0% found this document useful (0 votes)
91 views58 pages

As Partial Fulfillment of PGDM Program, Iind Year: A Project Report On

This document provides an overview of a project report on portfolio management services submitted by Neha Singh as a partial fulfillment of her PGDM program. The report includes an acknowledgment, index, and 14 chapters discussing topics such as the company profile, purpose of the project, research methodology, introduction to investments and portfolio management, investment avenues, a virtual portfolio example, findings, suggestions, and conclusions. The company profile describes N. G. Rathi Securities Pvt Ltd and their role in providing brokerage and financial services to investors.

Uploaded by

Pankaj
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
0% found this document useful (0 votes)
91 views58 pages

As Partial Fulfillment of PGDM Program, Iind Year: A Project Report On

This document provides an overview of a project report on portfolio management services submitted by Neha Singh as a partial fulfillment of her PGDM program. The report includes an acknowledgment, index, and 14 chapters discussing topics such as the company profile, purpose of the project, research methodology, introduction to investments and portfolio management, investment avenues, a virtual portfolio example, findings, suggestions, and conclusions. The company profile describes N. G. Rathi Securities Pvt Ltd and their role in providing brokerage and financial services to investors.

Uploaded by

Pankaj
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
You are on page 1/ 58

A Project report

On

“PORTFOLIO MANAGEMNET SERVICES”

As PARTIAL FULFILLMENT OF PGDM PROGRAM,


IInd year

Submitted by:
NEHA SINGH
ROLL NO:-DM11FM48
SPECIALIZATION: FIN

PUNE
2011-2013

1
ACKNOWLEDGEMENT

I take immense pleasure in completing this project and submitting the final project report. A successful project can

never be prepared by the singular effort of the person to whom project is assigned but, it also demand the help and

guardianship of some conversant person who undersigned actively or passively in the completion of a successful

project.

I would like to express my sincere thanks to my Director, Prof. bhat for giving me the opportunity to be a part of an

esteemed institution and without whose support this project would not have been possible.The last two months with

N G RATHI SECURITIES PVT LTD has been full of learning and sense of contribution toward the organization. I

would like to thank N G RATHI SECURITIES PVT LTD .giving me this opportunity for learning and

contributing. I take this opportunity to thank all those people who made this experience a memorable one.

In this context, as a student of MAHATMA PHULE INSTITUTE OF MANAGEMENT, PUNE would first of all like

to express my thank fullness to Mr.---------, for assigning me such a worthwhile title (“PORTFOLIO

MANAGEMENT”)During the actual project work, Mr. ----------(PROJECT GUIDE) has been a source of

inspiration through his constant guidance, personal interest, encouragement and help. I convey my sincere thanks to

him. In spite of his busy schedule he always found time to guide me through the project.

INDEX

2
Sr. No. Topic Page No.

3
1) Executive Summary 4

2) Company Profile 7

3) Purpose of Project 20

4) Research Methodology 22

5) Introduction to Investments 26

6) Portfolio Management 34

Introduction 35

Scope 37

Objectives 38

Types of Portfolio 39

7) Investment Avenues 47

- Physical Assets 48

- Financial Assets 50

8) Virtual Portfolio 53

9) Findings 56

10) Suggestions 59

11) Limitations 61

12) Conclusion 63

13) Bibliography 66

14) Annexure 68

4
5
CHAPTER 1

6
EXECUTIVE SUMMARY

The project at N G RATHI SECURITIES PVT LTD. i.e. “Portfolio Management

Services” helps the individual investors in constructing a portfolio from the funds

they want to put in the various securities or financial instruments that are available

in the market.

This project is divided into three phases

The first part emphasizes on the entire methodology of my study the parameters

kept in the mind while designing of the report, various sources of data collection.

Also company’s detail, objective of project etc in detail is done.

Then second part emphasizes on an introduction to investments need for financial

planning what is a “Portfolio Management Service”. The objective of portfolio is to

diversify risk, the various investment avenues and product offered in PMS along

with its objective and advantages. The report emphasizes on portfolio management

& the types of portfolio and various activities of portfolio management.

Then in the third part there is an example of virtual designed portfolio. It also

consists of my learning’s from the project and few suggestions for the organization

which I feel will be useful for them in improving their services even further. This

phase of the project talks about the final CRUX of the report under the name of

conclusion, it talks all about the findings and my beautiful experience with “N G

RATHI SECURITIES PVT LTD ”.

7
CHAPTER 2

COMPANY PROFILE

Company Profile

N.G.Rathi is one kind of mediator between clients that are investors and Exchange

board. Without mediator nobody can directly purchased shares from the exchange.

Sharekhan is one of the leading stock broking companies in India. Sharekhan is the

retail broking arm of Rathi group, an organization with more than 14 years of trust

and credibility in the stock market. But before 7 years the business was changed

from being a discount brokerage house to complete investment solutions provider.

Sharekhan was officially launched in February 2000 as a brand rathi group. With

branches and outlets across the country, their ground network is one of the biggest in

India!

History of N.G.Rathi

A member of the Bombay Stock Exchange for the last 3 generations and serving

investors since 1922, Rathi is a member of the National Stock Exchange, the Inter-

connected stock exchange and a depository participant registered with both NSDL &

CDSL. SSKI made its foray into institutional broking and corporate finance 19 years

ago. Mr. Nitin & Grish, chairman of the rathi group turned into a professional outfit

and established the group as the pioneer of the investment research in the Indian

market.

8
N.g.rathi as been voted as Top Domestic Brokerage House in the research category

as well as derivatives, depository services, commodities trading on the MCX &

NCDEX and most importantly, investment advice tempered by eighty years of

broking experience. Sharekhan is known for its research and it big share of its profit

on research.

Role of N.G.Rathi

 Interface between the stock exchange and the investor.

 Assistance to investors in precise allocation of funds.

 Building awareness amongst general public about stock market

N.G.Rathi Limited is a retail financial services provider with a focus on Equities,

Derivatives and Commodities, Brokerage execution on the National Stock Exchange

of India Ltd. (NSE), Bombay Stock Exchange Ltd. (BSE), National Commodity and

Derivatives Exchange India (NCDEX) and Multi-Commodity Exchange of India

Ltd. (MCX).

N.G.Rathi provides trade execution services through multiple channels - an Internet

platform, Telephone and Retail Outlets and is present in 225 cities through a

network of 615 locations. The company was awarded the 2005 Most Preferred Stock

Broking Brand by Awwaz Consumer Vote.

N.G.Rathi covers the entire spectrum of financial services such as Stock broking,

Depository Participants, Distribution of financial products like Mutual Funds,

Bonds, Fixed Deposit, Merchant Banking and Corporate Finance, Insurance

Broking, Commodities Broking, Personal Finance Advisory Services, Placement of

Equity, IPO’s, among others

9
A N.G.Rathi outlet offers the following services:

 Online BSE and NSE executions (through BOLT & NEAT terminals).

 Free access to investment advice from rathi Research team.

 Daily research reports and market review (High Noon & Eagle Eye).

 Pre-market Report (Morning Cuppa).

 Daily trading calls based on Technical Analysis.

 Cool trading products (Daring Derivatives and Market Strategy).

 Personalized Advice.

 Live Market Information.

 Depository Services: Demat & Remat Transactions.

 Derivatives Trading (Futures and Options).

 Commodities Trading.

 IPO’s & Mutual Funds Distribution.

 Internet-based Online Trading: Speed Trade.

They try to give new facilities thorough their researches to their clients like,

“Share mobile” where clients can buy or sell shares through their mobile phone. It

provides facility to their clients to buy or sell of shares through them. It provides

research calls to their clients so that clients can easily think of investment. Mainly

there are five departments in the company, one is DP department, we can say it

10
heart of the company because it is also “Finance Department”, all the clerical work

are done there. Second one is Off-line traders’ room, where the transaction has

been executed via phone calls or directly through clients. Then there is On-line

trading room where transaction executed totally online through “internet”.

Then there is one department of Mutual Fund where they take care of Mutual

Fund clients. Then there is one Sales/Marketing Department which is situated

nearby Branch Office. The Branch Manager of the company is Mr.nitin & grish

rathi, he is taken care all the activities done within the company. Total there is 30 to

40 employees working under one roof.

11
VARIOUS ACTIVITIES UNDERTAKEN BY N.G.Rathi STOCK

BROKING LTD

DEMAT SERVICE

Dematerialization and trading in the demat mode is the safer and faster alternative

to the physical existence of securities. Demat as a parallel solution offers freedom

from delays, thefts, forgeries, settlement risks and paper work. This system works

through depository participants (DPs) who offer demat services and the securities

are held in the electronic form for the investor directly by the Depository.

N.G.Rathi Depository Services offers dematerialization services to individual and

corporate investors. They have a team of professionals and the latest technological

expertise dedicated exclusively to our demat department, apart from a national

network of franchisee, making services quick, convenient and efficient.

At N.G.Rathi, their commitment is to provide a complete demat solution which is

simple, safe and secure.

Here mainly two types of services provided by the company to the customer for

Demat A/C that is (1) Online A/C and (2) Offline A/C.

12
1. Online Account: Nowadays online A/C is more popular than offline A/C. In

online A/C what company will do, they simply provide terminal to the

customer and customer can do trading himself/herself when he/she wants. The

online A/C will charge 750/- Rs. (*It varies from company to company). In

these there 3 types of facility company will provide to the customer as per the

company’s requirement.

a) Classic Account: This is the simplest way to do trading. Here what

customer has to do is that first he has to open an Demat A/C with the

N.G.Rathi, after the A/C has been opened the customer will get login ID

and Password and with the help of these he can login to the

N.G.Rathi.com and in Classic A/c which company’s data he wants, he has

to type that company’s name or code and he will get all the necessary

information regarding the company and he can buy or sell that company’s

stock.

b) Fast Trade Account: In this the whole terminal will provided to the

customer and the customer can buy or sell the shares by himself by

watching the live position of the company in the terminal. The initial

procedure will be same here, but after login in to N.G.Rathi.com the

customer has to login into Fast trade and he will get the whole terminal

from where he can buy or sell the shares of the company by himself only.

In this the customer can see 25 scripts at a time and place the order from

wherever he wants. There is no limitation for brokerage that has to be

generated.

13
c) Speed Trade Account: This is also same as Fast trade but the only

difference is that in Fast trade the customer will get only 25 scripts at a

time whereas in Speed Trade the customer will get full screen view and

more than 25 scripts at a time. This A/C also provides charts and graphs so

that one can easily understand about the stocks. This is provided mostly to

those persons who are dealer kind of customer or the big clients. Here the

minimum brokerage that has to be generated is Rs. 500 per month.

2. Offline Account: This is the traditional way of buying or selling shares. In this,

customer can place the order via telephone or directly by sitting in the

company. The customers who are busy in their jobs or businesses, they can

place the order via telephone and the customers who are not that much of busy,

they can come to the office (N.G.Rathi) and by sitting there whole day they can

place the order.

DAIL AND TRADE

Trade in Equity by using your phone!

Free with N.G.Rathi Classic Account, the Dial-n-Trade service enables customer

to place orders for buying and selling shares through telephone.

FEATURES:

Simple and Secure Interactive Voice Response based system for authentication. No

waiting time. Enter your T-PIN to be transferred to our telebrokers

14
STOCK BROKING

N.G.Rathi offers trading on a vast platform; National Stock Exchange, Bombay

Stock Exchange and Hyderabad Stock Exchange. More importantly, they make safe

to the maximum possible extent, by accounting for several risk factors and planning

accordingly. They assisted in this task by their in-depth research, constant feedback

and sound advisory facilities. Their highly skilled research team, comprising of

technical analysts as well as fundamental specialists, secure result oriented

information on market trends, market analysis and market predictions. This crucial

information is given as a constant feed back to the customers, through daily reports

delivered along with their updated portfolio. Besides this they are also offered

special portfolio analysis packages that provide daily technical advice on scrip’s for

successful portfolio management and provide customize advisory services to help

customer make the right financial moves that are specifically suited to their

portfolio.

Factors such as their success in the electronics custody business has helped

build on our trading of trust even more. Consequentially their retail client base

expanded very fast. To empower the investor further they have made serious efforts

to ensure that their research calls are disseminated systematically to all their stock

broking clients through various delivery channels like e-mail, chat, SMS, phone

calls etc.

ADVISORY SERVICES

Under their real brand N.G.Rathi LIMITED’ they deliver advisory services to a

cross-section of customers. The service is backed by a team of dedicated and expert

professionals with varied experience and background in handling investment

portfolios.

15
They are continually engaged in designing the right investment portfolio for

each customer according to individual needs and budget considerations with a

comprehensive support system that focuses on trading customers portfolios

providing valuable inputs, monitoring and managing the potfolio through varied

technological intiatives. Those is made possible by the expertise they have gained in

the business over the years.

COMMODITIES

At N.G.Rathi Commodities, they are focused on taking commodities trading to

new dimensions of reliability and profitability. They have made commodities

trading, an essentially age-old practice, into a sophisticated and scientific investment

option. Company enables trade in all goods and products of agriculture and mineral

origin that include lucrative commodities like gold and silver and popular items like

oil, pulses and cotton through a well-systematized trading platform. The

technological and infrastructural strengths and especially the street smart skills make

them an ideal broker. Their service matrix is holistic with a gamut of advantages, the

first and foremost being their legacy of human resources, technology and

infrastructure that comes from being part of the N.G.Rathi Group.

Their wide national network, spanning the length and breadth of India, further

supports these advantages. Regular trading workshops and seminars are conducted

to hone trading strategies to perfection. Every move made is a calculated one, based

on reliable research that is converted into valuable information through daily,

weekly and monthly newsletters

16
MUTUAL FUNDS

N.G.Rathi have announced that customers will now be able to invest in Mutual

Funds through N.G.Rathi. They have started this service for a few mutual funds, and

in the near future will be expanding their scope to include a whole lot more.

Applying for a mutual fund through N.G.Rathi is open to everybody, regardless of

whether you are a Sharekhan customer or not.

For investing in mutual funds through N.G.Rathi you have to just download the

form from internet, fill it and submit it in any N.G.Rathi office.

Competetors of N.G.Rathi

 Indiabulls

 Karvy consultant

 ICICI Direct

 India Infoline

 Relience money

 IL&FS Investsmart.

17
CHAPTER 3

OBJECTIVE OF

PROJECT

OBJECTIVE OF PROJECT

The main objective of this project is to know the Awareness of Financial

Instrument among investors and also to know the investing pattern of people in

different Financial Project. The project with N.G.RATHI SECURITIES LTD has

been full of learning and sense of contribution towards the organization.

My project on “Portfolio Management Services” is meant to study the nature

of different investment instruments available in the market and then finally suggest

the same to the clients in the form of a structured product. I do this by suggesting the

investor as to go for which all investments that can fetch out real good returns to

them in future, as per their risk appetite regarding the investments and their needs.

18
I suggest them the investments that they can opt for and the one’s which can

bring a huge value addition to their portfolio.

According to the study of the markets, it is being observed that there are lots of

financial instruments are available in the markets and some of them are really doing

well. In near future a proper financial planning is required to invest money in all

type of financial product because there is good potential in market to invest.

In this project the great emphasis is given to the investor’s mind in respect to

investment where he can maximize his wealth. The needs and wants of the client are

taken into consideration.

More emphasis has been given for the study of the project because it is the only

field where all type of Age group, Income class and different level of people are

represented and accordingly their approach towards the market.

19
CHAPTER 4

RESEARCH
METHODOLOGY

METHODOLOGY OF STUDY

Research can be defined as a systemized effort to gain new knowledge. A

research is carried out by different methodologies which have their own pros and

cons. Research methodology is a way to solve research in study and solving research

problems along with logic behind them are defined through research methodology.

Thus while talking about research methodologies we are not only talking of research

methods but also consider the logic behind the methods. We are in context of our

research studies and explain why it is being used a particular method or technique

and why the others are not used. So that research result is capable of being evaluated

either by researcher himself or by others.

20
RESEARCH METHODOLOGY

Research has its special significance in solving various operational and planning

problems of business and industry. Research methodology is a way to systematically

analyze the research problem.

I have executed the project after prior discussion with our guide and structured in the

following steps:

a. Preparation of a questionnaire

b. The focal point of the designing the questionnaire was to comprehend the

current investment scenario with respect to tax planning part.

c. This questionnaire was primarily aimed to respondents who belong to the

service and business class people

The questionnaires were discussed through personal interface with the

respondents.

ASSUMPTIONS:

1. It has been assumed that sample of hundred represents the whole population.

2. The information given by the customer is unbiased.

Development of Working Hypothesis

The hypothesis could be developed by discussing with the consulting department

heads and guides about this exploratory research and reach to the conclusion that the

data is to be collected by personal interaction with the clients, asking them about

their investment planning and their need for financial advisory service from

N.G.RATHI Securities Ltd.

First of all are they aware of tax and investment planning or not and then analyzing

the findings to reach to the objectives of research.

21
Sources of Data:

PRIMARY DATA

This research is solely based on primary research done by means of

questionnaires targeted to respondents who primarily belong to the business and

service sector.

It is very essential in the research process to know the accuracy of the finding’s

which depends on how systematically the study has been carried out so that it can

make sense.

The data required for the project was about the customers and therefore this data was

a confidential for the company.

SECONDARY DATA

Secondary data is a data that has been collected earlier for some purpose other than

the purpose of the present study. I have collected data by referring book and

websites for carrying out my project from .

Also, secondary data can be a useful benchmark against which the findings of

the study can be tested. This study is highly dependent on the secondary data for

various facts and figures.

CHAPTER 5

INTRODUCTION TO INVESTMENTS

22
INTRODUCTION

INVESTMENTS

WHY invest: We work hard so that we can live life to its fullest. Most of us spend more

than half of our lives working and saving because money is essential. In fact, to most of us it is

the driving force of our life. The reasons why we invest are primarily for tax-saving purposes.

Although, this may not be incorrect, it is true that one needs to analyze various factors before

putting the hard-earned money into any type of investment. A proper planning is crucial to

make your how to invest money work effectively at later stages of your life.

Identify your goals: Our goals in life may be plenty (owing a house, providing the best

education to children, supporting family with the best amenities, holidaying, etc). And of

course, last but not the least is to save how to invest for those retirement days. Prioritize your

goals. Make a note of when you would like to achieve them. We learn about a few smart ideas

on how to increase your net worth and not affect your needs too.

How to invest and where: The right time to learn how to invest is when you have identified

at what stage in life you would require how much funds. It is human tendency to be affected by

greed and fear. Greed makes us invest without thinking twice. One may land being a loser

when the desire to get more for less creeps in. When fear strikes, one dreads to even take

normal investment risks. Due to this, one may lose on opportunities while investing in the

market.

23
Handling risk: Know what is your risk appetite. All investments carry some risk. Risk

and return are two sides of the same coin. Investments with the potential for the biggest returns

are associated with the highest risk (of losing money).

Remember: your age, family situation, income and goals can all influence the amount of

risk you wish to take. In general, the younger you are you have more time to recover from any

loses if at all. The older you are or the closer to needing the money, the more conservative you

may become and be reluctant to take risks. Once you know your goals and your comfort with

risk, you can decide what type of portfolio is right for you. (A portfolio is simply a collection

of different kind of investments).

For example, if you are young, aggressive and have plenty of time before you plan to use

money from your investments, you might allocate 70 to 100 percent of your portfolio to stocks

and stock mutual funds. If you're more conservative, you might allocate 50 percent to stock

mutual funds, 40 percent to bond funds and the rest to cash equivalents.

When to start Investing: The sooner one starts investing the better. By investing early

investor allow his investments more time to grow, whereby the concept of compounding

increases income, by accumulating the principal and the interest or dividend earned on it, year

after year.

The three golden rules for all investors are:

 To Invest early,

 To Invest regularly,

 To Invest for long term and not short term.

Why Financial Planning is needed?

24
This can be explained by very simple example. Assume a person is 40 years old and will

require 70% of his current annual income for each of the 15 years expect to live after his

retirement. He wants to retain his purchasing ability after certain age.

In this case he will have to plan his finance and hence the terms portfolio and

portfolio management come in picture

Investors should periodically review their asset allocation across different assets as the

portfolio can get skewed over a period of time. This can be largely due to

appreciation/depreciation in the value of the investments.

For example: an investor who had invested Rs. 70 into equities and balance in income funds in

June 2004. During last one year, the BSE Sensex has moved up by 41% while the income

funds have grown by 1%. As of end May 05, the equity asset allocation would be 67% into

equities and rest into debt - equity exposure would have gone up by 7% (due to appreciation in

stock indices). An investor who wants to keep the allocation at 60% should reduce the

exposure in equities and shift to debt.

As the financial goals are diverse, the investment choices also need to be different to

meet those needs. No single investment is likely to meet all the needs, so one should keep some

money in bank deposits and / liquid funds to meet any urgent need for cash and keep the

balance in other investment products/ schemes that would maximize the return and minimize

the risk. Investment allocation can also change depending on ones risk-return profile.

25
Investment Guidelines

Investment in general is defined as use of money with an intention of making more

money or profit. The use of money could be in many ways like purchase of property, purchase

of vehicles, investing in financial assets like mutual funds, government securities and so on.

The ultimate aim of all investments would be to earn a sum as profit which is called as the

return on investment

The idea of investing in various options is a result of demand, where in one person would

be in need for money and the other person who has sufficient money is interested in making

some profits out of the same. It is interesting to know that how these two people with a

matching demand and supply meet. And the process is being made easier now a days with

various investing in India consultants booming down very lane and all major banks competing

with one another to give investment advice to their customers

Going further into the investing in India options available the points that any individual

would be looking at the return on investment, the time period involved and the authenticity of

the return. By rate of return we would mean the percentage of profit that we would be getting

on the amount invested.

26
A simple example for this –

Let’s assume X invests Rs.100 in a Bank Deposit for 365 days and at the end of 365 days he

gets back Rs.108. in this case the rate of return would be 8% per annum, the time period

involved in this investment in 365 days and the authenticity of the return would be the

certificate given by the bank for the investment that you make. Best advice would be that

before we go in make some investments the points to ponder would be your risk-appetite and

investment objective. Risk would be high on market and economy related investments where

as on the contrary there would be completely NIL risk in government securities. The return

would be nominal in Government securities and high in market related investments.

Drilling down on the topic of investing in India options in India the areas that are most

opted for sorted on the level importance would be real estate for long term investments and

mutual fund investments, stock market investments, Fixed return Government securities for

short term investments.

Benefits of investing at an early age

It’s known that inflation eats into savings. Investing early in life can help you:

Beat inflation- Inflation is the tendency of prices to rise over time giving your money

less buying power each year. Therefore if you invest your money wisely, you might earn

returns that match or beat the rate of inflation. You shall reap the benefits during your

retirement years (the time period when one does not wish to compromise too much on the

standard of living).

Benefit from compounding- Compounding is when an investment gives you returns on

the money you originally invested as well as on the returns you have gained so far from that

investment. For example, imagine you invest $1,000 into an investment that gives you a 5

percent rate of return each year. Year on year, you would get a 5 percent return on both your

27
original $1,000 and on the other returns you've earned so far. Elaborating on this, lets review

the following-

In one year, you would have $1,050 ($1,000 plus 5 percent, or $50).

In two years, you would have $1,102.50 ($1,050 plus 5 percent, or $52.50).

And in 25 years and you would have $3,481.29 (without investing a penny after the original

$1,000).This is the magic of compounding wherein you triple your money in 25 years.

Mistakes investors should never make while investing

 Thinking that customer should have loads of money to invest. It is in fact the other way

round. One can start investing with a just small amount and the earlier you start, the more

time your money has to compound and grow.

 Investing for shorter duration because customer do not want your money to be lying

somewhere else. Remember, investing for the long term (five years or longer) can not

only help you how to invest meet a range of different goals, it gives your portfolio time to

recover from any losses in the market.

 Selling investments in a panic when the market is down or rush to buy "hot" investments

unless they truly suit your long-term goals.

 Trading too much is not advisable. If your portfolio has high turnover you could face

high trading costs and capital gains taxes.

 Investing money to avoid taxes. One should be aware of the tax implications of their

actions, but the first objective should always be to make a fundamentally sound

investment decision.

 Ignoring return calculations. Always calculate the post-tax effective yield for each

investment made.

28
 Invest, monitor and review customers portfolio from time to time. Be disciplined and

your money will work harder for you.

CHAPTER 6

PORTFOLIO MANAGEMENT

INTRODUCTION TO PORTFOLIO MANAGEMENT

First, a definition of portfolio in the IBM view, a portfolio is:

... One of a number of mechanisms, constructed to actualize significant elements in the

Enterprise Business Strategy.

It contains a selected, approved, and continuously evolving, collection of Initiatives

which are aligned with the organizing element of the Portfolio, and, which contribute to the

achievement of goals or goal components identified in the Enterprise Business Strategy.

The basis for constructing a portfolio should reflect the enterprise’s particular needs. For

example, you might choose to build a portfolio around initiatives for a specific product,

business segment, or separate business unit within a multinational organization.

Portfolio management is the process of managing money, including investments,

budgeting, banking and taxes. The portfolio management process involves formulating,

29
modifying and implementing a real estate investment strategy in light of an investor's broader

overall investment objectives. It also can be defined as the management of several properties

owned by a single entity.

It is the art and science of making decisions about investment mix and policy, matching

investments to objectives, asset allocation for individuals and institutions, and balancing risk

vs. performance

The aim of Portfolio Management is to achieve the maximum return from portfolio,

which has been delegated to be managed by an individual manager or financial

institution. The manager has to balance the parameters which define a Good investment

i.e. security, liquidity and return. The goal is to obtain the highest return.

The relationship between risk and return is one of the essential concepts to understand

when investing and it is unique for every investor, the personal risk tolerance could be

influenced by current world events, investments experiences even your inherited views on

saving and investing r the client of the managed portfolio.

ADVANTAGES OF PORTFOLIO MANGEMENT

(1) Individually managed accounts: Provides a flexible format for optimizing returns through

effective fund management.

(2) Customized portfolios: Tailor-made investment strategies to suit individual requirements.

(3) Individually managed accounts: Provides a flexible format for optimizing returns through

better information support/client servicing regular investments disclosures make the investor

feel comfortable and in control of his money.

(4) Supportive tax structure: Tax changes support rise in equity, there is a cut in capital gains

tax on listed equities:

i. NIL for holdings greater than 12 months

ii. 10%(from 30%) for holdings less than 12 months

(5) SEBI regulated: A regulated industry makes the investor feel comfortable with the

investments techniques adapted to optimize returns.

30
SCOPE OF PORTFOLIO MANAGMENT

The portfolio management is vast in nature. It is intended to provide a bird’s-eye view of

the client’s assets. The portfolio manager has to have bottomless knowledge of markets, funds

etc. Considering this fact, the scope of the portfolio is defined to satisfy following objectives:

 Study and compare various investment and attributes

 Understand the necessity of portfolio management

 Study and apply the portfolio management process

 Understand client’s desires, investment potential and risk taking approach

 Identify various investment alternatives that can fit in client’s profile

 Provide the client an appropriate asset allocation mix based on certain factors like

time horizon, risk tolerance etc.

 Regularly monitor client’s portfolio and take corrective actions if essential

 Attain the investment objective by strengthening the client’s portfolio in the best

possible way

31
OBJECTIVES OF PORTFOLIO MANAGMENT

1 .Safety Of Fund: The investment should be preserved, not be lost and remain in the

returnable position in cash or kind.

2. Liquidity: Portfolio must consists of such securities which could be en cashed without any

difficulty or involvement of time to meet urgent need for funds.

3. Reasonable return: The investment should earn a reasonable return to up keep the

declining value of money and must be compatible with opportunity cost of money in terms of

current income in the form of interest or dividend.

4. Appreciation in Capital: The money invested in portfolio must grow and result into capital

gains.

5. Tax planning: Efficiently portfolio management is concerned with composite tax planning

covering income tax, capital gains tax , wealth tax, and gift tax.

6. Minimize risk: Risk avoidance and minimization are important are most important

objectives of portfolio management. Portfolio managers must ensure these objectives by

effective investment planning and periodical review of market, economy etc.

7. Marketability: The investment made in securities made in securities should be marketable

that means , the securities must be listed and traded in stock exchange so as to avoid risk and

difficult in their encashment . Marketability ensures liquidity to the portfolio.

32
Types of Portfolios

Aggressive Portfolio

Aggressive Portfolio consists almost entirely of equities. As such, with a very aggressive

portfolio, your main goal is aggressive capital growth over a long term horizon. Since these

portfolios carry a considerable amount of risk, the value of the portfolio will vary widely in the

short term. This strategy might be appropriate for investors who seek High growth and who can

tolerate wide fluctuations in market values, over the short term.

33
Growth Portfolio

Growth portfolios mainly consist of equities, so these portfolios’ value tends to fluctuate

widely. If you have an aggressive portfolio, your main goal is to obtain long term growth of the

capital. As such the strategy of an aggressive portfolio is often called a “capital growth”

strategy. To provide some diversifications, investors with aggressive portfolios usually add

some fixed-income securities. This strategy might be appropriate for investors who have a

preference for growth and who can withstand significant fluctuations in market value.

34
Balanced Portfolio

Balanced portfolio are often referred as “Moderately Aggressive portfolios” since the asset

composition is divided almost equally between fixed-income securities and equities in order to

provide a balance of growth and income.

Since these moderately aggressive portfolios have a higher level of risk than those conservative

portfolios mentioned above, select this strategy only if you have a longer time horizon

(generally more than five years), and have a medium level of risk tolerance. This strategy

might be appropriate for investors who want the potential for capital appreciation and some

growth, and who can withstand moderate fluctuations in market values

35
Conservative Portfolio

These types of portfolios generally allocate a large percent of the present portfolio to

lower risk securities such as fixed-income and money market securities. The main goal with a

conservative model portfolio is to protect the principal value of your portfolio. As such these

models are often referred to as “Capital Preservation portfolios”.

Even if they are very conservative and prefer to avoid the stock market entirely, some

exposure can help offset inflation. They could invest the equity portion in high quality blue

chip companies, or an index fund, since the goal is not to beta the market. This strategy may be

appropriate for investors who want to preserve their capital and minimize fluctuations in

market value.

36
INVESTMENT STRATEGY IN PMS

(1) Focus on select/clear stock opportunities: Investments in stocks where there is a clear

earnings visibility.

(2) Relatively concentrated portfolio: A portfolio composition of not more than 25-30 stocks

of what there are compelling opportunities.

(3) Usage of derivatives as a tool: One must have a selective use of derivatives in various

options to enhance returns/portfolio protection.

(4) Flexible cash allocation strategy: We have an efficient allocation among assets with

flexibility to sit on 100% cash.

The Portfolio Structure

A portfolio structure identifies and contains a number of portfolios. This structure, like

the portfolios within it, should align with significant planning and results boundaries, and with

business components. If customers have a product-oriented portfolio structure, for example,

then you would have a separate portfolio for each major product or product group. Each

portfolio would contain all the initiatives that help that particular product or product group

contribute to the success of the enterprise business strategy.

37
The Portfolio Manager

This is a new role for organizations that embrace a portfolio management approach. A

portfolio manager is responsible for continuing oversight of the contents within a portfolio. If

you have several portfolios within your portfolio structure, then you will likely need a portfolio

manager for each one. The exact range of responsibilities (and authority) will vary from one

organization to anotherone, but the basics are as follows:

 One portfolio manager oversees one portfolio.

 The portfolio manager provides day-to-day oversight.

 The portfolio manager periodically reviews the performance of, and conformance to

expectations for, initiatives within the portfolio.

 The portfolio manager ensures that data is collected and analyzed about each of the

initiatives in the portfolio.

 The portfolio manager enables periodic decision making about the future direction of

individual initiatives.

How the Portfolio Management Service works

Investors sit down with one of the advisers and discuss exactly what they are trying to

achieve; whether it is income, growth or a combination of the two, the level of risk with which

you feel comfortable and whether service is appropriate for them.

If investors decide to precede the portfolio will then be managed by specialist investment

team, headed by who look over the portfolios constantly, reacting instantly to changes and

taking investment decisions on your behalf.

These decisions are based on many years of experience, a deep understanding of the

market and the latest, most comprehensive investment research. As everyone know, better

results almost invariably derive from better information, more experience and greater

understanding.

38
What impact could this have on investors portfolio?

Five years ago Mr. Ramikbhai, after careful consideration, invested in funds he considered

right for his portfolio. Since then, some funds have under-performed and he has held on to

them, hoping they will do better. However, many of these funds will not recover and, with

hindsight, they should have been replaced when they started under-performing.

It is a common story. Many investors are emotionally attached to their decisions (we hate to

feel we are wrong) and others are too busy to stay fully informed or react swiftly.

Every time your funds under-perform, you lose in two ways; through the money you lose and

the money you could have gained elsewhere.

A professional manager is impartial and does little else but watch and consider what is

happening in the markets so as to make what he thinks are the right decisions faster.

INTERRELATIONSHIP AMONG VARIOUS PHASES OF PORTFOLIO

SPECIFICATION OF INVESTMENT OBJECTIVES


AND CONSTRAINT

CHIOCE OF MIX ASSETS

FORMUATION OF PORTFOLIO
STRATEGY

SELECTION OF SECURITES

PORTFOLIO EXECUTION

PORTFOLIO REVISION

PORTFOLIO EVALUATION

39
CHAPTER 7

INVESTMENTS AVENUES

INVESTMENT AVENUES

Various options available for investment are

Physical assets like Real Estate, Commodities etc.

Real estate market is something that is always glowing like the New York City. The

reason being that this market has very rarely seen a downslide. Real estate market in a common

man terms would mean dealing in property which would include purchase and sale of land and

building. It could be both commercial space and residential property. Commercial space would

mean the property that is purchased or occupied for business purposes by small to large

corporate houses.

40
One undeniable reason why Indian real estate market has been a boom is due to the

increasing number of Multi National Companies thronging the Indian Land. The want for space

is always increasing with government in India giving additional concessions and recognition to

Corporate engaged in building IT parks and commercial complex.

The best thing about real estate business is that every investor is bound to end up with a sure

margin of profit though the amount of profit may vary based on our bargaining skills and the

need of the buyer. People also engage in speculative business by purchasing barren lands in

under developed areas for a very minimal cost and wait for couple of years till all necessary

infrastructure is developed in that locality and then sell the land at a huge profit. On the other

side residential properties are also on the increase. One main reason behind this being that the

Housing Development Corporation of India is promoting big Residential Buildings and all

banks offer credit to customers for purchase of property. This way majority of the population

will end up owing a property. And icing on the cake is that the value of the property is always

down to increase and would never decrease as such we would be assured about our share of

profit

COMMODITIES futures are contracts to buy specific quantity of a particular

commodity at a future date. It is similar to the Index futures and Stock Futures but the

underlying happens to be commodities instead of Stocks and Indices. Commodity exchanges

are regulated by Forward Market Commission (FMC); Forward market Commission works

under the purview of the ministry of food, Agriculture and Public Distribution. Commodity

prices are generally less volatile than the stocks and this has been statistically proven.

Therefore it’s relatively safer to trade in commodities. Also the regulatory authorities ensure

through continuous vigil that the commodity prices are market- driven and free from

manipulations.

41
Major Commodity Exchanges

The Government of India permitted establishment of National-level Multi-Commodity

exchanges in the year 2002 and accordingly three exchanges come in picture. They are:

 Multi-Commodity Exchange in India Ltd, Mumbai (MCX).

 National Commodity and Derivative Exchange of India, Mumbai (NCDEX).

 National Multi Commodity Exchange, Ahmadabad (NMCE).

However there are regional commodities exchanges functioning all over the country.

Sharekhan Commodities Broking Pvt. Ltd has got membership of both the premier commodity

exchanges i.e. MCX and NCDEX.

Financial assets such as Fixed Deposits with Banks, Small Saving Instruments with Post

Offices, Insurance/Provident/Pension Fund, Mutual Fund etc. or Securities market related

instruments like Shares, Bonds, and Debentures etc.

Life Insurance is a contract for payment of money to the person assured (or to the person

entitled) depending on the event insured against. Payment of amount (depending on the type of

policy) is made on the date of maturity or at specified periodic intervals or at death (if it occurs

earlier). These policies involve periodical payment of insurance premium by the assured to the

corporation who provides the insurance.

Whatever combinations your portfolio may comprise of, but do get yourself and your family

insured.

42
Savings Scheme and Public Provident Fund schemes promoted by Banks. Under these

options the rate of return is fixed and varies from 8% to 10%. The return is paid in the form of

interest usually half yearly / quarterly. The time period for investment ranges from 1 year to 10

years and even more if the individual desires so. Another safe mode of investment would be

Bank deposits. Banks accept deposits from customers in different denominations and for varied

time periods and offer a return ranging from 5% to 9%. The longer the duration of your

investment the higher would be the rate of return no the same. In the current market banks

compete with one another to attract customers by offering higher rates of interest.

Mutual funds and stock markets are the other arena where people can make profit. But

one major drawback to this option is its association with market conditions and the economy of

the country. The basic concept behind mutual funds is that one institution collects funds from

likeminded people by issuing mutual fund units and invests the funds in various outlets. At the

end of the time period the institution distributes the profit earned among its members. The

difference between the amount invested and the amount returned would be the profit for an

investor. The risk involved in this case is that in case the institution faces loss, then the same

also has to be shared by the members which might result in getting a sum less than what we

had actually invested. Though the stock market and mutual funds investments are subject to

market risks, still many young people believe in investing in such options because the yield is

high in such investing in India and the turnaround time is also very less. But word of caution is

that you need to be a real watch dog about the market conditions and must have the mind set to

accept losses and gains in the same frame of mind.

Bonds Individuals have surplus funds in the form of savings which they want to invest.

Companies need funds to undertake good projects with high returns. Companies provide

individuals with instruments to invest their savings in.

One such instrument is corporate bonds. Similarly, governments also need funds for various

developmental projects. Further, the government also needs to raise money to finance the fiscal

deficit. They too tap the savings by issuing various kinds of bonds.

43
CHAPTER 8

VIRTUAL PORTFOLIO

VIRTUAL PORTFOLIO
(OF Rs 10 LACS)

TOTAL AMT INVESTED IN SHARES = 642855 (17.09%)


AMT INVESTED IN MUTUAL FUND = 210000 (29.06%)
INTRADAY = 100000
OTHERS = 47145

TOTAL 1000000 (23.08%)

NO. OF TARGET
SCRIPT SHARES PRICE T.AMT PRICE RETURNS

RIL 75 2554.8 191610 3127 22.39%


SBI 1001573.25 157325 1752.66 11.40%
INFOSYS 50 1862.4 91230 2244.6 20.52%
ITC 60 213.6 12816 240.51 13.52%
L&T 302844.75 85343 3255.11 14.43%
RELIANCE INDUS. INFRA 63 1240 78120 1490.73 20.16%
GOLDSTONE INFRA 40 58.75 2350 70.06 19.25%
DR REDDYS 35 687.45 24061 787.19 15.01%

TOTAL 453 642855 17.09%

44
INVEST
M.F NAV MENT RETURNS

DBS CHOLA MONTHLY INCOME PLAN 17.18 65000 27.60%


RELIANCE DIVERSIFIED POWER SECTOR GROWTH 63.04 95000 45.78%
FRANKLIN TEMPLTON ASSET MGMT GROWTH 30.18 50000 15.43%

TOTAL 210000 29.60%

Calculation of Target Price

1. Target Price = New EPS * P.E Ratio


2. New EPS = Last year EPS * Growth
3. Growth = Net Worth Return * Retention Ratio

45
CHAPTER 9

FINDINGS

FINDINGS

On the basis of research done following are the findings

TOTAL PORTFOLIO CLIENT PROFILE

POINTS STRATEGY
15 – 70 CAPITAL CONSERVATIVE

PRESERVATION INVERTOR SEEKING

PRESERVATION OF

CAPITAL AND A

MODERATE LEVEL

OF INCOME.
71 – 125 INCOME INVESTOR WITH A

LOW TOLERENCE

FOR RISK SEEKING,

A GREATER LEVEL

OF INCOME WITH

STABILITY OF

46
PRINCIPAL

126 – 190 GROWTH AND LESS

INCOME CONSERVATIVE

INVESTOR SEEKING

CURRENT INCOME

PLUS CAPITLA

APPRECIATION.
191 – 250 GROWTH INVESTOR WITH

SOME TOLERENCE

FOR RISK

SEEKING,CAPITAL

APPRECIATION AND

SECONDARILY

INCOME
251 – 305 AGRESSIVE EXPERIENCED

GROWTH INVESTOR WILLING

TO ASSUME A

GREAT LEVEL OF

RISK FOR A

POTENTIALLY

GREATER.

47
As per my findings a strong portfolio should go through:

 Analyze result of survey

 Communicate results to analysts

 Accordingly research analysts give ideas

 Based on their research ideas managers create and manage portfolios

48
CHAPTER 10

SUGGESTIONS

SUGGESTIONS

To Clients

 Selling investments in a panic when the market is down or rush to buy "hot" investments

unless they truly suit your long-term goals.

 Invest and monitor portfolio from time to time.

 Greed makes invest without thinking twice. One may land being a loser when the desire

to get more for less creeps in.

 When fear strikes, one dreads to even take normal investment risks. Due to this, one may

lose on opportunities while investing in the market.

To Firm

 With the growing competition it needs to be more focused and give special services to

lead in market.

 Most of the client’s are connected through dial and trade service due to which there is no

direct connection i.e. seminars, get together etc should be organized.

 Feedback should be taken by every customer regularly.

 Organize and make accessible a database of customer information.

49
CHAPTER 11

LIMITATIONS

LIMITATIONS

Every work has its own limitations. Limitations are extent to which the process should not

exceed. The following limitations for the project are:

 Investor ignorance was faced during discussions with respondents as the topic is related

with their income part so respondents were a bit reluctant towards disclosing their true

feelings, so I have to first built up the trust & then talk about the investments.

 Time constraints have also become a major limitation as “Portfolio Management” is

such a vast subject which involves in-depth study analysis.

 Some clients are not aware of the market scenario and to make them understand from

basics was a problem. Also at times they panic to the market movements which was

difficult to tackle with.

 Getting appointments with people was difficult as most of the people were busy and it

was difficult to contact them again and again.

 People provide false data as they were scared about providing actual data such as net

income, premium paid etc.

50
CHAPTER 12

CONCLUSION

CONCLUSION

When we talk about “Portfolio Management Services” it all start from making a decision

about what to invest and where to invest. All the advisory is done once the financial advisor

analyses the actual need of the customers, and this all is done once we know what to offer and

when to offer.

Their is lot of scope of promoting PMS in Pune as in the present scenario the Investors

are not well versed with the various investment avenues present in the market. They always

seek for financial help for good “Capital Appreciations” as the annual packages offered to them

are quite high so they need to plan accordingly & that is the right time when we come into the

picture, with best of the PMS which we can offer.

There is great opportunity as there is a rise in number of people who want to invest in

share market but don’t have time and knowledge to do so, also these people want to take

risk .With booming market and falling interest rate of bank deposits, people see mutual funds

as an attractive financial tool which provide a high return rate at lower risk as compared to

equity market. Young people these days are particularly more interested as these people have

51
large disposable incomes and risk taking capability too. Advertising can also play a major part

as it has been seen that people buy looking at the brand name.

While offering them the “Portfolio Management Services” we see that we offer them the best

after carrying out the total analysis on various schemes running in the market we give them

what satisfies their need the most efficiently.

According to the respondents the quality of the service is very important. So the

company should project itself as a brand in the market that gives end user the best quality of

service with handy operations. Also most of the respondents have their personal consultant or

company consultants, Sharekhan LTD. have to differentiate their services from other consultant

effectively by delivering value added services to its customers. Also organizations have to

concentrate on direct marketing activities. The consultancy should develop its long term

relationship with the customers. The consultancy must give much more emphasis on creation

of customer who make repurchase.

52
CHAPTER 13

BIBLIOGRAPHY

Bibliography

Web sites

 www.moneycontrol.com

http://www.moneycontrol.com/mutualfundindia/

http://www.moneycontrol.com/stocks/cptmarket/compsearchnew.php?

fname=price&companyname=portfolio%20Management

http://www.moneycontrol.com/stocks/cptmarket/compsearchnew.php?

fname=price&companyname=comany%20analysis

 www.learntoinvest.com

http://www.learntoinvest.com/investmentPortfolioTheory and Portfolio

Management.htm

 www.valueresearchonline.com

http://investsmartindia.com/ilfswebapp/Search.do?reqCode=searchAc

on&schName=mutual%20Fund&selectOption=Test&page=1

Books

 INVESTMENT AND PORTFOLIO ANALYSIS

By: Prasana Chandra

 NCFM Basic Modul

53
CHAPTER 14

ANNEXURE

ANNEXURE

Questionnaire

Name :
Address :

City :
Pin :
Contact address :

Telephone :
Date of birth:
Sex :
Marital Status :
Educational Qualifications :

Q1) WHAT IS YOUR AGE?

o 18 – 29 40
o 30- 44 30
o 45- 54 20
o 55 – 64 10
o ABOVE 65 0

Q2) HOW MANY FINANCIAL DEPENDENTS DO YOU HAVE?

54
o NONE 15
o 1 10
o 2–3 5
o MORE THAN 3 0

Q3) WAHT IS YOUR EMPLOYMENT STATUS?

o FULL TIME EMPLOYED 20


o PART TIME EMPLOYED 10
o SELF EMPLOYED 15
o NOT EMPLOYED 0
o RETIRED 5

55
Q4) DESCRIBE YOUR FUTURE EARNING POTENTIAL?

o FAR OUTPACE INFLATION 40


o SOMEWHAT OUTPACE INFLATION 30
o KEEP PACE WITH INFLATION 20
o LESS THAN INFLATION 10
o RETIRED 5

Q5) DO YOU HAVE AN EMERGENCY FUND?

o NO 0
o < THAN 3 MONTH AFTER TAX INCOME 5
o < THAN 6 MONTHS AFTER TAX INCOME 10
o YES, ADEQUATE EMERGENCY FUND 20

Q6) IF YOU INVEST NOW, WHEN WILL YOU NEED THAT MONEY?

o 0 – 5 YEARS 5
o 6 – 10 YEARS 10
o 11 – 20 YEARS 15
o 21 YEARS ABOVE 20

56
Q7) IF YOU INVEST NOW, WHAT % OF YOUR TOTAL INVESTABLE ASSETS

DOES THIS REPRESENT?

o 25 % OR LESS 20
o 50 % OR LESS 10
o 75 % OR LESS 5
o 100 % 0

Q8) WHEN I INVEST MONEY, MY PRIMARY GOAL IS TO:

o PRESERVE THE VALUE OF MY INVESTMENT 0


o EMPHASIZE CURRENT INCOME 10
o PRIMARILY GENERATE CURRENT INCOME
WITH SOME GROWTH 20
o PRIMARILY GENERATE CURRENT INCOME
WITH SOME INCOME 30
o HAVE SUBSTANTIAL LONG TERM GROWTH 40

Q9) THE APPROPRIATE LOSS IN ANY 1 YEAR PERIOD THAT I WOULD BE

WILLING TO ACCEPT IS:

o MINIMUM LOSS 0
o 5 – 10 % 10
o 10 – 20 % 15
o 20 % OR MORE 30

Q10) IF MY INVESTMENT LOSES 10 % AFTER 1 MONTH, AND THAT IS

CONSISTENT WITH THE OVERALL MARKET, I WOULD SELL PORTION OF

MY RISKIER ASSETS AND PUT THE MONEY INTO SAFER ASSETS.

o STRONGLY AGREE 0
o DISAGREE 5
o AGREE 10
o STRONGLY DISAGREE 20

57
Q11) HOW CRITICAL IT IS THAT YOU HAVE ACCESS TO YOUR INVESTMENT

CAPITAL IN CASE OF EMERGENCY OR OTHER INVESTMENT OPPURTUNITIES

o EXTREMELY IMPORTANT 0
o IMPORTANT 10
o SLIGHTLY IMPORTANT 15
o NOT IMPORTANT AT ALL 30

Q12) IN WHICH ARE MOST OF YOUR CURRENT INVESTMENT FUND?

o BANK CDs OR SAVING ACCOUNTS 0


o BONDS 10
o MUTUAL FUNDS 20
o EQUITY 30
o OWN BUSINESS 30

58

You might also like