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A STUDY ON PORFOLIO MANAGEMENT -HDFC

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 A STUDY ON PORFOLIO MANAGEMENT –HDFC
1
BARRE SHIRISHA, 2S. SWAPNA
1
MBA STUDENT, 2ASSISTANT PROFESSOR
DEPARTMENT OF MBA
Sree Chaitanya College of Engineering, KARIMNAGAR

ABSTRACT techniques have been used to support the

portfolio management process:
Portfolio Management is used to select a
portfolio of new product development projects  Heuristic models
to achieve the following goals:  Scoring techniques
 Visual or mapping techniques
 Maximize the profitability or value of
the portfolio The earliest Portfolio Management techniques
 Provide balance optimized projects' profitability or financial
 Support the strategy of the enterprise returns using heuristic or mathematical models.
However, this approach paid little attention to
Portfolio Management is the responsibility of balance or aligning the portfolio to the
the senior management team of an organization organization's strategy. Scoring techniques
or business unit. This team, which might be weight and score criteria to take into account
called the Product Committee, meets regularly to investment requirements, profitability, risk and
manage the product pipeline and make decisions strategic alignment. The shortcoming with this
about the product portfolio. Often, this is the approach can be an over emphasis on financial
same group that conducts the stage-gate reviews measures and an inability to optimize the mix of
in the organization. projects.

A logical starting point is to create a product 1. INTRODUCTION

strategy - markets, customers, products, strategy
approach, competitive emphasis, etc. The second CHARACTERISTICS OF PORTFOLIO
step is to understand the budget or resources MANAGEMENT:
available to balance the portfolio against. Third,
each project must be assessed for profitability Individuals will benefit immensely by
(rewards), investment requirements (resources), taking portfolio management services for the
risks, and other appropriate factors. following reasons:

 Whatever may be the status of the

The weighting of the goals in making decisions
capital market, over the long period
about products varies from company. But
capital markets have given an excellent
organizations must balance these goals: risk vs.
return when compared to other forms of
profitability, new products vs. improvements,
investment. The return from bank
strategy fit vs. reward, market vs. product line,
deposits, units, etc., is much less than
long-term vs. short-term. Several types of
from the stock market.

VOL 29. ISSUE 07 Page no·528·

 The modern theory is of the view that
by diversification, risk can be reduced. The
 The Indian Stock Markets are very investor can make diversification either by
complicated. Though there are having a large number of shares of companies in
thousands of companies that are listed different regions, in different industries or those
only a few hundred which have the producing different types of product lines.
necessary liquidity. Even among these, Modern theory believes in the perspective of
only some have the growth prospects combinations of securities under constraints of
which are conducive for investment. It risk and return.
is impossible for any individual wishing
to invest and sit down and analyze all SCOPE OF STUDY:
these intricacies of the market unless he This study covers the Markowitz model.
does nothing else. The study covers the calculation of correlations
 Even if an investor is able to understand between the different securities in order to find
the intricacies of the market and out at what percentage funds should be invested
separate chaff from the grain the trading among the companies in the portfolio. Also the
practices in India are so complicated study includes the calculation of individual
that it is really a difficult task for an Standard Deviation of securities and ends at the
investor to trade in all the major calculation of weights of individual securities
exchanges of India, look after his involved in the portfolio. These percentages
deliveries and payments help in allocating the funds available for
NEED & IMPORTANCE OF STUDY: investment based on risky portfolios.

Portfolio management has emerged as a OBJECTIVES OF THE STUDY:

separate academic discipline in India. Portfolio
theory that deals with the rational investment  To study the investment pattern and its
decision-making process has now become an related risks & returns In The Housing
integral part of financial literature. Development Finance Corporation
Limited (HDFC).
Investing in securities such as shares,  To find out optimal portfolio of The
debentures & bonds is profitable well as Housing Development Finance
exciting. It is indeed rewarding but involves a Corporation Limited (HDFC), which
great deal of risk & need artistic skill. Investing gave optimal return at a minimize risk
in financial securities is now considered to be to the investor in HDFC.
one of the most risky avenues of investment. It  To see whether the portfolio risk is less
is rare to find investors investing their entire than individual risk on whose basis the
savings in a single security. Instead, they tend portfolios are constituted
to invest in a group of securities. Such group of  To see whether the selected portfolios is
securities is called as PORTFOLIO. Creation of yielding a satisfactory and constant
portfolio helps to reduce risk without sacrificing return to the investor
returns. Portfolio management deals with the  To understand, analyze and select the
analysis of individual securities as well as with best portfolio
the theory & practice of optimally combining STEPS IN PORTFOLIO MANAGEMENT:
securities into portfolios.

VOL 29. ISSUE 07 Page no·529·

  Specification and qualification of 1. Construction of Portfolio is
investor objectives, constraints, and restricted to two companies based
preferences in the form of an investment on Markowitz model.
policy statement. 2. Very few and randomly selected
 Determination and qualification of scripts / companies are analyzed
capital market expectations for the from BSE listings.
economy, market sectors, industries and 3. Data collection was strictly
individual securities. confined to secondary source. No
 Allocation of assets and determination primary data is associated with the
of appropriate portfolio strategies for project.
each asset class and selection of 4. Detailed study of the topic was not
individual securities. possible due to limited size of the
 Performance measurement and project.
evaluation to ensure attainment of 5. There was a constraint with regard
investor objectives. to time allocation for the research
 Monitoring portfolio factors and study i.e. for a period of two
responding to changes in investor months.
objectives, constrains and / or capital 3. DATA ANALYSIS AND
market expectations. INTERPRETATION
 Rebalancing the portfolio when
necessary by repeating the asset
allocation, portfolio strategy and
security selection.
2. METHODOLOGY AND
FRAMEWORK
DATA COLLECTION METHODS
The data collection methods include
both the primary and secondary collection
methods.
Primary collection methods:
This method includes the data collection from
the personal discussion with the authorized
clerks and members of the hdfc financial
services.
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
LIMITATIONS OF THE STUDY

VOL 29. ISSUE 07 Page no·530·

 RANBAXY is 55.13. When compared to both
the risk is almost same, hence the risk is same
when invested in either of the security.

MAHENDRA & BAJAJ AUTO

The combination of M&M and BAJAJ AUTO

gives the proportion of investment is 1.6206 and
0.6206 for M&M and BAJAJ AUTO, based on
the standard deviations The standard deviation
for M&M is 104. 186 and for BAJAJ AUTO is
54.6.

Average
Hence the investor should invest their
funds more in BAJAJ AUTO when compared to
M&M as the risk involved in BAJAJ AUTO is
less than M&M as the standard deviation of
BAJAJ AUTO is less than that of M&M.

5. CONCLUSIONS

In case of perfectly correlated securities or

stocks, the risk can be reduced to a minimum
point.

In case of negatively correlative

securities the risk can be reduced to a
zero.(which is company’s risk) but the market
risk prevails the same for the security or stock
in the portfolio.

SUGGESTIONS
Correlation Coefficient
Investor would be able to achieve when the
4. FINDINGS returns of shares and debentures Resultant
portfolio would be known as diversified
CIPLA & RANBAXY portfolio. Thus portfolio construction would
address itself to three major via. Selectivity,
The combination of CIPLA and RANBAXY
timing and diversification.
gives the proportion of investment is 0.49916
and 0.50084 for CIPLA and RANBAXY, based In case of portfolio management,
on the standard deviations The standard negatively correlated assets are most profitable.
deviation for CIPLA is 55.22 and for Correlation between the BAJAJ are negatively

VOL 29. ISSUE 07 Page no·531·

 correlated which means both the combinations 5. www.indiainfoline.com
of portfolios are at good position to gain in
future. 6. www.moneybhai.com

Investors may invest their money for NEWSPAPERS& MAGAZINE

long run, as both the combinations are most 1. Dairy News Papers.
suitable portfolios. A rational investor would
constantly examine his chosen portfolio both for 2. Economic Times,
average return and risk.
3. Financial Express.
BIBLIOGRAPHY

BOOKS:

1. Securities Analysis And Portfolio

Management , Donalde, Fisher &
Ronald J.Jodon , 6th Edition

2. Security Analysis ad Portfolio

Management, Sudhindra Bhatt, Excel
Publications

3. Security Analysis ad Portfolio

Management, Kelvin S.

4. Investment Analysis and Portfolio

Management, Prasanna Chnadra

5. Financial Management and Policy, Van

Home, James C, Englewood Cliffs, N.J.
Prentice Hall, 1995

6. Money and Stock prices, Sprinkel,

Beryl, W., HomewoodIll, Richard S.
Irwin, Inc, 1964.

7. Portfolio and Investment Section:

Theory and Practice, Prentice Hall, 1984

WEBSITES:

1. www.investopedia.com

2. www.nseindia.com

3. www.bseindia.com.

4. www.moneycontrol.com

VOL 29. ISSUE 07 Page no·532·

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