirability of any securities to include in the portfolio is directly related to
excess return to beta ratio and cut-off rate.
The above information shows that for securities of Satyam computers to NTPC
Ri Rf / is less than C*. While securities 11&12 are less than C*. So from
Satyam computers to NTPC all the ten securities are included in the portfolio
and ONGC & TATA consultancy services are not added in the optimal portfolio.
Here optimal portfolio consists of securities of 10 companies
- 54 -
PORTFOLIO C:
Securities
Beta
Un
Excess
Syste
Return
(Ri-Rf)
Over ()
_____________
Returns Values metic

R%
Risk
()
2e (%)
Ri Rf
2e
_____________
Cu
mulative
(Ri-Rf)
_____________
Cumulative
__________
e
2
C=
n
m2t=1 (Ri-Rf)
____________________
__________
2e
e
2
2e
1+ m2t=1 2
________
2e
Satyam
18
1.09
45
11
0.2906
0.2906
0.0264
0.0264
2.29
Com
Bharthi
14.3
0.88
29
10.5
0.2654
0.556
0.0286
0.055
3.587
Reliance 10.3
0.95
19
8.4
0.2650
0.821
0.0525
0.1074
3.956
Airtel
- 55 -

comm
SBI
10.62
Reliance 8
1.12
0.66
20.5
22
7
5.6
0.3070
0.0900
1.128
1.218
0.0711
0.0200
0.1786
0.2086
4.048
3.94
Ene
L&T
Hero
5.5
4.8
0.80
1.00
12
15
5.2
4.54
0.2333
0.2533
1.4513
1.7046
0.0544
0.6777
0.263
1.9407
3.9
1.637
Honda
Guj
8.5
1.42
12.76
4.5
0.3894
2.094
0.1580
1.0987
1.905
Amboja
Ranbaxy
ICICI
BHEL
Infosys
6.8
6
6
6
0.82
0.74
0.69
0.89
32
4.5
20
5
4.4
4.3
4.24
4.2
0.0461
0.1644
0.0345
0.178
2.1401
2.3045
2.3390
2.517
0.1664
0.1217
0.0238
0.15842
1.2651
1.3868
1.4106
1.5690
1.567
1.549
1.5488
1.508
INTERPRETATION
For the portfolio-C selected scripts are 12companies and portfolio basket
consists of all the selected scripts whose excess return to beta ratios are always
greater than cutoff rates.
So the optimal portfolio consists of selected all 12 securities.
CALCULATION OF
AVERAGE RETURNS, RISK, CORRELATION COEFICIENT
BHARTI AIRTEL
Symbol
Date
Prev
Close
Close
Price
Returns
Average
Difference
D2
BHARTIARTL
1-Feb-13
319
317.1
-0.5956
4.1602
-4.7558
22.61774
BHARTIARTL
2-Feb-13
317.1
322.8
1.7975
4.1602
-2.3627
5.582161
BHARTIARTL
3-Feb-13
322.8
339.8
5.2664
4.1602
1.1062
1.22372
BHARTIARTL
4-Feb-13
339.8
332.5
-2.1483
4.1602
-6.3085
39.79746
BHARTIARTL
7-Feb-13
332.5
333.85
0.406
4.1602
-3.7542
14.0939
BHARTIARTL
8-Feb-13
333.85
333.3
-0.1647
4.1602
-4.3249
18.70515
BHARTIARTL
9-Feb-13
333.3
332.15
-0.345
4.1602
-4.5052
20.29714
BHARTIARTL
10-Feb-13
332.15
322.6
-2.8752
4.1602
-7.0354
49.49695
BHARTIARTL
11-Feb-13
322.6
318.9
-1.1469
4.1602
-5.3071
28.16564
BHARTIARTL
14-Feb-13
318.9
327.35
2.6497
4.1602
-1.5105
2.281509
BHARTIARTL
15-Feb-13
327.35
329.15
0.5499
4.1602
-3.6103
13.03448
BHARTIARTL
16-Feb-13
329.15
328.4
-0.2279
4.1602
-4.3881
19.25507
BHARTIARTL
17-Feb-13
328.4
339.85
3.4866
4.1602
-0.6736
0.453735
BHARTIARTL
18-Feb-13
339.85
331.35
-2.5011
4.1602
-6.6613
44.37296
BHARTIARTL
21-Feb-13
331.35
330.7
-0.1962
4.1602
-4.3564
18.97794
BHARTIARTL
22-Feb-13
330.7
330.5
-0.0605
4.1602
-4.2207
17.81412
- 56 -

BHARTIARTL
23-Feb-13
330.5
328.2
-0.6959
4.1602
-4.8561
23.58186
BHARTIARTL
24-Feb-13
328.2
324.4
-1.1578
4.1602
-5.318
28.28145
BHARTIARTL
25-Feb-13
324.4
329.75
1.6492
4.1602
-2.511
6.305128
BHARTIARTL
28-Feb-13
329.75
331.3
0.4701
4.1602
-3.6901
13.61718
4.1602
387.9553
(Table -2)
Returns= (close price - prev. close)*100/prev. close
(Fig 19)
Risk = D2/n-1 = 4.5187

RELIANCE COMMUNICATION
Symbol
RCOM
RCOM
RCOM
RCOM
RCOM
RCOM
RCOM
RCOM
RCOM
RCOM
RCOM
RCOM
RCOM
RCOM
RCOM
RCOM
RCOM
RCOM
RCOM
RCOM
Date
1-Feb-13
2-Feb-13
3-Feb-13
4-Feb-13
7-Feb-13
8-Feb-13
9-Feb-13
10-Feb-13
11-Feb-13
14-Feb-13
15-Feb-13
16-Feb-13
17-Feb-13
18-Feb-13
21-Feb-13
22-Feb-13
23-Feb-13
24-Feb-13
25-Feb-13
28-Feb-13
Prev
Close
122.65
118.50
116.95
118.10
114.75
115.60
110.45
94.65
96.60
97.15
97.30
101.55
99.60
99.95
93.15
93.60
95.05
96.45
92.35
87.45
Close
Price
118.50
116.95
118.10
114.75
115.60
110.45
94.65
96.60
97.15
97.30
101.55
99.60
99.95
93.15
93.60
95.05
96.45
92.35
87.45
85.75
Returns
-3.3836
-1.3080
0.9833
-2.8366
0.7407
-4.4550
-14.3051
2.0602
0.5694
0.1544
4.3679
-1.9202
0.3514
-6.8034
0.4831
1.5491
1.4729
-4.2509
-5.3059
-1.9440
-33.7802
(Table 3)
- 57 -
Average
-33.7802
-33.7802
-33.7802
-33.7802
-33.7802
-33.7802
-33.7802
-33.7802
-33.7802
-33.7802
-33.7802
-33.7802
-33.7802
-33.7802
-33.7802
-33.7802
-33.7802
-33.7802
-33.7802
-33.7802
Differenc
e
30.3966
32.4722
34.7635
30.9436
34.5209
29.3252
19.4751
35.8404
34.3496
33.9346
38.1481
31.8600
34.1316
26.9768
34.2633
35.3293
35.2531
29.5293
28.4743
31.8362
D2
923.9526
1054.4427
1208.5028
957.5077
1191.6953
859.9663
379.2789
1284.5358
1179.8921
1151.5571
1455.2801
1015.0573
1164.9665
727.7476
1173.9732
1248.1626
1242.7817
871.9791
810.7857
1013.5457
20915.6109
(Fig 20)
Risk = D2/n-1= 33.1786

NTPC
Symbol
NTPC
NTPC
NTPC
NTPC
NTPC
NTPC
NTPC
NTPC
NTPC
NTPC
NTPC
NTPC
NTPC
NTPC
NTPC
NTPC
NTPC
NTPC
NTPC
NTPC
Date
1-Feb-13
2-Feb-13
3-Feb-13
4-Feb-13
7-Feb-13
8-Feb-13
9-Feb-13
10-Feb-13
11-Feb-13
14-Feb-13
15-Feb-13
16-Feb-13
17-Feb-13
18-Feb-13
21-Feb-13
22-Feb-13
23-Feb-13
24-Feb-13
25-Feb-13
28-Feb-13
Prev
Close
189.05
185.25
180.25
182.3
176.95
179.6
174.15
171.35
170.4
176.85
178.1
180.9
181.6
180.85
179.05
176.65
175.85
172.9
170.95
169.85
Close
Price
185.25
180.25
182.3
176.95
179.6
174.15
171.35
170.4
176.85
178.1
180.9
181.6
180.85
179.05
176.65
175.85
172.9
170.95
169.85
169.85
Returns
-2.0101
-2.6991
1.1373
-2.9347
1.4976
-3.0345
-1.6078
-0.5544
3.7852
0.7068
1.5722
0.3870
-0.4130
-0.9953
-1.3404
-0.4529
-1.6776
-1.1278
-0.6435
0.0000
-10.4050
(Table 4)
- 58 -
Average
-10.4050
-10.4050
-10.4050
-10.4050
-10.4050
-10.4050
-10.4050
-10.4050
-10.4050
-10.4050
-10.4050
-10.4050
-10.4050
-10.4050
-10.4050
-10.4050
-10.4050
-10.4050
-10.4050
-10.4050
Difference
8.3949
7.7059
11.5423
7.4703
11.9026
7.3705
8.7972
9.8506
14.1902
11.1118
11.9772
10.7920
9.9920
9.4097
9.0646
9.9521
8.7274
9.2772
9.7615
10.4050
D2
70.4752
59.3816
133.2249
55.8050
141.6718
54.3240
77.3906
97.0339
201.3621
123.4724
143.4521
116.4663
99.8402
88.5425
82.1668
99.0448
76.1681
86.0661
95.2876
108.2640
2009.4400
(Fig 21)
2
Risk = D /n-1= 10.2840
POWERGRID
Symbol
Date
Prev
Close
Close
Price
Returns
Average
Difference
D2
POWERGRID
1-Feb-13
96.55
95.65
-0.9322
2.6046
-3.5368
12.5087
POWERGRID
2-Feb-13
95.65
95.55
-0.1045
2.6046
-2.7091
7.3395
POWERGRID
3-Feb-13
95.55
98.65
3.2444
2.6046
0.6398
0.4093
POWERGRID
4-Feb-13
98.65
97.3
-1.3685
2.6046
-3.9731
15.7853
POWERGRID
7-Feb-13
97.3
97.8
0.5139
2.6046
-2.0907
4.3711
POWERGRID
8-Feb-13
97.8
95.7
-2.1472
2.6046
-4.7518
22.5800
POWERGRID
9-Feb-13
95.7
95.9
0.2090
2.6046
-2.3956
5.7390
POWERGRID
10-Feb-13
95.9
95.4
-0.5214
2.6046
-3.1260
9.7717
POWERGRID
11-Feb-13
95.4
96.4
1.0482
2.6046
-1.5564
2.4223
POWERGRID
14-Feb-13
96.4
98.55
2.2303
2.6046
-0.3743
0.1401
POWERGRID
15-Feb-13
98.55
98.75
0.2029
2.6046
-2.4017
5.7680
POWERGRID
16-Feb-13
98.75
98.6
-0.1519
2.6046
-2.7565
7.5983
POWERGRID
17-Feb-13
98.6
98.6
0.0000
2.6046
-2.6046
6.7839
POWERGRID
18-Feb-13
98.6
98.1
-0.5071
2.6046
-3.1117
9.6827
POWERGRID
21-Feb-13
98.1
98.95
0.8665
2.6046
-1.7381
3.0211
POWERGRID
22-Feb-13
98.95
98.45
-0.5053
2.6046
-3.1099
9.6715
POWERGRID
23-Feb-13
98.45
99.6
1.1681
2.6046
-1.4365
2.0635
POWERGRID
24-Feb-13
99.6
98.25
-1.3554
2.6046
-3.9600
15.6818
- 59 -

POWERGRID
25-Feb-13
98.25
99.2
0.9669
2.6046
-1.6377
2.6820
POWERGRID
28-Feb-13
99.2
98.95
-0.2520
2.6046
-2.8566
8.1603
2.6046
152.1800
(Table 5)
(Fig 22)
2
Risk = D /n-1 = 2.830102

RANBAXY
Symbol
RANBAXY
RANBAXY
RANBAXY
RANBAXY
RANBAXY
RANBAXY
RANBAXY
RANBAXY
RANBAXY
RANBAXY
RANBAXY
RANBAXY
RANBAXY
RANBAXY
RANBAXY
RANBAXY
RANBAXY
RANBAXY
RANBAXY
RANBAXY
Date
1-Feb-13
2-Feb-13
3-Feb-13
4-Feb-13
7-Feb-13
8-Feb-13
9-Feb-13
10-Feb-13
11-Feb-13
14-Feb-13
15-Feb-13
16-Feb-13
17-Feb-13
18-Feb-13
21-Feb-13
22-Feb-13
23-Feb-13
24-Feb-13
25-Feb-13
28-Feb-13
Prev
Close
544.85
535.3
539.25
537.4
524.65
510.85
498.2
488.35
499.1
502.8
517
516.15
510.65
512.2
505.15
509.15
492.25
461.8
441.75
449.15
Close
Price
535.3
539.25
537.4
524.65
510.85
498.2
488.35
499.1
502.8
517
516.15
510.65
512.2
505.15
509.15
492.25
461.8
441.75
449.15
434.65
Returns
-1.7528
0.7379
-0.3431
-2.3725
-2.6303
-2.4763
-1.9771
2.2013
0.7413
2.8242
-0.1644
-1.0656
0.3035
-1.3764
0.7918
-3.3193
-6.1859
-4.3417
1.6752
-3.2283
-21.9584
(Table 6)
- 60 -
Average
-21.9584
-21.9584
-21.9584
-21.9584
-21.9584
-21.9584
-21.9584
-21.9584
-21.9584
-21.9584
-21.9584
-21.9584
-21.9584
-21.9584
-21.9584
-21.9584
-21.9584
-21.9584
-21.9584
-21.9584
Difference
20.2056
22.6963
21.6153
19.5859
19.3281
19.4821
19.9813
24.1597
22.6997
24.7826
21.7940
20.8928
22.2619
20.5820
22.7502
18.6391
15.7725
17.6167
23.6336
18.7301
D2
408.2672
515.1222
467.2225
383.6061
373.5745
379.5536
399.2516
583.6906
515.2779
614.1765
474.9780
436.5099
495.5937
423.6181
517.5736
347.4176
248.7724
310.3479
558.5450
350.8159
8803.9149
(Fig 23)
Risk = D2/n-1 = 21.52589
DR REDDY LABS
Symbol
DRREDDY
DRREDDY
DRREDDY
DRREDDY
DRREDDY
DRREDDY
DRREDDY
DRREDDY
DRREDDY
DRREDDY
DRREDDY
DRREDDY
DRREDDY
DRREDDY
DRREDDY
DRREDDY
DRREDDY
DRREDDY
DRREDDY
DRREDDY
Date
1-Feb-13
2-Feb-13
3-Feb-13
4-Feb-13
7-Feb-13
8-Feb-13
9-Feb-13
10-Feb-13
11-Feb-13
14-Feb-13
15-Feb-13
16-Feb-13
17-Feb-13
18-Feb-13
21-Feb-13
22-Feb-13
23-Feb-13
24-Feb-13
25-Feb-13
28-Feb-13
Prev
Close
1624.25
1609.35
1613.4
1600.35
1580.9
1565.15
1534.6
1518.45
1491.25
1497.25
1541.15
1538.6
1511.2
1525.85
1537.35
1537.25
1550.75
1578.05
1500.1
1527.4
Close
Price
1609.35
1613.4
1600.35
1580.9
1565.15
1534.6
1518.45
1491.25
1497.25
1541.15
1538.6
1511.2
1525.85
1537.35
1537.25
1550.75
1578.05
1500.1
1527.4
1546
Returns
-0.9173
0.2517
-0.8089
-1.2154
-0.9963
-1.9519
-1.0524
-1.7913
0.4023
2.9320
-0.1655
-1.7808
0.9694
0.7537
-0.0065
0.8782
1.7604
-4.9396
1.8199
1.2178
-4.6404
(Table 7)
- 61 -
Average
-4.6404
-4.6404
-4.6404
-4.6404
-4.6404
-4.6404
-4.6404
-4.6404
-4.6404
-4.6404
-4.6404
-4.6404
-4.6404
-4.6404
-4.6404
-4.6404
-4.6404
-4.6404
-4.6404
-4.6404
Difference
3.7231
4.8921
3.8315
3.4250
3.6441
2.6885
3.5880
2.8491
5.0427
7.5724
4.4749
2.8596
5.6098
5.3941
4.6339
5.5186
6.4008
-0.2992
6.4603
5.8582
D2
13.8611
23.9322
14.6808
11.7309
13.2797
7.2281
12.8738
8.1174
25.4293
57.3419
20.0251
8.1771
31.4702
29.0961
21.4730
30.4549
40.9707
0.0895
41.7352
34.3180
446.2849
(Fig 24)
Risk = D2/n-1 =
4.8465118
GMR INFRA
Symbol
GMRINFRA
GMRINFRA
GMRINFRA
GMRINFRA
GMRINFRA
GMRINFRA
GMRINFRA
GMRINFRA
GMRINFRA
GMRINFRA
GMRINFRA
GMRINFRA
GMRINFRA
GMRINFRA
GMRINFRA
GMRINFRA
GMRINFRA
GMRINFRA
GMRINFRA
GMRINFRA
Date
1-Feb-13
2-Feb-13
3-Feb-13
4-Feb-13
7-Feb-13
8-Feb-13
9-Feb-13
10-Feb-13
11-Feb-13
14-Feb-13
15-Feb-13
16-Feb-13
17-Feb-13
18-Feb-13
21-Feb-13
22-Feb-13
23-Feb-13
24-Feb-13
25-Feb-13
28-Feb-13
Prev
Close
39.4
38.6
38.25
39.6
38.5
39.05
35.95
31.75
36.1
37.7
40.45
42.25
41.9
41.3
40.2
41.5
41.05
40.5
38.4
39.95
Close
Price
38.6
38.25
39.6
38.5
39.05
35.95
31.75
36.1
37.7
40.45
42.25
41.9
41.3
40.2
41.5
41.05
40.5
38.4
39.95
41.05
Returns
-2.0305
-0.9067
3.5294
-2.7778
1.4286
-7.9385
-11.6829
13.7008
4.4321
7.2944
4.4499
-0.8284
-1.4320
-2.6634
3.2338
-1.0843
-1.3398
-5.1852
4.0365
2.7534
6.9894
(Table 8)
- 62 -
Average
6.9894
6.9894
6.9894
6.9894
6.9894
6.9894
6.9894
6.9894
6.9894
6.9894
6.9894
6.9894
6.9894
6.9894
6.9894
6.9894
6.9894
6.9894
6.9894
6.9894
Difference
-9.0199
-7.8961
-3.4600
-9.7672
-5.5608
-14.9279
-18.6723
6.7114
-2.5573
0.3050
-2.5395
-7.8178
-8.4214
-9.6528
-3.7556
-8.0737
-8.3292
-12.1746
-2.9529
-4.2360
D2
81.3578
62.3490
11.9715
95.3978
30.9228
222.8434
348.6545
45.0427
6.5396
0.0930
6.4489
61.1180
70.9197
93.1773
14.1043
65.1852
69.3761
148.2205
8.7199
17.9433
1460.3853
(Fig 25)
Risk = D2/n-1 = 8.7671
L&T
Symbol
Date
Prev
Close
Close
Price
Returns
Average
Difference
D2
L&T
1-Feb-13
1641.1
1578.5
-3.8145
-6.2520
2.4375
5.9413
L&T
2-Feb-13
1578.5
1573.5
-0.3168
-6.2520
5.9352
35.2271
L&T
3-Feb-13
1573.5
1630.6
3.6289
-6.2520
9.8809
97.6313
L&T
4-Feb-13
1630.6
1570.05
-3.7134
-6.2520
2.5386
6.4447
L&T
7-Feb-13
1570.05
1539.25
-1.9617
-6.2520
4.2903
18.4065
L&T
8-Feb-13
1539.25
1506.9
-2.1017
-6.2520
4.1503
17.2252
L&T
9-Feb-13
1506.9
1481.85
-1.6624
-6.2520
4.5896
21.0649
L&T
10-Feb-13
1481.85
1491.7
0.6647
-6.2520
6.9167
47.8409
L&T
11-Feb-13
1491.7
1556.1
4.3172
-6.2520
10.5692
111.7085
L&T
14-Feb-13
1556.1
1660.15
6.6866
-6.2520
12.9386
167.4071
L&T
15-Feb-13
1660.15
1624.75
-2.1323
-6.2520
4.1197
16.9716
L&T
16-Feb-13
1624.75
1654.5
1.8311
-6.2520
8.0831
65.3357
L&T
17-Feb-13
1654.5
1695.45
2.4751
-6.2520
8.7271
76.1617
L&T
18-Feb-13
1695.45
1639.15
-3.3207
-6.2520
2.9313
8.5928
L&T
21-Feb-13
1639.15
1652.35
0.8053
-6.2520
7.0573
49.8054
L&T
22-Feb-13
1652.35
1605.85
-2.8142
-6.2520
3.4378
11.8186
- 63 -

L&T
23-Feb-13
1605.85
1600.95
-0.3051
-6.2520
5.9469
35.3652
L&T
24-Feb-13
1600.95
1516.4
-5.2812
-6.2520
0.9708
0.9424
L&T
25-Feb-13
1516.4
1513.95
-0.1616
-6.2520
6.0904
37.0934
L&T
28-Feb-13
1513.95
1527.95
0.9247
-6.2520
7.1767
51.5055
-6.2520
882.4898
(Table 9)
(Fig 26)
Risk = D2/n-1 = 6.8152

MAHINDRA & MAHINDRA
Symbol
M&M
M&M
M&M
M&M
M&M
M&M
M&M
M&M
M&M
M&M
M&M
M&M
M&M
M&M
M&M
M&M
M&M
M&M
M&M
M&M
Date
1-Feb-13
2-Feb-13
3-Feb-13
4-Feb-13
7-Feb-13
8-Feb-13
9-Feb-13
10-Feb-13
11-Feb-13
14-Feb-13
15-Feb-13
16-Feb-13
17-Feb-13
18-Feb-13
21-Feb-13
22-Feb-13
23-Feb-13
24-Feb-13
25-Feb-13
28-Feb-13
Prev
Close
713.35
705.8
700.55
705.65
669.5
669.2
627.7
655.2
652.6
665.2
680.1
668.05
655.8
669.55
649.6
651
639.75
640.6
616
595.2
Close
Price
705.8
700.55
705.65
669.5
669.2
627.7
655.2
652.6
665.2
680.1
668.05
655.8
669.55
649.6
651
639.75
640.6
616
595.2
615.75
Returns
-1.0584
-0.7438
0.7280
-5.1229
-0.0448
-6.2014
4.3811
-0.3968
1.9307
2.2399
-1.7718
-1.8337
2.0967
-2.9796
0.2155
-1.7281
0.1329
-3.8401
-3.3766
3.4526
-
- 64 -
Average
-13.9208
-13.9208
-13.9208
-13.9208
-13.9208
-13.9208
-13.9208
-13.9208
-13.9208
-13.9208
-13.9208
-13.9208
-13.9208
-13.9208
-13.9208
-13.9208
-13.9208
-13.9208
-13.9208
-13.9208
Difference
12.8624
13.1770
14.6488
8.7979
13.8760
7.7194
18.3019
13.5240
15.8515
16.1607
12.1490
12.0871
16.0175
10.9412
14.1363
12.1927
14.0537
10.0807
10.5442
17.3734
D2
165.4417
173.6324
214.5873
77.4024
192.5431
59.5886
334.9586
182.8979
251.2713
261.1691
147.5982
146.0981
256.5595
119.7096
199.8355
148.6617
197.5055
101.6195
111.1797
301.8358
3644.0954

13.9208
(Table 10)
(Fig 27)
Risk = D2/n-1 = 13.8490
TATA MOTORS
Symbol
TATAMOTORS
TATAMOTORS
TATAMOTORS
TATAMOTORS
TATAMOTORS
TATAMOTORS
TATAMOTORS
TATAMOTORS
TATAMOTORS
TATAMOTORS
TATAMOTORS
TATAMOTORS
TATAMOTORS
TATAMOTORS
TATAMOTORS
TATAMOTORS
TATAMOTORS
TATAMOTORS
TATAMOTORS
TATAMOTORS
Date
1-Feb-13
2-Feb-13
3-Feb-13
4-Feb-13
7-Feb-13
8-Feb-13
9-Feb-13
10-Feb-13
11-Feb-13
14-Feb-13
15-Feb-13
16-Feb-13
17-Feb-13
18-Feb-13
21-Feb-13
22-Feb-13
23-Feb-13
24-Feb-13
25-Feb-13
28-Feb-13
Prev
Close
1147.05
1069.05
1114.25
1156.8
1150.85
1146.35
1112.25
1073.6
1102.5
1142.7
1209.25
1237.35
1238.45
1248.6
1205.55
1161.75
1136.85
1143.9
1054.4
1110.7
Close
Price
1069.05
1114.25
1156.8
1150.85
1146.35
1112.25
1073.6
1102.5
1142.7
1209.25
1237.35
1238.45
1248.6
1205.55
1161.75
1136.85
1143.9
1054.4
1110.7
1082.75
(Table 11)
- 65 -
Returns
-6.8001
4.2281
3.8187
-0.5143
-0.3910
-2.9747
-3.4749
2.6919
3.6463
5.8239
2.3238
0.0889
0.8196
-3.4479
-3.6332
-2.1433
0.6201
-7.8241
5.3395
-2.5164
-4.3192
Average
-4.1392
-4.1392
-4.1392
-4.1392
-4.1392
-4.1392
-4.1392
-4.1392
-4.1392
-4.1392
-4.1392
-4.1392
-4.1392
-4.1392
-4.1392
-4.1392
-4.1392
-4.1392
-4.1392
-4.1392
Difference
-2.6609
8.3673
7.9579
3.6249
3.7482
1.1645
0.6643
6.8311
7.7855
9.9631
6.4630
4.2281
4.9588
0.6913
0.5060
1.9959
4.7593
-3.6849
9.4787
1.6228
D2
7.0801
70.0109
63.3284
13.1395
14.0489
1.3562
0.4412
46.6636
60.6134
99.2639
41.7698
17.8768
24.5894
0.4779
0.2560
3.9835
22.6513
13.5786
89.8463
2.6334
593.6092
(Fig 28)
Risk = D2/n-1 = 5.5895
CORRELATION CO-EFFICIENTS
CORREALATION CO-EFFICIENT OF BHARTI AIRTEL AND RCOMM
Date
1-Feb-13
2-Feb-13
3-Feb-13
4-Feb-13
7-Feb-13
8-Feb-13
9-Feb-13
10-Feb-13
11-Feb-13
14-Feb-13
15-Feb-13
16-Feb-13
17-Feb-13
18-Feb-13
21-Feb-13
22-Feb-13
23-Feb-13
24-Feb-13
25-Feb-13
28-Feb-13
Returns
-0.5956
1.7975
5.2664
-2.1483
0.4060
-0.1647
-0.3450
-2.8752
-1.1469
2.6497
0.5499
-0.2279
3.4866
-2.5011
-0.1962
-0.0605
-0.6959
-1.1578
1.6492
0.4701
4.1602
Average D1
4.1602
4.1602
4.1602
4.1602
4.1602
4.1602
4.1602
4.1602
4.1602
4.1602
4.1602
4.1602
4.1602
4.1602
4.1602
4.1602
4.1602
4.1602
4.1602
4.1602
-4.7558
-2.3627
1.1062
-6.3085
-3.7542
-4.3249
-4.5052
-7.0354
-5.3071
-1.5105
-3.6103
-4.3881
-0.6736
-6.6613
-4.3564
-4.2207
-4.8561
-5.3180
-2.5110
-3.6901
Returns
Average D2
D22
D1*D2
-3.3836
-1.3080
0.9833
-2.8366
0.7407
-4.4550
-14.3051
2.0602
0.5694
0.1544
4.3679
-1.9202
0.3514
-6.8034
0.4831
1.5491
1.4729
-4.2509
-5.3059
-1.9440
-33.7802
-33.7802
-33.7802
-33.7802
-33.7802
-33.7802
-33.7802
-33.7802
-33.7802
-33.7802
-33.7802
-33.7802
-33.7802
-33.7802
-33.7802
-33.7802
-33.7802
-33.7802
-33.7802
-33.7802
923.9526
1054.443
1208.503
957.5077
1191.695
859.9663
379.2789
1284.536
1179.892
1151.557
1455.28
1015.057
1164.967
727.7476
1173.973
1248.163
1242.782
871.9791
810.7857
1013.546
-144.5604
-76.7207
38.4561
-195.2085
-129.5980
-126.8298
-87.7398
-252.1520
-182.2976
-51.2571
-137.7273
-139.8034
-22.9910
-179.7006
-149.2635
-149.1138
-171.1932
-157.0377
-71.4990
-117.4804
2503.7178
-33.7802
- 66 -
30.3966
32.4722
34.7635
30.9436
34.5209
29.3252
19.4751
35.8404
34.3496
33.9346
38.1481
31.8600
34.1316
26.9768
34.2633
35.3293
35.2531
29.5293
28.4743
31.8362
20915.61

(Table 12)
CORRELATION CO-EFFICIENT
=D1*D2/ D22 = - 0.120
CORREALATION CO-EFFICIENT OF NTPC AND POWERGRID

Date
Returns Average D1
Returns Average D2
D22
D1*D2
1-Feb-13
2-Feb-13
-2.0101
-2.6991
-10.4050
-10.4050
8.3949
7.7059
-0.9322
-0.1045
-19.2291
-19.2291
18.2969
19.1246
334.7780
365.7485
153.6019
147.3727
3-Feb-13
4-Feb-13
7-Feb-13
8-Feb-13
9-Feb-13
10-Feb-13
11-Feb-13
14-Feb-13
15-Feb-13
16-Feb-13
17-Feb-13
18-Feb-13
21-Feb-13
22-Feb-13
23-Feb-13
24-Feb-13
25-Feb-13
28-Feb-13
1.1373
-2.9347
1.4976
-3.0345
-1.6078
-0.5544
3.7852
0.7068
1.5722
0.3870
-0.4130
-0.9953
-1.3404
-0.4529
-1.6776
-1.1278
-0.6435
0.0000
10.4050
-10.4050
-10.4050
-10.4050
-10.4050
-10.4050
-10.4050
-10.4050
-10.4050
-10.4050
-10.4050
-10.4050
-10.4050
-10.4050
-10.4050
-10.4050
-10.4050
-10.4050
-10.4050
11.5423
7.4703
11.9026
7.3705
8.7972
9.8506
14.1902
11.1118
11.9772
10.7920
9.9920
9.4097
9.0646
9.9521
8.7274
9.2772
9.7615
10.4050
3.2444
-1.3685
0.5139
-2.1472
0.2090
-0.5214
1.0482
2.2303
0.2029
-0.1519
0.0000
-0.5071
0.8665
-0.5053
1.1681
-1.3554
0.9669
-0.2520
-19.2291
-19.2291
-19.2291
-19.2291
-19.2291
-19.2291
-19.2291
-19.2291
-19.2291
-19.2291
-19.2291
-19.2291
-19.2291
-19.2291
-19.2291
-19.2291
-19.2291
-19.2291
22.4735
17.8606
19.7430
17.0819
19.4381
18.7077
20.2773
21.4594
19.4320
19.0772
19.2291
18.7220
20.0956
18.7238
20.3972
17.8737
20.1960
18.9771
505.0571
319.0019
389.7850
291.7900
377.8392
349.9789
411.1696
460.5054
377.6043
363.9396
369.7583
350.5133
403.8316
350.5805
416.0460
319.4684
407.8793
360.1297
259.3958
133.4238
234.9927
125.9015
171.0006
184.2819
287.7394
238.4527
232.7405
205.8803
192.1373
176.1684
182.1581
186.3416
178.0153
165.8173
197.1442
197.4566
7525.4047
3850.0226
2.6046
(Table 13)
- 67 -
=D1*D2/ D22 = 0.5355
CORREALATION CO-EFFICIENT OF RANBAXY AND DR REDDY LABS
Date
Returns
Average D1
1-Feb-13
2-Feb-13
3-Feb-13
4-Feb-13
7-Feb-13
8-Feb-13
9-Feb-13
10-Feb-13
11-Feb-13
14-Feb-13
15-Feb-13
16-Feb-13
17-Feb-13
18-Feb-13
21-Feb-13
22-Feb-13
23-Feb-13
24-Feb-13
25-Feb-13
28-Feb-13
-1.75278
0.737904
-0.34307
-2.37253
-2.63032
-2.47627
-1.97712
2.20129
0.741334
2.824185
-0.16441
-1.06558
0.303535
-1.37642
0.791844
-3.31926
-6.18588
-4.34171
1.675156
-3.22832
-21.9584
-21.9584
-21.9584
-21.9584
-21.9584
-21.9584
-21.9584
-21.9584
-21.9584
-21.9584
-21.9584
-21.9584
-21.9584
-21.9584
-21.9584
-21.9584
-21.9584
-21.9584
-21.9584
-21.9584
-21.9584
20.2056
22.6963
21.6153
19.5859
19.3281
19.4821
19.9813
24.1597
22.6997
24.7826
21.794
20.8928
22.2619
20.582
22.7502
18.6391
15.7725
17.6167
23.6336
18.7301
Returns Average D2
-0.9173
0.2517
-0.8089
-1.2154
-0.9963
-1.9519
-1.0524
-1.7913
0.4023
2.9320
-0.1655
-1.7808
0.9694
0.7537
-0.0065
0.8782
1.7604
-4.9396
1.8199
1.2178
-4.6404
(Table 14)
=D1*D2/ D22 = 4.17036
- 68 -
-4.6404
-4.6404
-4.6404
-4.6404
-4.6404
-4.6404
-4.6404
-4.6404
-4.6404
-4.6404
-4.6404
-4.6404
-4.6404
-4.6404
-4.6404
-4.6404
-4.6404
-4.6404
-4.6404
-4.6404
3.7231
4.8921
3.8316
3.4251
3.6442
2.6886
3.5880
2.8491
5.0428
7.5725
4.4750
2.8596
5.6099
5.3941
4.6339
5.5186
6.4009
-0.2992
6.4603
5.8582
D22
D1*D2
13.8614
23.9326
14.6811
11.7312
13.2800
7.2283
12.8741
8.1176
25.4297
57.3425
20.0254
8.1773
31.4706
29.0965
21.4734
30.4553
40.9712
0.0895
41.7357
34.3185
446.2919
75.2274
111.0325
82.8211
67.0832
70.4348
52.3787
71.6938
68.8343
114.4699
187.6657
97.5277
59.7451
124.8865
111.0217
105.4232
102.8626
100.9580
-5.2709
152.6803
109.7245
1861.1999
CORREALATION CO-EFFICIENT OF GMR INFRA AND L&T

Date
Returns
1-Feb-13
2-Feb-13
3-Feb-13
4-Feb-13
7-Feb-13
8-Feb-13
9-Feb-13
10-Feb-13
11-Feb-13
14-Feb-13
15-Feb-13
16-Feb-13
17-Feb-13
18-Feb-13
21-Feb-13
22-Feb-13
23-Feb-13
24-Feb-13
25-Feb-13
28-Feb-13
-2.0305
-0.9067
3.5294
-2.7778
1.4286
-7.9385
-11.6829
13.7008
4.4321
7.2944
4.4499
-0.8284
-1.4320
-2.6634
3.2338
-1.0843
-1.3398
-5.1852
4.0365
2.7534
6.9894
Average D1
6.9894
6.9894
6.9894
6.9894
6.9894
6.9894
6.9894
6.9894
6.9894
6.9894
6.9894
6.9894
6.9894
6.9894
6.9894
6.9894
6.9894
6.9894
6.9894
6.9894
-9.0199
-7.8961
-3.4600
-9.7672
-5.5608
-14.9279
-18.6723
6.7114
-2.5573
0.3050
-2.5395
-7.8178
-8.4214
-9.6528
-3.7556
-8.0737
-8.3292
-12.1746
-2.9529
-4.2360
Returns
Average D2
D22
D1*D2
-3.81451
-0.31676
3.628853
-3.71336
-1.96172
-2.10167
-1.66235
0.66471
4.317222
6.686588
-2.13234
1.831051
2.475068
-3.32065
0.805295
-2.81417
-0.30513
-5.28124
-0.16157
0.924733
-6.25196
-10.6579
-10.6579
-10.6579
-10.6579
-10.6579
-10.6579
-10.6579
-10.6579
-10.6579
-10.6579
-10.6579
-10.6579
-10.6579
-10.6579
-10.6579
-10.6579
-10.6579
-10.6579
-10.6579
-10.6579
46.8319
106.9393
204.1113
48.2267
75.6235
73.2090
80.9199
128.2015
224.2543
300.8313
72.6852
155.9739
172.4748
53.8352
131.4048
61.5240
107.1798
28.9085
110.1730
134.1574
2317.4653
-61.7264
-81.6551
-49.4320
-67.8286
-48.3580
-127.7268
-167.9675
75.9904
-38.2954
5.2906
-21.6503
-97.6362
-110.5977
-70.8253
-43.0508
-63.3282
-86.2306
-65.4586
-30.9951
-49.0636
-1200.5450
(Table 15)
=D1*D2/ D22 = -0.5180
- 69 -
6.8434
10.3411
14.2868
6.9445
8.6962
8.5562
8.9955
11.3226
14.9751
17.3445
8.5256
12.4890
13.1330
7.3372
11.4632
7.8437
10.3528
5.3767
10.4963
11.5826
CORREALATION CO-EFFICIENT OF
MAHINDRA AND MAHINDRA AND TATA MOTORS
Date
Returns
Average D1
1-Feb-13
2-Feb-13
3-Feb-13
4-Feb-13
7-Feb-13
8-Feb-13
9-Feb-13
10-Feb-13
11-Feb-13
14-Feb-13
15-Feb-13
16-Feb-13
17-Feb-13
18-Feb-13
21-Feb-13
22-Feb-13
23-Feb-13
24-Feb-13
25-Feb-13
28-Feb-13
-1.0584
-0.7438
0.7280
-5.1229
-0.0448
-6.2014
4.3811
-0.3968
1.9307
2.2399
-1.7718
-1.8337
2.0967
-2.9796
0.2155
-1.7281
0.1329
-3.8401
-3.3766
3.4526
-13.9208
-13.9208
-13.9208
-13.9208
-13.9208
-13.9208
-13.9208
-13.9208
-13.9208
-13.9208
-13.9208
-13.9208
-13.9208
-13.9208
-13.9208
-13.9208
-13.9208
-13.9208
-13.9208
-13.9208
-13.9208
12.8624
13.1770
14.6488
8.7979
13.8760
7.7194
18.3019
13.5240
15.8515
16.1607
12.1490
12.0871
16.0175
10.9412
14.1363
12.1927
14.0537
10.0807
10.5442
17.3734
Returns Average D2
-6.8001
4.2281
3.8187
-0.5143
-0.3910
-2.9747
-3.4749
2.6919
3.6463
5.8239
2.3238
0.0889
0.8196
-3.4479
-3.6332
-2.1433
0.6201
-7.8241
5.3395
-2.5164
-4.3192
-4.3192
-4.3192
-4.3192
-4.3192
-4.3192
-4.3192
-4.3192
-4.3192
-4.3192
-4.3192
-4.3192
-4.3192
-4.3192
-4.3192
-4.3192
-4.3192
-4.3192
-4.3192
-4.3192
-4.3192
(Table 16)
=D1*D2/ D22 = 1.81211
- 70 -
-2.4809
8.5473
8.1379
3.8049
3.9282
1.3445
0.8443
7.0111
7.9655
10.1431
6.6430
4.4081
5.1388
0.8713
0.6860
2.1759
4.9393
-3.5049
9.6587
1.8028
D22
D1*D2
6.1546
73.0555
66.2256
14.4769
15.4306
1.8078
0.7128
49.1552
63.4485
102.8830
44.1288
19.4313
26.4070
0.7592
0.4706
4.7345
24.3970
12.2844
93.2911
3.2500
622.5045
-31.9097
112.6268
119.2106
33.4746
54.5075
10.3790
15.4516
94.8176
126.2648
163.9203
80.7053
53.2812
82.3102
9.5335
9.6976
26.5299
69.4158
-35.3318
101.8434
31.3203
1128.0481
CONSTRUCTING A PORTFOLIO:
PORTFOLIO OF
BHARTI AIRTEL & RELIANCE COMMUNICATION
r1= 4.1602
r2= -33.7802
1= 4.5187
2= 33.1786
r1, 2= -0.120
Assume w1=50%
=0.5
w2=50
=0.5
Return of portfolio: Rp1 = w1.r1+w2.r2

= (0.5*4.1602) + (0.5* -33.7802)
= 2.0801 16.8901
Rp1 = -14.81
Risk of Portfolio: p1= (w1212+w2222+2w1w212r12

= (0.5)2*(4.5187)2+ (0.5)*(33.1786)2+2*0.5*0.5*1.922*1.7298 *0.0785)
= (0.25*20.42 + 0.25*1100.82 + 8.995)
= (5.105 + 275.205 8.995)
= (271.315)
- 71 -

p1= 16.47
PORTFOLIO OF NTPC & POWERGRID

r1= -10.4050 r2= 2.6046
1= 10.2840
2= 2.8301
r1, 2= 0.5355
Assume w1=50%
=0.5
w2=50
=0.5

= (0.5*-10.4050) + (0.5* 2.6046)
= -5.2025 + 1.3023
Rp1 = -3.90

= (0.5)2*(10.2840)2+ (0.5)*(2.8301)2+2*0.5*0.5*10.2840*2.8301 *0.5355)
= (0.25*105.76 + 0.25*8.009 + 7.79)
= (26.44 + 2.002 + 7.79)
= (36.232)
p1= 6.02
- 72 -
PORTFOLIO OF RANBAXY & DR. REDDY LABS

r1= -21.9584 r2= -4.6404
1= 21.5259
2= 4.8465
r1, 2= 4.1704
Assume w1=50%
=0.5
w2=50
=0.5

= (0.5*-21.9584) + (0.5* -4.6404)
= -10.9792 2.3202
Rp1 = -13.29

= (0.5)2*(-21.5259)2+ (0.5)*(4.8465)2+2*0.5*0.5*21.5259*4.8465*4.1704)
= (0.25*463.36 + 0.25*23.49 + 217.539)
= (115.84 + 5.87 217.539)
= (339.249)
p1= 18.42
- 73 -
PORTFOLIO OF GMR INFRA & L&T

r1= 6.9894
r2= -6.2520
1= 8.7671
2= 6.8152
r1, 2= -0.5180
Assume w1=50%
=0.5
w2=50
=0.5

= (0.5*6.9894) + (0.5* -6.2520)
= 3.49 3.126
Rp1 = 0.3687

= (0.5)2*(8.7671)2+ (0.5)*(6.8152)2+2*0.5*0.5*8.7671*6.8152*-0.5180)
= (0.25*76.86 + 0.25*46.45 15.47)
= (19.215 + 11.61 15.47)
= (15.355)
p1= 3.92
- 74 -
PORTFOLIO OF MAHINDRA&MAHINDRA AND TATA MOTORS
r1= 13.9208
1= 13.8490
r2= -4.3192
2= 5.5895
r1, 2= 1.8121
Assume w1=50%
=0.5
w2=50
=0.5

= (0.5*13.9208) + (0.5* -4.3192)
= 6.96 2.1596
Rp1 = 4.8

= (0.5)2*(13.8490)2+ (0.5)*(5.5895)2+2*0.5*0.5*13.8490*5.5895*4.1704)
= (0.25*193.79 + 0.25*18.65 70.128)
= (48.45 + 4.66 70.128)
= (123.238)
- 75 -

p1= 11.10
STATEMENT OF EXPECTED RETURNS OF COMPANIES

COMPANIES
EXPECTED
RETURNS
BHARTI AIRTEL
R COMM
NTPC
POWER GRID
4.16
-33.78
-10.4
2.6
RANBAXY
-21.96
DR REDDY
-4.64
GMR INFRA
6.99
L&T
-6.25
M&M
-13.92
TATA MOTORS
-4.32
(Table 17)
EXPECTED RETURS OF COMPANIES
- 76 -
(Fig 29)
STATEMENT OF RISK OF COMPANIES

COMPANIES
BHARTI AIRTEL
RISK
4.52
R COMM
33.18
NTPC
10.28
POWER GRID
2.83
RANBAXY
21.53
DR REDDY
4.85
GMR INFRA
8.77
LT
6.82
M&M
TATA MOTORS
13.85
5.59
(Table 18)
- 77 -
GRAPH STATEMENT OF RISK OF COMPANIES
(Fig 30)
STATEMENT SHOWING
COMPARISON OF PORTFOLIO RETURNS AND
RISK
COMPANIES
BHARTI AIRTEL &

RELIANCE
COMMUNICATION
NTPC & POWERGRID
RANBAXY & DR. REDDY
LABS
GMR INFRA & LT
EXPECTED
RETURNS
-14.81
RISK
-3.90
6.02
-13.29
18.42
0.37
3.92
16.47
- 78 -
MAHINDRA&MAHINDRA 4.8
AND TATA MOTORS
11.10
(Table 19)
EXPECTED RETURNS AND RISK OF COMPANIES
(Fig 31)
- 79 -
CHAPTER - V
FINDINGS, SUGGESTIONS
&
CONCLUSIONS
- 80 -
FINDINGS
QUESTIONNAIRE FINDINGS
There is considerable rise in the working female population. 35% of the respondents are working
females earning good remuneration.
46% respondents prefer fixed deposits, 19% post office deposits, 4% chit funds. A considerable 23%
also prefer stock market.
29% are aware of stock market, 35% about mutual funds, 14% about IPOs 7% bonds, 7% bullion,
4ULIPs, and rest 4% prefer other options.
80% respondents feel stock market as a very risky option, 10% feel it as a gambling and another
only 10% feel it is a safe option.
Only 40% respondents are willing to invest in stock market.
Only 45% are aware of the online share trading.
A 75% are satisfied with their current investment portfolio.
A 75% respondent recognizes Reliance Money as one of the leading stock broking company.
- 81 -
FINDINGS FROM DATA ANALYSIS

CALCULATED EXPECTED RETURNS AND RISKS
Company name
Expected returns (%)
Risks (%)
TELE COMMUNICATION
BHARTI AIRTEL
R COMM
4.16
4.52
-33.78
33.18
POWER
NTPC
POWERGRID
-10.40
10.28
2.60
2.83
PHARMACEUTICALS
RANBAXY
-21.96
21.53
DR REDDY
-4.64
4.85
CONSTRUCTION & ENGINEERING

GMR INFRA
6.99
8.77
LT
-6.25
6.82
AUTOMOBILES
M&M
-13.92
13.85
TATA MOTORS
-4.32
5.59
- 82 -

TELE COMMUNICATION
The expected return of Bharti Airtel is 4.16 and Reliance Communication is -33.78 respectively, and
the risk is 4.52 and 33.18 respectively.
POWER:
The expected returns of NTPC and POWERGRID are -10.40 and 2.60 respectively and their risk is
10.28 and 2.83 respectively.
PHARMACEUTICALS
The expected returns of RANBAXY and Dr REDDY LABS are -21.96 and -4.64, and their risk is
are 21.53 and 4.85 respectively.
CONSTRUCTION & ENGINEERING:

The expected returns of GMR INFRA and L&T are 6.99 and -6.25 respectively. And their risk is
8.77 and 6.82.
AUTOMOBILES
The expected returns of Mahindra & Mahindra and TATA Motors are -13.92 and -4.32 respectively.
And their risk is 13.85 and 5.59.
- 83 -

CORRELATION COEFFICIENT BETWEEN THE COMPANIES
Company name
Correlation Coefficients (r)

TELE COMMUNICATION
BHARTI AIRTEL
-0.120
R COMM
POWER
NTPC
0.535
POWERGRID
PHARMACEUTICALS
RANBAXY
4.170
DR REDDY
CONSTRUCTION & ENGINEERING

GMR INFRA
-0.518
LT
AUTOMOBILES
M&M
1.812
TATA MOTORS
- 84 -
TELE COMMUNICATION
The combination of Bharti Airtel and Reliance Communication are having a correlation of - 0.120.
POWER:
The combination of NTPC and POWERGRID are having a correlation of 0.535.
PHARMACEUTICALS
The combination of Ranbaxy and Dr Reddy Labs are having a correlation of 4.170.
CONSTRUCTION & ENGINEERING:

The combination of GMR Infra and L&T are having a correlation of -0.518
AUTOMOBILES
The combination of M&M and TATA Motors are having a correlation of 1.812.
- 85 -
SUGGESTIONS:
The respondents being working professionals should be aware of requirement of various financial
proofs and tools like personal bank account, credit card, PAN Card, Demat account. A very low
percentage of respondents posses all kinds of financial documents.
The respondents are not feeling stock market as a trustable place to invest their savings. There
should be financial education made as a special requirement in the academic curriculum to male the
young generation have more knowledge about the markets and can decide what they want and where
they should invest their savings.
The respondents need to be given full disclosure about the details about various investment options
available to them and so they can decide themselves what is required and suitable to them.
The stock broking companies should conduct various awareness campaigns to make the general
investors aware of the situation of the market and various investment avenues available to them.
The stock broking companies should make fair dealings with the investors, use corporate
governance, social responsibility activities to win the trust of investors and show concerned interest
towards the inquiries of the investors.
Dont put your trust in only one investment. It is like putting all the eggs in one basket . This will
help reduce the risk in the long term.
Select your investments on economic grounds. Public knowledge is no advantage. Listen to rumors
and tips, check for yourself. The investor must select the right advisory body which is has sound
knowledge about the product which they are offering.
Professionalized advisory is the most important feature to the investors. Professionalized research,
analysis which will be helpful for reducing any kind of risk to overcome.
- 86 -
CONCLUSIONS
Conclusions for Portfolio Risk, Return & Investments

The conclusion on this study is formed on the basis of data analysis made from the 1 month (February)
CNX 100 Index from National Stock Exchange listed companies. The conclusions are based on Markowitz
Model of Portfolio Theory.
BHARTI AIRTEL & RELIANCE COMMUNICATION: Both the companies are one of the most top
Tele communication companies. BHARTI AIRTEL is giving positive returns of 4.16 with calculated risk at
4.52. The Reliance Communication shows negative returns of -33.78 and a high calculated risk of 33.18.
The combined correlation coefficient is -0.120.
NTPC & POWERGRID: Both the companies are one of the most top Power companies. NTPC is giving
negative returns of -10.40 with calculated risk at 10.28. The POWERGRID shows negative returns of 2.60
and a high calculated risk of 2.83. The combined correlation coefficient is 0.535.
RANBAXY & DR REDDY LABS: Both the companies are one of the most top Pharmaceuticals
companies. RANBAXY is giving negative returns of -21.96 with calculated risk at 21.53. The DR REDDY
LABS shows negative returns of -4.64 and a high calculated risk of 4.85. The combined correlation
coefficient is 4.170.
RANBAXY & DR REDDY LABS: both the companies are one of the most top Pharmaceuticals
companies. RANBAXY is giving negative returns of -21.96 with calculated risk at 21.53. The DR REDDY
LABS shows negative returns of -4.64 and a high calculated risk of 4.85. The combined correlation
coefficient is 4.170.
- 87 -

GMR INFRA & L&T: Both the companies are one of the most top Infrastructure & Engineering
companies. GMR Infra is giving positive returns of 6.99 with calculated risk at 8.77. The L&T shows
negative returns of -6.25 and a calculated risk of 6.82. The combined correlation coefficient is -0.518.
MAHINDRA AND MAHINDRA & TATA MOTORS: Both the companies are one of the most top
Automobile companies. M&M is giving negative returns of -13.92 with calculated risk at 13.85. The TATA
Motors shows negative returns of -4.32 and a calculated risk of 5.59. The combined correlation coefficient is
1.812.
- 88 -
CHAPTER - VI
BIBLIOGRAPHY
- 89 -
Books referred:
Robert A. Strong, Portfolio Management Handbook, 2006, Fourth Edition, Jaico Publishing House,
page No: 85-88, 475-476.
Donald E. Fischer, Ronald J. Jordan, Portfolio Analysis, SAPM , 1999, Sixth Edition, , page no: 559588, page no: 636-648
Punithavathy Pandian, Security Analysis & Portfolio Management, 2007, Portfolio Markowitz
Model, page no: 329-349.
Prasanna Chandra, Investment Analysis & Portfolio Management, 2006, Second edition, Efficient
Frontier, page no: 251-259
Websites:
www.reliancemoney.com
www.reliancecapital.com
www.moneycontrol.com
www.bseindia.com
www.nseindia.com
www.sebi.gov.in
www.amfiindia.com
www.investopedia.com
www.economictimes.com
Business Journals:
Business world-2008
- 90 -
Outlook Money-2008
Economic Times Times of India.
CHAPTER - VII
APPENDIX
- 91 -
QUESTIONNAIRE
(Note: This questionnaire is used as a part of data collection for academic project.)
Q1. Is it a safe option on investing in Stock Market?

Yes
No
Q2. Are you willing to invest in Stock Market?
Yes
No
Q3. Do you have any of your own company stocks in your portfolio?
Yes
No
Q4. Invest in the direct stocks and managed funds are useful?
Agree
Strongly agree
neutral
Disagree
Strongly disagree
Q5. Are you aware of online share trading?

Yes
No
Q6. You invest up to 25%, is it better savings?
Agree
Strongly agree
neutral
Disagree
Strongly disagree
Q7. Are you satisfied with your current investment portfolio?

Yes
No
Q8. Have you heard about Reliance Capital?
Yes
No
Q9. In an effort to grow your wealth, can you afford to lose any money over the next two years?
Yes
No
Q10. Portfolio is a combination of various assets and instruments of investments.
Agree
Strongly agree
neutral
Disagree
Strongly disagree
Q11. In the management of investments both risk and return are vital, to a great extent in creating
value of the company
Agree
Strongly agree
neutral
Disagree
Strongly disagree
Q12. Portfolio management is all about strengths, weaknesses, opportunities and threats in the
choice of debt vs. equity, domestic vs. international, growth vs safety?
Agree
Strongly agree
neutral
Disagree
- 92 -
Strongly disagree

Q13. Banks and other financial institutions generally create a portfolio of fixed income securities to
fund liabilities
Agree
Strongly agree
neutral
Disagree
Strongly disagree
Q14. Portfolio management is the art of managing the expected return requirement for the
corresponding risk tolerance
Agree
Strongly agree
neutral
Disagree
Strongly disagree
Q15 The relevant risk of an asset contributes more to a widely-held portfolio

Yes
No
Q16. Investors have homogenous information about different assets?
Agree
Strongly agree
neutral
Disagree
Strongly disagree
Q17. All investors are risk-adverse, that is they will only accept greater risk if they are
compensated with a higher expected return
Agree
Strongly agree
neutral
Disagree
Strongly disagree
Q18. Markets are inefficient when prices of securities assimilate and reflect information about
them
Agree
Strongly agree
neutral
Disagree
Strongly disagree
Q19. Do u agree that constructing the optimal portfolio, such as risk-free, taxes, transaction cost
and benchmark portfolio maximizes the return and minimizes the risk?
Agree
Strongly agree
neutral
Disagree
Strongly disagree
Q20. Do u agree that Reliance capital provides Investors with better Portfolio Management
Services?
Agree
Strongly agree
neutral
Disagree
- 93 -
Strongly disagree
Dichotomous Table
YES-1 NO-2
SL.N
O
NAME
1
ANIL
2
RISHI
SANTHOS
3
H
4 MAHESH
5
SUDHIR
6 PRABHA
7 RAKESH
8 BHASKAR
9
ARJUN
10
ASHOK
11
PRIYA
12
SHILPA
13 KISHORE
14
SAGAR
15
MURALI
16 SHANTHI
17 SWAPNA
18 GANESH
19
VISHNU
20
SUMAN
21 SINDHU
22 SAIRAM
23 SANTOSH
24 NARESH
25
SUJITH
26
AJAY
27
AKHIL
28 KRISHNA
29 MICHAEL
30 PRASANA
31
BALU
32
BALRAJ
33
VARUN
34
KIRAN
35
NIKHIL
36
GOPI
37
MOHAN
MADHUK
38
AR
Q Q Q
Q1
Q1 2
3
5
Q7 Q8 Q9 5
1
2
1
1
1
1
1
1
1
2
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
2
2
2
2
2
2
2
2
1
1
1
1
1
1
1
1
1
1
2
2
2
2
2
2
2
2
2
2
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
2
2
2
2
2
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
2
1
1
1
2
1
1
1
1
1
1
1
1
1
1
2
1
1
1
1
1
1
1
2
1
1
1
1
2
1
2
1
2
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
1
1
- 94 -

39
40
41
42
43
44
45
46
47
48
49
50
ANUSH
VIKRAM
SUDHAKA
R
MAHESH
HEMA
BHARATH
I
VARSHA
RAKESH
VAMSHI
MADHAN
ROMESH
SUNIL
1
1
1
1
2
2
1
1
2
2
1
1
1
1
1
1
2
2
2
1
1
1
2
2
2
1
1
1
2
2
2
1
1
1
1
1
1
1
1
1
2
2
2
2
2
2
2
1
1
1
1
1
1
1
2
2
2
2
2
2
2
1
1
1
1
1
1
1
2
2
2
2
2
2
2
1
1
1
1
1
1
1
1
1
1
1
2
2
2
1
1
1
1
1
1
1
- 95 -

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PORTFOLIO MANAGEMENT SERVICES

The Project report

Project submitted in partial fulfillment for the award of the degree of

GRAHAMBELL INSTITUTE OF TECHNOLOGY AND SCIENCE

Osmania University , Hyderabad -500007

PORTFOLIO MANAGEMENT SERVICES

is a bonafide work undertaken by me as a partial requirement of the academic

Signature of the student

PORTFOLIO MANAGEMENT SERVICES

This is to certify that the Project Report titled PORTFOLIO MANAGEMENT

Signature of Associate Professor of Management

PORTFOLIO MANAGEMENT SERVICES

PORTFOLIO MANAGEMENT SERVICES

PORTFOLIO MANAGEMENT SERVICES

1.2 Need for the study

1.3 Objective of the study

1.4 Research methodology

1.5 Scope of the study

1.6 Limitation of the Project

PORTFOLIO MANAGEMENT SERVICES

PORTFOLIO MANAGEMENT SERVICES

The essential quality of an investment is that it involves waiting for a reward.

PORTFOLIO MANAGEMENT SERVICES

IMPORTANCE OF THE STUDY

PORTFOLIO MANAGEMENT SERVICES

A portfolio is a collection of investments held by an institution or a private individual. Holding a

NEED FOR THE STUDY

PORTFOLIO MANAGEMENT SERVICES

OBJECTIVES OF THE STUDY

To study about the portfolio management services provided by Reliance Money.

PORTFOLIO MANAGEMENT SERVICES

To study the various stages involved in portfolio management services.

To study the benefits of creating an investment portfolio.

PORTFOLIO MANAGEMENT SERVICES

A structures questionnaire is distributed to a sample size of 30 respondents of young and

Structured interviews with the respondents of the questionnaire.

Secondary Data: - Referring to

Website of the company

Other project works.

PORTFOLIO MANAGEMENT SERVICES

LIMITATIONS OF THE PROJECT

Construction of Portfolio is restricted to randomly selected company scrips based on Markowitz

The questionnaire analysis is based on the responses provided by the respondents.

PORTFOLIO MANAGEMENT SERVICES

PORTFOLIO MANAGEMENT SERVICES

PORTFOLIO THEORY - INTRODUCTION

PORTFOLIO MANAGEMENT SERVICES

So where should individuals park their money now?

PORTFOLIO MANAGEMENT SERVICES

PORTFOLIO MANAGEMENT SERVICES

Post office deposits

Provident fund deposits

Blue chip shares

PORTFOLIO MANAGEMENT SERVICES

Government of India relief bonds

Government agency securities

Debentures of private sector companies

Endowment assurance policy