CERTIFICATE OF GUIDE

This is to certify that Ms. Hiteksha S. Joshi research Scholar of doctor of philosophy has

satisfactorily completed her thesis on “practical Application of modern portfolio theory” is the

original work done by her under guidance and supervision.

It is a standard piece of original research work, which embraces a fresh approach towards

analysis & interpretations of facts, which provides the candidate’s capacity for critical

examination and sound judgment over the problem studies by her.

She has devoted herself to the conduct of this research work under my guidance and supervision

as per the stipulated norms of the Saurashtra University and this work has not been submitted for

the award of degree of doctor of philosophy in management.

Date:

Place: Rajkot

Guide:

Dr. H.M.SHAH

Principal of K.K. Parekh commerce college

Amreli

CERTIFICATE FOR PRE PH.D PRESENTATION

this is certify that miss HITEKSHA JOSHI has made pre Ph.D. presentation as per UGC guide

line “University Grant Commission (minimum Standard and procedure for award of Ph.D.

degree) regulation – 2009” and Saurashtra university ordinance for Ph.D. program (O.Ph.D 6.2)

on the research work entitled “ practical Application of modern portfolio theory” presented on

Date ________________ at the department of management Saurashtra University, Rajkot.

Presentation was done before all the faculty members and students of the department for getting

feedback and comments.

I also certify that the research work was appreciated by all who remain present and there was no

comment made for this research work.

Date:

Place: Rajkot

Guide:

Dr. H.M.SHAH

Principal of K.K. Parekh commerce college

Amreli

DECLARATION

I, the undersigned, Hiteksha S. Joshi, a scholar of doctor of Philosophy, Department of

Management, Saurashtra University, Rajkot on April 2015, hereby declare that the research work

entitled “practical application of modern portfolio theories” is my own original work carried out

under the guidance and supervision of Dr. H.M.Shah, principal of K.K Parekh commerce

college, Amreli and Dr. Sanjay Bhayani, Head of the Department of Business Management

Saurashtra University, Rajkot.

I, further, declare that no part of this research work either fully or partly has been submitted to

any other University for any other degree and diploma.

Date:

Place:

(Hiteksha S. Joshi)

Acknowledgement

It is a great pleasure for me, to get this opportunity of expressing sincere gratitude to my guide,

Prof H.M.shah, Department of Commerce & Business Administration, Saurashtra University

under whose guidance and supervision this study has been carried out..

I am thankful to Dr. Sanjay Bhayani, who has devoted his time in guiding me at each and every

step. In fact, no words would suffice to express my deep sense of gratefulness to him, who has

been a source of stimulation and continued encouragement throughout my work and without his

full co operation, the study would have not been possible.

I am also thankful to teaching and non teaching staff of Department of Business Management,

Rajkot.

As well I would like to thanks Dr. Abhay Raja assistant professor in MBA Deparment at

ATMIYA institute of science and technology, Rajkot. He has been a source of constant

motivator for my critical situation and many issues for my career well life.

Finally, I am thankful to Dr. Pratapsinh Chauhan, Vice – Chancellor, Saurashtra University,

Rajkot for providing research work as well as other facilities.

And again I am greatly thankful to my parents and family members for supporting me and

encouraging me at every stage of my life. As well I would like thank my In laws for inspiration.

PREFACE

The Indian capital market has been increasing tremendously during last few years. With the

reforms of economy, reforms of industrial policy, reforms of public sector and reforms of

financial sector, the economy has been opened up and many developments have been taking

place in the Indian money market and capital market. In the study most critical year of economy

2008 is also covered so we could have exact result.

Small investors face a lot of problems in the share market, limited resources, lack of professional

advice, lack of information etc. Mutual funds have come as a much needed help to these

investors. It is a special type of institutional device or an investment vehicle through which the

investors pool their savings which are to be invested under the guidance of a team of experts in

wide variety of portfolios of corporate securities in such a way, so as to minimize risk, while

ensuring safety and steady return on investment. It forms an important part of the capital market,

providing the benefits of a diversified portfolio and expert fund management to a large number,

particularly small investors.

A booming economy and Bull Run on stock markets in the past four years despite recession have

led to an upsurge in portfolio management services (PMS). Funds managed by 150 PMS

providers, registered with the stock market regulator Securities and Exchange Board of India

(SEBI), are now running into thousands of crores of rupees, fund managers say.

Model testing required an in-depth study of the diversification practices being used in the world

of management and business. A thorough understanding of the risk being associated with

investment and the ways in which such risks can be mitigated to the best possible extent has been

elaborated in this paper. To proceed on with the topic a basic understanding of risk and its

diversification has been enumerated in the first chapter.

Not just that the widely assumed and practiced principle of mitigating risk and substantially

increasing reward by diversifying investment in several stocks, bonds, commodities, etc has been

discussed in the paper; but is diversifying can be risky has also been touched upon. This contrary

aspect has been elaborated in context to the investment technique being adopted by the world’s

famous and wealthiest investor Warren Buffet; namely a new horizon of the paradox of

diversification.

In order to arrive at a conclusion and verify the generally applied principle and model of modern

portfolio theory and the correlation existent between the index and nifty before diversifying

one’s investment, a hypothesis testing has been done.