A SYNOPSIS ON

“PORTFOLIO MANAGEMENT”
AT
“INDIA INFOLINE LIMITED”
BY
TANETI JOYTSHNA DEVI
(HALL TICKET NO: 2129-21-672-024)
Synopsis for project to be submitted for the award
of the degree of
MASTER OF BUSINESS ADMINISTRATION
OSMANIA UNIVERSITY
2021-2023

AURORA’PG COLLEGE, NAMPALLY

INTRODUCTION
Portfolio
A portfolio is a collection of assets. The assets may be physical or financial like Shares,
Bonds, Debentures, Preference Shares, etc. The individual investor or a fund manager would
not like to put this money in the shares of one company that would amount to great risk. He
would therefore, follow the age-old maxim that one should not put all the eggs into one
basket. By doing so, he can achieve objective to maximize portfolio return and at the same
time minimizing the portfolio risk by diversification.

Portfolio management
Portfolio management is the management of various financial assets which comprise the
portfolio. Portfolio management is a decision–support system that is designed with a view to
meet the multi-faced needs of investors. According to Securities and Exchange Board of
India Portfolio Manager is defined as: “Portfolio means the total holdings of securities
belonging to any person”. To frame the investment strategy and select an investment mix to
achieve the desired investment objectives.

Functions of portfolio Management

 To provide a balanced portfolio which not only can hedge against the inflation but can
also optimize returns with the associated degree of risk 3?
 To make timely buying and selling of securities.
 To maximize the after-tax return by investing in various tax saving investment
instruments.

Characteristics of portfolio management

Individuals will benefit immensely by taking portfolio management services for the following
reasons:
Whatever may be the status of the capital market over the long period capital markets have
given an excellent return when compared to other forms of investment. The return from bank
deposits, units, etc., is much less than from the stock market.

The Indian Stock Markets are very complicated. Though there are thousands of Companies
that are listed only a few hundred which have the necessary liquidity. Even among these, only
some have the growth prospects which are conductive for investment. It is impossible for any
individual wishing to invest and sit down and analyze all these intricacies of the market
unless he does nothing else.

Even if an investor is able to understand the intricacies of the market and Separate chaff from
the grain the trading practices in India are so complicated that it is really a difficult task for an
investor to trade in all the major exchanges of India, look after his deliveries and payments.

Importance of portfolio Management

Emergence of institutional investing on behalf of individuals. A number of financial
institutions, mutual funds and other agencies are undertaking the task of investing money of
small investors, on their behalf. Growth in the number and size of ingestible funds–a large
part of household savings is being directed towards financial assets.
Increased market volatility–risk and return parameters of financial assets are continuously
changing because of frequent changes in government‘s industrial and fiscal policies,
economic uncertainty and instability.
 Greater use of computers for processing mass of data.
 Professionalization of the field and increasing use of analytical methods (e.g., quantitative
techniques) in the investment decision–making.
Larger direct and indirect costs of errors or short falls in meeting portfolio objectives–
increased competition and greater scrutiny by investor.
THEORETICAL REVIEW
The Indian capital market has changed dramatically over the last few years, especially since
1990.
Changes have also been taking place in government regulations and technology. The
expectations of
the investors are also changing. The only inherent feature of the capital market, which has not
Changed is the risk involved in investing in corporate securities. Managing the risk is
emerging as an important function of both large scale and small-scale investors. Risk
management of investing in corporate securities is under active and extensive discussion
among academicians and capital market operators. Surveys and research analyses have been
conducted by institutions and academicians on risk management. The mutual fund companies
in India have conducted specific studies on the risk element of investing in corporate
securities.
Donald E Fischer and Ronald J. Jordan16 (1994) analyses the relation between risk,
investor preferences and investor behavior. The risk return measures on portfolios are the
main determinants of an investor's attitude towards them. Most investors seek more return for
additional risk assumed. The conservative investor requires large increase in return for
assuming small increases in risk. The more aggressive investor will accept smaller increases
in return for large increases in risk. They concluded that the psychology of the stock market is
based on how investors form judgments about uncertain future events and how they react to
these judgments.

DISCRETIONARY PORTFOLIO MANAGEMENT SERVICE (DPMS):

In this type of service, the client parts with his money in favor of the manager, who in
return, handles all the paper work, makes all the decisions and gives a good return on the
investment and charges fees. In the Discretionary Portfolio Management Service, to
maximize the yield, almost all portfolio managers park the funds in the money market
securities such as overnight market, 21 days treasury bills and 90 days commercial bills.
Normally, the return of such investment varies from 17 to 21 percent, depending on the call
money rates prevailing at the time of investment
REVIEW OF LITERATURE
ARTICLES

ARTICLE :1

TITLE: Portfolio selection

AUTHOR: Harry Markowitz

JOURNAL: The Journal of Finance (volume 7) no1 (March 1952)

ABSTRACT:

The process of selecting a portfolio may be divided in two stages. The first stage starts with
observations and experience and ends with beliefs about the future performance of available

securities. The second stage starts with the relevant beliefs about future performance and ends
with the choice of portfolio. This paper is concerned with the second stage. We first consider
the rule that the investor does maximize discounted expected, returns. This rule is rejected
both as a hypothesis to explain, and as a maximum to guide investment behavior. We next
consider the rule that the investor does consider expected return a desirable thing and
variance of return an undesirable thing. We illustrate geometrically relations between beliefs
and choice of portfolio according to the “expected returns-variance of returns” rule.
ARTICLE:2

TITLE: Reduction of risk through portfolio management.

AUTHOR: Fisher N & Hall GR,

JOURNAL: The Economic Challenger, no12, issue46 (March2010)

ABSTRACT:

The rationale investor analyses the risks associated with the investment before investing his
or her wealth in various investment. Risk is the probability of occurrence of loss. It consists
of two components, Systematic risk and unsystematic risk. Systematic risk is the measurable
part of total risk and the techniques used in the evaluation of portfolios. Unsystematic risk is
not measurable and so it is not considered for portfolio evaluation.
ARTICLE :3

TITLE: Portfolio management services

AUTHOR: Mayank Patel

JOURNAL: Portfolio Organizer, the ICFAI University press, May 2009

ABSTRACT:

Portfolio management services (pms) are an established and well developed management
product in developed economics. The primary objective of PMS is to maximize returns and
minimize risks. There are certain aspects which make professional portfolio management
advantageous over a mutualfund. These include asset allocation, timing flexibility, etc. Some
people say that the number one rule of investing is ‘do not pull all of your investments in one
basket.’ Some people say that ‘you can never have too much of good’.
ARTICLE:4
TITLE: Portfolio Management Services.
AUTHOR: Dorota Maria.
JOURNAL: International Advance in Economic Research (2007).
ABSTRACT:
In today competitive world where banks and financial institutions provide number of services
which provides a customer with a wide spectrum of investment opportunities .They in order
to retain their customers provide them special services beside traditional services. The
invention of new technology and services by bank and financial institution has given the
customers a wide range of investment avenues to invest in one of the special services brought
out by objective of this program is to review the real meaning of portfolio management, its
objectives framework, responsibilities of portfolio manager and the study of various other
issues related to it such as its comparison with mutual funds with role of merchant.
ARTICLE:5
TITLE: Portfolio Management process.
AUTHOR: Prasanna Chandra
JOURNAL: Investment Analysis and portfolio management
ABSTRACT:
Portfolio management is a complex activity which may be broken down into following.
Specification of investment objectives and constraints, the typical objectives sought by
investors are current income capital appreciation and safety of principal. Choice of the asset
mix; this is concerned with proportion of stocks and bonds on the portfolio. Formulation of
the portfolio strategy; once a certain asset mix is chosen an appropriate portfolio strategy has
to be implemented.
STATEMENT OF PROBLEM
 Among the most widespread business problems that may come in the way of
successful project portfolio management are poor visibility into project-related data,
productivity gaps due to insufficient task automation, collaboration and
communication issues, and suboptimal project selection.
 Most of those pain points can be eradicated by a Project Management Office with the
support of an industry-grade PPM software tool.
NATURE OF THE STUDY
The portfolio management process is not a one-time activity. The portfolio manager manages
the portfolio regularly and keeps his client updated with the changes. It involves the
following tasks:
 Understanding the client’s investment objectives and availability of funds.
 Matching investment to these objectives.
 Recommending an investment policy.
 Balancing risk and studying the portfolio performance from time to time.
 Taking a decision on the portfolio investment strategy based on discussion with the
client.
 Changing asset allocation from time to time based on portfolio performance.
NEED OF THE STUDY
Portfolio management has emerged as a separate academic discipline in India. Portfolio
theory that deals with the rational investment decision-making process has now become an
integral part of financial literature.
Investing in securities such as shares, debentures & bonds is profitable well as
exciting. It is indeed rewarding but involves a great deal of risk & need artistic skill.
Investing in financial securities is now considered to be one of the most risky avenues of
investment. It is rare to find investors investing their entire savings in a single security.
Instead, they tend to invest in a group of securities. Such group of securities is called as
Portfolio. Creation of portfolio helps to reduce risk without sacrificing returns. Portfolio
management deals with the analysis of individual securities as well as with the theory &
practice of optimally combining securities into portfolios.
The modern theory is of the view that by diversification, risk can be reduced. The investor
can make diversification either by having a large number of shares of companies in different
regions, in different industries or those producing different types of product lines. Modern
theory believes in the perspective of combinations of securities under constraints of risk and
return.
OBJECTIVES OF THE STUDY
 To study the investment pattern and its related risks & returns In the selected stocks
 To examine the factors influencing individual investor’s decision to make portfolio
choice
 To compare of selected stocks with BSE Sensex index
 To construct portfolios of positively correlated and negatively or less correlated
stocks.
 To calculate risk and return of different stocks.
 To evaluate the risk and return of those newly constructed portfolio
SCOPE OF THE STUDY
This study covers the Markowitz model. The study covers the calculation of correlations
between the different securities in order to find
out at what percentage funds should be invested among the companies in the portfolio. Also
the study includes the calculation of individual Standard Deviation of securities and ends at
the calculation of weights of individual securities involved in the portfolio. These
percentages help in allocating the funds available for investment based on risky portfolios.
The data collected for equity picks were from CNX Nifty index only and thus the study deals
with stocks from CNX Nifty index only. The data used for the equity portfolio study is the
historical data of immediate pervious 5 years (1st June 2018 to 31st May 2022)
RESEARCH METHODOLOGY
DATA COLLECTION METHODS:
The data collection method secondary collection method.
Secondary collection methods:
The secondary collection methods includes the lectures of the superintend of the department
of market operations and so on., also the data collected from the news, magazines and
different books issues of this study Superintend
STANDARD DEVIATION:
The concept of standard deviation was first suggested by Karl Pearson in 1983.it may be
defined as the positive square root of the arithmetic mean of the squares of deviations of the
given observations from their arithmetic mean In short S.D may be defined as “Root Mean
Square Deviation from Mean”.
It is by far the most important and widely used measure of studying dispersions.
For a set of N observations X1, X2……..Xn with mean X,
Deviations from Mean: (X1-X), (X2-X),…. (Xn-X)
Mean-square deviations from Mean=
1/N (X1-X)2+(X2-X)2+………. +(Xn-X)2
=1/N sigma(X-X)2
Root-mean-square deviation from mean , i.e.
Deviations from Mean: (X1-X), (X2-X),…. (Xn-X)
Mean-square deviations from Mean=
1/N (X1-X)2+(X2-X)2+………. +(Xn-X)2
=1/N sigma(X-X)2
Root-mean-square deviation from mean , i.e.

VARIANCE:
The square of standard deviation is known as Variance. Variance is the square root of the
standard deviation:
Variance = (S.D) 2
Where, (S.D) is standard deviation
CORRELATION ANALYSIS:
The correlation coefficient is a measure that determines the degree to which two
Variables' movements are associated. The range of values for the correlation coefficient is -
1.0 to
1.0. If a calculated correlation is greater than 1.0 or less than -1.0, a mistake has been made.
A Correlation of -1.0 indicates a perfect negative correlation, while a correlation of 1.0
indicates a Perfect positive correlation.
LIMITATIONS OF THE STUDY
1. Construction of portfolio is restricted to two companies based on Markowitz model.
2. Very few and randomly selected scripts/companies are analyzed from BSE listings.
3. Data collection was strictly confined to secondary source. No primary data is associated
with the project.
4. Detailed study of the topic was not possible due to limited size of the project.
5. There was a constraint with regard to time allocation for the research study i.e for a period
of two months
INDUSTRY PROFILE
For the Indian investors, the year belonged to stock markets, which have been shining bright
when it comes to generating wealth, while the glitter of gold and silver faded for the second
straight year in 2016.
Measured by BSE Sensex, stock market has generated a positive return of about 9 per cent
for investors in 2016, while gold prices fell by about three per cent and its poorer cousin
silver plummeted close to 24 per cent.
After outperforming stock market for more than a decade, gold has been on back foot for two
consecutive years now vis-a-vis equities, shows an analysis of their price movements.
"Gold's under-performance was mainly due to prices falling in dollar terms amid anticipated
tapering over last several months combined with FII investment in Indian stocks.
"This movement has been equally true for global markets as 2016 saw gold losing its shine
and markets coming back with a bang," said Jayant Manglik, President Retail Distribution,
Religare Securities.
"As always, gold and stock prices follow opposite trends and this year was no different
except that both changed direction," he said.
Improvement in the world economy has brought the risk appetite back amongst retail
investors and this has drenched the liquidity from safe havens such as gold leading to its
under-performance, an expert said.
In 2012, the Sensex had gained over 25 per cent, which was nearly double the gain of about
12.95 per cent in gold. The appreciation in silver was at about 12.84 per last year.
According to Hiren Dhakan, Associate Fund Manager, Bonanza Portfolio, "Markets have
particularly shown great strength post July-August 2016 when RBI took some strong
measures to control the steeply depreciating rupee."
"When the US Fed gave indications that it might taper its stimulus programme given the
economy shows improvement, a knee-jerk correction was seen in most risky assets, including
stocks in Indian markets. However, assurance by the Fed about planned and staggered
tapering in stimulus once again proved to be a catalyst for the markets."

"External factors affecting Indian stocks seem to be negative for the first half of 2017 due to
continued strength of the US dollar and benign in the second half. By that time, elections too
would have taken place. A combination of domestic and international factors point to a
bumper closing of Indian markets in 2017 with double-digit percentage growth," he said.
Stock market segment mid-cap and small-cap indices have fallen by about 10 per cent and 19
per cent, respectively, in 2016.
Foreign Institutional Investors have bought shares worth over Rs 1.1 lakh crore (nearly USD
20 billion) till December 19. In 2012, they had pumped in Rs 1.28 lakh crore (USD 24.37
billion).
COMPANY PROFILE
About IIFL
The IIFL (India Infoline) group, comprising the holding company, India Infoline Ltd (NSE:
INDIAINFO, BSE: 532636) and its subsidiaries, is one of the leading players in the Indian
financial services space. IIFL offers advice and execution platform for the entire range of
financial services covering products ranging from Equities and derivatives, Commodities,
Wealth management, Asset management, Insurance, Fixed deposits, Loans, Investment
Banking, GoI bonds and other small savings instruments. IIFL recently received an in-
principle approval for Securities Trading and Clearing memberships from Singapore
Exchange (SGX) paving the way for IIFL to become the first Indian brokerage to get a
membership of the SGX. IIFL also received membership of the Colombo Stock Exchange
becoming the first foreign broker to enter Sri Lanka. IIFL owns and manages the website,
www.indiainfoline.com, which is one of India’s leading online destinations for personal
finance, stock markets, economy and business.
IIFL has been awarded the ‘Best Broker, India’ by FinanceAsia and the ‘Most improved
brokerage, India’ in the AsiaMoney polls. India Infoline was also adjudged as ‘Fastest
Growing Equity Broking House - Large firms’ by Dun & Bradstreet. A forerunner in the field
of equity research, IIFL’s research is acknowledged by none other than Forbes as ‘Best of the
Web’ and ‘…a must read for investors in Asia’. Our research is available not just over the
Internet but also on international wire services like Bloomberg, Thomson First Call and
Internet Securities where it is amongst one of the most read Indian brokers. A network of
over 2,500 business locations spread over more than 500 cities and towns across India
facilitates the smooth acquisition and servicing of a large customer base. All our offices are
connected with the corporate office in Mumbai with cutting edge networking technology. The
group caters to a customer base of about a million customers, over a variety of mediums viz.
online, over the phone and at our branches.