Sana Port Folio Management.doc

8/9/2019 Sana Port Folio Management.doc

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PREFACE

The Analysis of Portfolio Analysis of Banking Sector briefly explains the importance of

Portfolio Analysis of Banking Sector in the investment decisions. The introduction of

Portfolio Analysis of Banking Sector

Will gives details about definition of portfolio management, obectives of Portfolio

Analysis of Banking Sector and advantages and disadvantages of portfolio management.

!o" the Portfolio Analysis of Banking Sector introduced in #ndia and its role in #ndia$s

finance sector and it$s importance "as explained in introduction. The various investment

opportunities "hich are available to the investor in market are briefly introduced in the

analysis of portfolio management. Analysis gives the support to take decisions in theconstruction process of portfolio management.

The investment process exhibits ho" the process should be and the re%uired information

for invest in various investments. The analysis gives the data about the calculation of

various hypothesis like risk, return and variance in constructing a portfolio. The portfolio

construction sho"s ho" to choose optimum portfolio

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INTRODUCTION:

#nvesting in securities such as shares, debentures and bonds is profitable as "ell as

exciting. #t is indeed re"arding, but involves a great deal of risk and calls for scientific

kno"ledge as "ell as artistic skill. #n such investments, both rational as "ell as emotional

responses are involved. #nvesting in financial securities is no" considered to be one of

the best avenues for investing one$s savings "hile it is ackno"ledged to be one of the

most risky avenues of investment.

#t is rare to find investors investing their entire savings in a single security. #nstead, they

tend to invest in a group of securities. Such a group of securities is called a portfolio.

'reation of a portfolio helps to reduce risk "ithout sacrificing returns. Portfolio Analysis

of Banking Sector deals "ith the analysis of individual securities as "ell as "ith the

theories and practice of optimally combining securities into portfolios. An investor "ho

understands the fundamental principles and analytical aspects of Portfolio Analysis of Banking Sector has a better chance of success.

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NEED FOR THE STUDY

#t is The study of analysis of portfolio management. The analysis of Portfolio Analysis of

Banking Sector provides the information to investor ho" to invest the savings in

various securities and the "ay ho" to get maximum returns from the securities andho" to decrease the risk "hich lies in securities.

The technical approach to investment is essentially a reflection of the idea that prices

move in trends, "hich are determined by the changing attitudes of investors to"ard a

variety of economic, monetary, political, and psychological forces. The art of

analysis of Portfolio Analysis of Banking Sector is to identify trend changes at an

early stage and to maintain an investment posture until the "eight of the evidence

indicates that the trend has reversed.

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OBJECTIVES OF THE STUDY

&. To understand the portfolio selection process

(. To study the frontier techni%ue in the portfolio selection

). To study the process of generation of investible securities in portfolio

*. To understand the process of calculating risk of selected securities in portfolio

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SCOPE OF THE PROJECT

The proect provides the information regarding the Portfolio Analysis of Banking

Sector that is ho" to analy+e the portfolio, ho" to construct the portfolio and the factors

"hich influence "hile constructing a portfolio. Analysis of Portfolio Analysis of Banking

Sector "ill helps to the investor in getting good returns and decreases the risk. The

proect analysis considers the mission of the company and "ealth maximi+ation concept

of the investor .

LIMITATIONS:

The data is collected from the primary and secondary sources and there is subected to

slight variation than "hat the study includes in reality.

!ence accuracy and correctness can be measured only to the extent of "hat the sample

group has furnished.

This study has been conducted purely to understand Portfolio Analysis of Banking Sector

for investor

'onstruction of portfolio is restricted to t"o companies based on mark"it+

model. -ery fe" and randomly selected scriptscompanies are analy+ed.

/ata collection "as strictly confined to secondary source. 0o primary data is

associated "ith the proect.

/etailed study of the topic "as not possible due to limited si+e of the proect

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There "as constraint "ith regard to the time allocation for the research study i.e.

for a period of t"o months.

METHODOLOGY OF THE STUDY

The data collection of the study consists of t"o kinds of data

1. Primary s!r"#s $ %a&a:

Which is first hand in nature, can be collected through.

. 2eeting "ith concerned peoples.

. Personal observation.

'. M#&(%s $ "))#"&i* $ &(# %a&a..secondary data Which is already exists

.

. 3inancial management text books .

. Printed materials.

. 4ournals 5 maga+ines.

. 0e"s papers.

. Text books. . World "ide "ebs.

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INDUSTRY PROFILE

Bombay Stock 7xchange 8imited is the oldest stock exchange in Asia "ith a rich

heritage. Popularly kno"n as 9BS79, it "as established as 9The 0ative Share 5 Stock

Brokers Association9 in &:;1. BS7 has played a pioneering role in the #ndian Securities

2arket < one of the oldest in the "orld. 2uch before actual legislations "ere enacted,

BS7 had formulated comprehensive set of =ules and =egulations for the #ndian 'apital

2arkets. #t also laid do"n best practices adopted by the #ndian 'apital 2arkets after

#ndia gained its #ndependence.

-ision

97merge as the premier #ndian stock exchange by establishing global benchmarks9

BS7 is the first stock exchange in the country to obtain permanent recognition in

&>16 from the ?overnment of #ndia under the Securities 'ontracts @=egulation Act,

&>16.The 7xchanges pivotal and pre


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The launch of S70S7D in &>:6 "as later follo"ed up in 4anuary &>:> by introduction of

BS7 0ational #ndex @Base &>:)


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3irst in #ndia to launch GSI version of BS7 Sensex

3irst in #ndia to launch 7xchange 7nabled #nternet Trading Platform

3irst in #ndia to obtain #SF certification for Surveillance, 'learing 5 Settlement

BS7 Fn


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securities, #ndia index services and products ltd @##S8 provides indices and index

services "ith a consulting and licensing agreement "ith Standard 5 Poor$s @S5P, and #T

ltd forms the technology strength that 0S7 "orks on.

Today, 0S7 is one of the largest exchanges in the "orld and still forging ahead. At 0S7,

"e are constantly "orking to"ards creating a more transparent, vibrant and innovativecapital market.

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COMPANY PROFILE

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Thus, Portfolio Analysis of Banking Sector is all about strengths, "eaknesses,

opportunities and threats in the choice of debt vs. e%uity, domestic vs. international,

gro"th vs. safety and numerous other trade


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NEED FOR PORTFOLIO MANAGEMENT:

The Portfolio Analysis of Banking Sector deals "ith the process of selection securities

from the number of opportunities available "ith different expected returns and carrying

different levels of risk and the selection of securities is made "ith a vie" to provide the

investors the maximum yield for a given level of risk or ensure minimum risk for a levelof return.

Portfolio Analysis of Banking Sector is a process encompassing many activities of

investment in assets and securities. #t is a dynamics and flexible concept and involves

regular and systematic analysis, udgment and actions. The obectives of this service are

to help the unkno"n investors "ith the expertise of professionals in investment Portfolio

2anagement. #t involves construction of a portfolio based upon the investor$s obectives,

constrains, preferences for risk and return and liability. The portfolio is revie"ed and

adusted from time to time "ith the market conditions. The evaluation of portfolio is to be

done in terms of targets set for risk and return. The changes in portfolio are to be effected

to meet the changing conditions.

Portfolio 'onstruction refers to the allocation of surplus funds in hand among a variety of

financial assets open for investment. Portfolio theory concerns itself "ith the principles

governing such allocation. The modern vie" of investment is oriented to"ards the

assembly of proper combinations held together "ill give beneficial result if they are

grouped in a manner to secure higher return after taking into consideration the risk

element.

The modern theory is the vie" 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

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lines. 2odern theory believes in the perspectives of combination of securities under

constraints of risk and return.

ELEMENTS:

Portfolio Analysis of Banking Sector is an on


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Pr"#ss $ +r&$)i ma*a,#m#*&:

The Portfolio Program and Asset Management Program both follo" a disciplined

process to establish and monitor an optimal investment mix. This six


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1. IDENTIFY GOALS AND OBJECTIVES:

When "ill you need the money from your investmentsK What are you saving your

money forK With the assistance of financial advisor, the n!estment Profile

#estionnaire "ill guide through a series of %uestions to help identify the goals and

obectives for the investments.

'. DETERMINE OPTIMAL INVESTMENT MI-:

Fnce the n!estment Profile #estionnaire is completed, investor$s optimal

investment mix or asset allocation "ill be determined. An asset allocation represents

the mix of investments @cash, fixed income and e%uities that match individual risk

and return needs. This step represents one of the most important decisions in your

portfolio construction, as asset allocation has been found to be the maor determinant

of long


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The customi+ed portfolio is created using an allocation of select L32 3unds.

7ach L32 3und is designed to satisfy the re%uirements of a specific asset class, and

is selected in the necessary proportion to match the optimal investment mix.

0 MONITOR PROGRESS

Building an optimal investment mix is only part of the process. #t is e%ually important

to maintain the optimal mix "hen varying market conditions cause investment mix to

drift a"ay from its target. To ensure that mix of asset classes stays in line "ith

investor$s uni%ue needs, the portfolio "ill be monitored and rebalanced back to the

optimal investment mix

. REASSESS NEEDS AND GOALS

4ust as markets shift, so do the goals and obectives of investors. With the flexibility

of the Portfolio Program and Asset Management Program, "hen the investor$s needs

or other life circumstances change, the portfolio has the flexibility to accommodatesuch changes.

RIS2:

=isk refers to the probability that the return and therefore the value of an asset or security

may have alternative outcomes. =isk is the uncertainty @today surrounding the eventual

outcome of an event "hich "ill occur in the future. =isk is uncertainty of the

incomecapital appreciation or loss of both. All investments are risky. The higher the risk

taken, the higher is the return. But proper management of risk involves the right choice of

investments "hose risks are compensation.

RETURN:

=eturn


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7ach security in a portfolio contributes returns in the proportion of its investment in

security. Thus the portfolio of expected returns, from each of the securities "ith "eights

representing the proportionate share of security in the total investments.

RIS2 3 RETURN RELATIONSHIP:

The riskreturn relationship is a fundamental concept in not only financial analysis, but in

every aspect of life. #f decisions are to lead to benefit maximi+ation, it is necessary that

individualsinstitutions consider the combined influence on expected @future return or

benefit as "ell as on riskcost. The re%uirement that expected returnbenefit be

commensurate "ith riskcost is kno"n as the 9riskreturn trade


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2. Gn


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There "as a time "hen Portfolio Analysis of Banking Sector "as an elite practice beyond

the reach of ordinary people, in #ndia. The scenario has changed drastically. Portfolio

Analysis of Banking Sector is no" a familiar term and is "idely practiced in #ndia. The

theories and concepts relating to Portfolio Analysis of Banking Sector no" find their

"ay to the frontpages of financial ne"s papers and the cover pages of investment ournals

in #ndia.

#n the beginning of nineties #ndia embarked on a programme of economic liberali+ation

and globali+ation. This reform has made the #ndian capital markets active. The #ndian

stock markets are steadily moving to"ards higher efficiency, "ith rapid computeri+ation,

increasing market transparency, "ith rapid computeri+ation, increasing market

transparency , better infrastructure, better customer service, closer integration and higher

volumes. The markets are dominated by large institutional investors "ith their diversified

portfolios.

Professional portfolio management, backed by competent research, began to be practiced

by mutual funds, investment consultants and big brokers. The securities exchange board of

#ndia, the stock market regulatory body in #ndia, is supervising the "hole process "ith a

vie" to making Portfolio Analysis of Banking Sector a responsible professional service

to be rendered by experts in the field.

With the advent of computers the "hole process of Portfolio Analysis of Banking Sector

has become %uite easy. The computer can absorb large amount of data, perform the

computations accurately and %uickly give out the results in any desired form.Portfolios

no" include not only domestic securities but also foreign securities. /iversification has

become international. #n this context, financial investment cannot be conceived of "ith

out portfolio management. Another significant development in the field of investment

management is the introduction of derivative securities such as options and futures. The

trading in derivative securities, their valuation, etc. have broadened the scope of

investment management.

ANALYSIS OF PORTFOLIO MANAGEMENT:

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A*a)ysis $ Pr&$)i ma*a,#m#*&:

Analysis of Portfolio management9 is nothing but management of portfolio of an

investor. The obective is to analyse all the products available in details for an investor .

Analysis of Portfolio Analysis of Banking Sector includes analysis of various productsavailable to the investor like mutual funds, insurance, fixed deposits, saving bank account

and other Portfolio Analysis of Banking Sector services.

I 8 MUTUAL FUNDS:

INTRODUCTION

#nvestments goals vary from person to person. While somebody "ants security, othersmight give more "eightage to returns alone. Somebody else might "ant to plan for his

childs education "hile somebody might be saving for the proverbial rainy day or even life

after retirement. With obectives defying any range , it is obvious that the products re%uired

"ill vary as "ell.

#ndian 2utual 3unds industry offers a plethora of schemes and serves broadly all tupe of

investors. The range of products includes e%uity funds, debt, li%uid, gilt and balanced

funds. There are also funds meant exclusively for young and old, small and large investors.2oreover, the setup of a legal structure, "hich has enough teeth to safeguard investors

intersts, ensures that the investors are not cheated out of their hard earned money. All in

all, benefits provided by them cut across the boundaries of investor category and thus

create for them, a universal appeal.

#nvestors of all categories could choose to invest on their o"n in multiple options but opt

for 2utual 3unds for the sole reason that all benefits come in a package.The 2utual 3und

industry is having its hands full to cater to various needs of the investors by coming up "ith

ne" plans, schemes and options "ith respect to rate of returns, dividend fre%uency and

li%uidity.

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2utual 3und is a mechanism for pooling the resources by issuing units to the investors and

investing funds in securities in accordance "ith obectives as disclosed in offer document.

#nvestments in securities are spread among a "ide cross


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2utual 3und investments are not totally risk free. #n fact, investing in 2utual 3unds

contains the same risk as investing in the markets, the only difference being that due to

professional management of funds the controllable risks are substantially reduced. A very

important risk involved in 2utual 3und investments is the market risk. When the market is

in doldrums, most of the e%uity funds "ill also experience a do"n turnoverN the company

specific risks are largely eliminated due to professional fund management.

. TYPES OF MUTUAL FUNDS:

There are many types of mutual funds available to the investor.

O+#*5#*%#% M!&!a) F!*%s:

An open


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7xchange


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!edge funds in the Gnited States are pooled investment funds "ith loose S7' regulation

and should not be confused "ith mutual funds. Some hedge fund managers are re%uired to

register "ith S7' as investment advisers under the #nvestment Advisers Act. The Act does

not re%uire an adviser to follo" or avoid any particular investment strategies, nor does it

re%uire or prohibit specific investments. !edge funds typically charge a management fee of

&O or more, plus a 9performance fee9 of (CO of the hedge fundsprofits. There may be a

9lock


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N* 3 Ta9 #9#m+& $!*%s:

7xcept e%uity mutual fund schemes are tax


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#nsurance has its basic characteristics they are

P)i*, $ )ss#s:

#t refers to the spread of loss of many one to many, in order to substitute actual loss "ith

average loss. Thus pooling techni%ue involves sharing of losses and also prediction of future losses.

Fr&!i&!s Lss#s:

#t pays fortuitous or accidental losses. #nsurance covers unforeseen and unexpected or

accidental losses, "hich have been grouped under fortuitous losses and are unintentional

and occur due to a chance factor.

Tra*s$#r $ Ris4:

#nsurance essentially involves transfer of risk from insured to the insurer. Since an insurer

is in a better financial position then individual insureds, he indemnifies the insured for

losses due to premature death, poor health, disability, theft or loss of property etc.

I*%#m*i$i"a&i*:

#ndemnification means restoring the insured to his financial position prior to suffering aloss.

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CLASSIFICATION OF INSURANCE BUSSINESS:

The insurance business "as nationali+ed in &>16. #nsurance business may be classified

broadly in t"o categories

Li$# i*s!ra*"# 7!ssi*#s:

life insurance business9 means the business of effecting contracts of insurance upon

human life, including any contract "hereby the payment of money is assured on death

@except death by accident only or the happening of any 8ife #nsurance 'orporation of

#ndia "as established under 8ife #nsurance 'orporation Act,&>16 to carry on 8ife #nsurance

Business. Accordingly, the 8ife #nsurance business "as conducted only by the 8ife

#nsurance 'orporation of #ndia. But no" the 8ife #nsurance 'orporation Act,&>16 has been

amended and private companies are also allo"ed to carry on 8ife #nsurance Business.

Gnder 8ife #nsurance contracts, the insurance company, in consideration of some regular

payment called premium guarantees to pay to the policy holder, or nominee, on reaching a

certain age or his death, "hichever is earlier, a certain sum of money called policy amount.

G#*#ra) i*s!ra*"# 7!si*#ss:

?eneral #nsurance covers all types of insurances except life insurance, such as fire

insurance, marine insurance, accident insurance etc. A common characteristic of all types

of general insurance is that a policy covers one year. The premium paid by the policy

holder provides protection to him for one year commencing "ith the date of payment of

premium. #f there is no damage or loss during the year, there is no claim and, of course, the

premium paid is not refunded.

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THE INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY ACT=

1>>>:

An Act to provide for the establishment of an Authority to protect the interests of holders of

insurance policies, to regulate, promote and ensure orderly gro"th of the insurance industry

and for matters connected there"ith or incidental there to and f urther to amend the Act,&>):, the 8ife #nsurance 'orporation Act, &>16 and the ?eneral #nsurance

Business@0ationalisation Act, &>;(..

@& This Act may be called the #nsurance =egulatory and /evelopment Authority Act,

&>>>.

@( #t extends to the "hole of #ndia.

@) #t shall come into force on such date as the 'entral ?overnment may, by notification in

the Ffficial ?a+ette, appoint Provided that different dates may be appointed for different

provisions of this Act and any reference in any such provision to the commencement of this

Act shall be construed as a reference to the coming into force of that provision.

INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY

Es&a7)is(m#*& a*% i*"r+ra&i* $ A!&(ri&y.5

@& With effect from such date as the 'entral ?overnment may, by notification, appoint,

there shall be established, for the purposes of this Act, an Authority to be called 9the

#nsurance =egulatory and /evelopment Authority9.

@( The Authority shall be a body corporate by the name aforesaid having perpetual

succession and a common seal "ith po"er, subect to the provisions of this Act, to ac%uire,

hold and dispose of property, both movable and immovable, and to contract and shall, by

the said name, sue or be sued.

@) The head office of the Authority shall be at such place as the 'entral ?overnment may

decide from time to time.

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@* The Authority may establish offices at other places in #ndia.

Cm+si&i* $ A!&(ri&y:

The Authority shall consist of the follo"ing members, namely<

@a a 'hairpersonN

@b not more than five "hole


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III8 Sa;i*,s Ba*4 A""!*&

A Saving Bank account @SB account is meant to promote the habit of saving among

thepeople. #t also facilitates safekeeping of money. #n this scheme fund is allo"ed to be

"ithdra"n "henever re%uired, "ithout any condition. !ence a savings account is a safe,

convenient and affordable "ay to save your money. Bank deposits are fairly safe because

banks are subect to control of the =eserve Bank of #ndia "ith regard to several policy and

operational parameters. Bank also pays you a minimal interest for keeping your money

"ith them.

F#a&!r#s:

The minimum amount to open an account in a nationali+ed bank is =s &CC. #f che%ue books

are also issued, the minimum balance of =s 1CC has to be maintained. !o"ever in some

private or foreign bank the minimum balance is =s 1CC or more and can be up =s. &C,CCC.

Fne che%ue book is issued to a customer at a time.

A Savings account can be opened either individually or ointly "ith another individual. #n a

oint account only the sign of one account holder is needed to "rite a che%ue. But at the

time of closing an account, the sign of the both the account holders are needed.

R#&!r*:

The interest rate of savings bank account in #ndia varies bet"een (.1O and *O. #n Savings

Bank account, bank follo"s the simple interest method. The rate of interest may change

from time to time according to the rules of =eserve Bank of #ndia. Fne can "ithdra"

hisher money by submitting a che%ue in the bank and details of the account, i.e the 2oney

deposited, "ithdra"n along "ith the dates and the balance, is recorded in a passbook.

A%;a*&a,#s:

#ts much safer to keep your money at a bank than to keep a large amount of cash in your

home. Bank deposits are fairly safe because banks are subect to control of the =eserve

Bank of #ndia "ith regard to several policy and operational parameters. The federal

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?overnment insures your money. Saving Bank account does not have any fixed period for

deposit. The depositor can takemoney from his account by "riting a che%ue to somebody

else or submitting a che%ue directly. 0o" most of the banks offer various facilities such as

AT2 card, credit card etc. Through debitAT2 card one can take money from any of the

AT2 centres of the particular bank "hich "ill be open (* hours a day. Through credit card

one can avail shopping facilities from any shop "hich accept the credit card. And many of

the banks also give internet banking facility through "ith one do the transactions like

"ithdra"als, deposits, statement of account etc

H6 & +#*

Savings Bank Account can be opened in the name of an individual or in oint names of the

depositors by filling up the appropriate forms. A minor "ho have completed ten years of

age can also open and operate the account. At the time of opening an account one must

submit the documents like photocopy of passport or 7lectoral card, Postal identification

cards as address proof and t"o passport si+e photos.

2ost banks also re%uire an introduction for opening an SB account. The introduction may

be obtained either from an existing account holder or from a respectable citi+en, "ell

kno"n to the bank, "ho should normally call on the bank and sign in the column specially

provided for the purpose of introduction in the account opening form.

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IV 8 Fi9#% D#+si&

A fixed deposit is meant for those investors "ho "ant to deposit a lump sum of money for

a fixed periodN say for a minimum period of &1 days to five years and above, thereby

earning a higher rate of interest in return. #nvestor gets a lump sum @principal R interest at

the maturity of the deposit. Bank fixed deposits are one of the most common savings

scheme open to an average investor. 3ixed deposits also give a higher rate of interest than a

savings bank account.

The facilities vary from bank to bank. Some of the facilities offered by banks are

overdraft @loan facility on the amount deposited, premature "ithdra"al before maturity

period @"hich involves a loss of interest etc. Bank deposits are fairly safer because banks

are subect to control of the =eserve Bank of #ndia.

F#a&!r#s:

Bank deposits are fairly safe because banks are subect to control of the =eserve Bank of

#ndia @=B# "ith regard to several policy and operational parameters. The banks are free to

offer varying interests in fixed deposits of different maturities. #nterest is compounded once

a %uarter, leading to a some"hat higher effective rate. The minimum deposit amount

varies "ith each bank. #t can range from as lo" as =s. &CC to an unlimited amount "ith

some banks. /eposits can be made in multiples of =s. &CC. Before opening a 3/ account,

try to check the rates of interest for different banks for different periods. #t is advisable to

keep the amount in five or ten small deposits instead of making one big deposit. #n case of

any premature "ithdra"al of partial amount, then only one or t"o deposit need be

prematurely encashed. The loss sustained in interest "ill, thus, be less than if one big

deposit "ere to be encashed. 'heck deposit receipts carefully to see that all particulars have

been properly and accurately filled in. The thing to consider before investing in an 3/ is

the rate of interest and the inflation rate. A high inflation rate can simply chip a"ay your

real returns.

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R#&!r*s:

The rate of interest for Bank 3ixed /eposits varies bet"een * and && per cent, depending

on the maturity period @duration of the 3/ and the amount invested. #nterest rate also

varies bet"een each bank. A Bank 3/ does not provide regular interest income, but a lump<

sum amount on its maturity. Some banks have facility to pay interest every %uarter or everymonth, but the interest paid may be at a discounted rate in case of monthly nterest. The

#nterest payable on 3ixed /eposit can also be transferred to Savings Bank or 'urrent

Account of the customer. The deposit period can vary from &1, )C or *1 days to ), 6

months, & year, &.1 years to &C years.

A%;a*&a,#s

Bank deposits are the safest investment after Post office savings because all bank deposits

are insured under the /eposit #nsurance 5 'redit ?uarantee Scheme of #ndia. #t is possible

to get a loans up to;1< >CO of the deposit amount from banks against fixed deposit

/uration #nterest rate @O per annum

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receipts. The interest charged "ill be (O more than the rate of interest earned by the

deposit. With effect from A.. &>>:>, investment on bank deposits, along "ith other

specified incomes, is exempt from income tax up to a limit of =s.&(, CCC< under Section

:C8. Also, from A.. &>>)*, bank deposits are totally exempt from "ealth tax. The &>>1

3inance Bill Proposals introduced tax deduction at source @T/S on fixed deposits on

interest incomes of =s.1CCC< and above per annum.

H6 & a++)y

Fne can get a bank 3/ at any bank, be it nationalised, private, or foreign. ou have to open

a 3/ account "ith the bank, and make the deposit. !o"ever, some banks insist that you

maintain a savings account "ith them to operate a 3/. When a depositor opens an 3/

account "ith a bank, a deposit receipt or an account statement is issued to him, "hich can

be updated from time to time, depending on the duration of the 3/ and the fre%uency of the

interest calculation. 'heck deposit receipts carefully to see that all particulars have been

properly and accurately filled in.

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Da&a A*a)ysis

Fi9#% %#+si& ras i* +!7)i" a*% +ri;a s#"&r 7a*4s

P!7)i" S#"&r Ba*4s

):


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Fixed Deposit Rates in Public Sector Banks

Bank Name15-29

Days

30-45

Days

46-60

Days

61-90

Days

91-120

Days

120-179

Days

180-270

Days

271-364

Days

1-2Years

2-3Years

3-5Years

Up to5

Years

Wite!!e"t!rom

#$$aa%a&Bank

5.00 5.50 6.50 6.50 7.00 7.00 8.00 8.00 9.50 10.00 10.50 11.00 1-4-99

#n&ra Bank 5.50 5.50 7.00 7.00 8.00 8.00 9.50 9.50 10.00 10.50 11.00 11.00 1-4-99

Bank o!Baro&a

5.00 5.00 6.00 6.00 6.00 6.00 7.00 7.00 8.00 9.51 10.50 10.50 5-4-99

Bank o! 'n&ia 5.00 5.00 5.50 6.50 6.50 6.50 7.00 7.00 8.00 9.50 10.00 10.00 21-7-99

(anara Bank 5.00 5.00 6.00 6.00 6.50 6.50 7.50 7.50 9.00 9.50 10.00 10.00 16-8-99

(entra$ Bank 5.00 6.00 6.50 6.50 7.00 7.00 8.50 8.50 9.50 9.50 10.50 10.50 12-3-99

Dena Bank 6.00 6.00 6.25 6.25 6.75 6.75 7.75 7.75 9.00 10.00 10.50 10.50 9-8-99

'n&ian Bank 5.00 5.00 7.00 7.00 8.00 8.00 8.50 8.50 10.00 10.50 11.00 11.00 17-5-99

'n&ian)*erseasBank

5.00 5.00 6.00 6.00 7.50 7.50 8.00 8.00 9.50 10.00 10.50 10.50 1-4-99

)rienta$ Bank 5.00 5.00 6.50 6.50 7.00 7.00 8.00 8.00 9.50 10.00 10.5 10.5 1-4-99

+,na% /in&

Bank

6.00 6.00 6.50 6.50 7.00 7.00 8.00 8.00 9.50 10.00 10.5 10.5 18-5-99

/tate Bank o!

y&era%a& 5.00 5.00 6.50 6.50 7.00 7.00 8.00 8.00 9.50 9.50 10.50 10.50 15-3-99

/tate Bank o! 'n&ia

5.00 5.00 5.50 5.50 5.50 5.50 7.00 7.00 9.00 9.50 10.50 10.50 15-3-99

/tate Bank o! ysore

5.00 5.00 5.50 5.50 5.50 5.50 7.00 7.00 9.00 9.50 10.50 10.50 5-3-99

/.B. 5.00 6.00 6.50 7.00 8.00 8.00 8.00 8.00 9.00 10.00 10.50 10.50 -

/yn&i"ateBank

5.00 5.50 7.00 7.00 7.25 7.25 8.00 8.00 10.00 10.50 11.25 11.25 15-3-99

U.B.' 5.00 5.00 6.00 6.50 7.00 7.00 8.00 8.00 9.00 10.00 10.5 10.5 1-4-99

Nort a$a%arrameenBank

5.00 7.00 8.00 8.00 10.00 10.00 10.00 10.00 10.50 11.00 11.00 12.00 1-12-99

iaya Bank 5.00 6.00 7.00 7.00 8.00 8.00 9.00 9.00 9.50 10.50 11.00 11.00 8-3-99

Private Sector Banks

Fixed Deposit Rates in Private Sector Banks

Name o! teBank

15-29

30-45

46-60

61-90

91-120

120-179

180-270

271-364

1 -2Years

2 - 3Years

3 - 5Years

Up to5

Wite!!e"ti*e

)>


40/79

&ays Days Days Days Days Days Days Days Years !rom

Bank o! a&,ra 5.50 6.50 6.50 7.50 8.50 8.50 9.50 9.50 10.00 10.50 11.00 11.00 16-8-99

(ent,rion Bank 6.50 8.00 8.25 8.50 9.25 9.25 10.25 10.25 10.50 11.25 11.25 11.25 24-6-99

(ity Union Bank 5.00 6.00 7.00 8.00 9.00 9.00 10.00 10.00 10.50 10.50 10.00 10.00 1-6-99

$o%a$ r,st'n&ia

6.50 8.00 8.00 8.00 9.25 9.25 10.00 10.00 - - 11.25 11.50 18-8-99

.D..( Bank 5.00 8.00 8.00 8.00 9.00 9.00 10.00 10.00 10.00 10.00 10.00 - 10-4-99

'.(.'.(.' Bank 5.00 6.00 7.00 7.00 8.00 8.00 10.00 10.00 10.50 10.50 10.50 10.50 1-8-99

'.D.B.'. 5.00 8.00 8.00 8.00 9.00 9.00 9.50 9.50 - - 10.50 - 21-8-99

'n&,s'n& Bank 5.50 8.00 8.00 8.00 9.00 9.00 10.00 10.00 - 11.25 11.25 11.25 2-8-99

or& risnaBank

5.50 5.50 8.00 8.00 8.00 8.00 9.50 9.50 11.25 11.25 11.25 11.25 1-5-99

ami$na&,er"anti$e Bank

6.00 6.00 7.50 7.50 9.50 9.50 10.50 10.50 11.00 11.00 11.50 11.50 7-5-99

(ato$i" /yrianBank

6.00 6.00 8.00 8.00 8.50 8.50 9.00 9.00 10.00 10.50 11.00 11.00 19-4-99

Dana $aksmiBank

7.00 7.00 8.00 8.00 9.00 9.00 9.50 9.50 10.50 11.00 11.50 11.50 1-9-99

e&era$ Bank 5.00 5.00 7.00 7.00 7.50 7.50 8.00 8.00 9.50 10.00 10.75 10.75 1-9-99

. . Bank 5.50 5.50 7.00 7.00 9.25 9.25 10.00 10.00 10.25 10.50 11.00 11.00 15-12-

99/o,t 'n&ianBank

5.00 5.00 7.00 7.00 7.50 7.50 8.50 8.50 9.50 10.25 10.75 10.75 15-9-99

Ne&,na&iBank

6.00 6.00 8.00 8.00 9.00 9.00 10.00 10.00 10.50 11.50 11.50 11.50 1-4-99

ysya Bank 5.75 5.75 7.25 7.25 8.25 8.50 9.00 9.00 10.50 10.75 11.00 11.00 2-8-99

imes Bank 6.00 8.00 8.00 8.00 9.00 9.00 10.00 10.00 10.5 10.5 10.5 - 16-8-99

U..'. Bank 5.50 8.00 8.00 8.00 9.00 9.00 - - - - 11.5 11.5 1-5-99

V 8 Pr&$)i A*a)ysis $ Ba*4i*, S#"&r S#r;i"#s

Portfolio Analysis of Banking Sector Services @P2S has t"o ne" offerings, the ?ro"th

Scheme and the Arbitrage Scheme, aimed at investors "ith lo" to moderate risk appetite

*C


41/79

seeking to maximise returns on investments in this challenging economic environment.

/edicated "ealth managers "ill help the investors to carefully understand their financial

goals and advise them "ith the right product mix. #t has robust Portfolio Analysis of

Banking Sector soft"are that enables the entire construction, monitoring and risk

management processes. #t relieves investors from all the administrative hassles by using

proactive reporting measures.

P2S is fast gaining eminence as an investment avenue of choice for !igh 0et"orth

#nvestors. While offering a range of speciali+ed investment strategies to capitali+e on

opportunities in the market, Wealths P2S combines competent fund management,

dedicated research and state of art technology, thereby ensuring a re"arding experience for

all clients. #t "ill ensure that investors "ith uni%ue needs, varying risk appetite and

focussed financial goals can maximise returns on investments and also get multiple

conveniences and benefits even in todays challenging financial environment.9

Wealth P2S offers several benefits to investors. We professionally manage e%uity

investments "ith an aim to deliver consistent return "hile having a prudent eye on risk. We

have a "ell


42/79

The Arbitrage Scheme is formulated to generate consistent reurns on a regular basis under

lo" risk environment to outperform the fixed income bearing financial instruments by

reasonably good margin. The scheme is recommended for investors "ith very lo"


43/79

to use a combination of 9top


44/79

C(ara"ris&i"s $ I*;#s&m#*&

The entrepreneur has to "eigh the alternative investment process in accordance "ith his

preferences to achieve his business goal. The principal characteristics of investment are

i. Ris4:

=isk is inherent in any investment. This risk may relate to loss of capital, delay in

repayment of capital, non payment of interest, or variability of returns.

ii. R#&!r*:

All investments are characteri+ed by the expectation of a return. #n fact, investments are

made "ith the primary obective of deriving a return. The return may be received in the

form of yield plus capital appreciation.

iii. Sa$#&y:

the safety of an investment implies the certainty of return of capital "ith out loss of

money or time. Safety is another feature "hich an investor desires for his investments.i;. Li!i%i&y:

an investment "hich is easily saleable or marketable "ith out loss of money and "ith out

loss of time is said to process li%uidity.

I*;#s&m#*& Pr$i)# $ a* E*&r#+r#*#!r

The investment process of an entrepreneur is multi


45/79

U&i)i&y $ I*;#s&m#*&

#nvestments play a vital role in the overall economic development. #n fact, the %uantum

of investment decides the process and direction of gro"th. #n case of manufacturing

enterprises investment determines its performance.

Broadly, the utility of investment is directed to"ards development, profit, Po"er, "ealth,

capital generation and social good.

INVESTMENT PROCESS

We follo" a bottom


46/79

Hfactors that affect the overall economy and the company$s sector, as "ell as currency

risks, interest rate changes, etc.

Gltimately the investment decision rests "ith the portfolio manager. When the elements

of this holistic approach are in place, the analysts float their stock recommendations to

portfolio manager and he take the final call.

The investment process is generally described in four stages. These stages are

&. #nvestment policy,

(. #nvestment analysis,

). -aluation of securities, and

*. Portfolio construction.

Portfolio construction re


47/79

• Allocation of "ealth to asset categories.

II. I*;#s&m#*& Va)!a&i*

• -aluation of stocks

• -aluation of /ebentures and bonds

• -aluation of other assets

III. I*;#s&m#*& A*a)ysis

IV. Pr&$)i C*s&r!"&i*/etermination of diversification level 'onsideration of investment timing Selection of

investment assets Allocation of ingestible "ealth to investment assets 7valuation of

portfolio for feedback.

Pr&$)i C*s&r!"&i*

#n todays financial marketplace, a "ell


48/79

"ords, your portfolio should meet your future needs for capital and give you peace of

mind. #nvestors can construct portfolios aligned to their goals and investment strategies

by follo"ing a systematic approach. !ere "e go over some essential steps for taking such

an approach.

S+ 1: %#rmi*i*, &(# A++r+ria Ass#& A))"a&i*

Ascertaining the individual financial situation and investment goals is the first task in

constructing a portfolio. #mportant items to consider are age, ho" much time you have to

gro" your investments, as "ell as amount of capital to invest and future capital needs. A

single college graduate ust beginning his or her career and a 11


49/79

!ere are t"o examples one suitable for a conservative investor and another for the

moderately aggressive investor.

The main goal of a conservative portfolio is to protect its value. The allocation sho"n

above "ould yield current income from the bonds, and "ould also provide some long<

term capital gro"th potential from the investment in high


50/79

But you can further break do"n the different asset classes into subclasses, "hich also

have different risks and potential returns. 3or example, an investor might divide the

e%uity portion bet"een different sectors and market caps, and bet"een domestic and

foreign stock. The bond portion might be allocated bet"een those that are short term and

long term, government versus corporate debt and so forth.

S+ : R#ass#ssi*, Pr&$)i @#i,(&i*,s

Fnce you have an established portfolio, you need to analy+e and rebalance it periodically

because market movements may cause your initial "eightings to change. To assess your

portfolios actual asset allocation, %uantitatively categori+e the investments and determine

their values proportion to the "hole.

The other factors that are likely to change over time are your current financial situation,future needs and risk tolerance. #f these things change, you may need to adust your

portfolio accordingly. #f your risk tolerance has dropped, you may need to reduce the

amount of e%uities held. Fr perhaps youre no" ready to take on greater risk and your

asset allocation re%uires that a small proportion of your assets be held in riskier small


51/79

implications of readusting your portfolio. Perhaps your investment in gro"th stocks has

appreciated strongly over the past year, but if you "ere to sell all of your e%uity positions

to rebalance your portfolio, you may incur significant capital gains taxes. #n this case, it

might be more beneficial to simply not contribute any ne" funds to that asset class in the

future "hile continuing to contribute to other asset classes. This "ill reduce your gro"th

stocks "eighting in your portfolio over time "ithout incurring capital gains taxes.

At the same time, al"ays consider the outlook of your securities. #f you suspect that those

same over "eighted gro"th stocks are ominously ready to fall, you may "ant to sell in

spite of the tax implications. Analyst opinions and research reports can be useful tools to

help gauge the outlook for your holdings. And tax


52/79

The expected return on a portfolio is the "eighted average of the returns of individual

assets, "here each assets "eight is determined by its "eight in the portfolio.

T(# $rm!)a is:

Where

7E is stands for expected

= pE =eturn on the portfolio

WaE Weight of asset n "here n may stand for asset a, bUetc.

= aE =eturn on asset n "here n may stand for asset a, bUetc

78 S&a*%ar% %#;ia&i*:

The portfolio standard deviation @V p measure the risk associated "ith the expected return

of the portfolio.

T(# $rm!)a is

The term r ab represents the correlation bet"een the returns of investments a and b. The

correlation coefficient, r, "ill al"ays reduce the portfolio standard deviation as long as it

is less than R&.CC.

Company nameExpected return (%)

Standard deviation (%)

CEMENT

GACLLNT

19.0363.69

6.916.1!

1(

E R +8 @a- E R a8 @a- E R a8

+ 6a' ' 6a' ' '6a67ra7 a 78


53/79

"#$M$CE&T'C$

RANBAXYCIPLA

9.0!*.!

+.*!!.+3

TEEC,M

MTNLBHARTI ARTL

13.-11!.1*

1-.9-1!6.1

$N/'N

ING VYSYAICICI

1!.+6+9.+3

6*.!3*.*3

'.T.

WIPROSATYAM

13.6*16.*!

3+.-6+0.+1

I& s(6s &(# "a)"!)a&i* $ Pr&$)i R#&!r*s a*% Ris4s $Cm+a*i#s:

RIS2:

=isk refers to the probability that the return and therefore the value of an asset or security

may have alternative outcomes. =isk is uncertainty of the incomecapital appreciation or

loss of both. All investments are risky. The higher the risk taken, the higher is the return.

1)


54/79

RETURN:

=eturn


55/79

I& s(6s &(# "a)"!)a&i* $ "rr#)a&i* "#$$i"i#*& 7#&6##* &(#"m+a*i#s:

Correlation coefficient:

The correlation coefficient is obtained by dividing the covariance by the product of the

standard deviation of the t"o securities. To facilitate comparison covariance can be

standardi+ed.

I& s(6s &(# "a)"!)a&i* $ A;#ra,# r#&!r* $ "m+a*i#s:

Company name Correation coe44icient (r)

CEMENT

GACLLNT

0.66

"#$M$CE&T'C$

RANBAXYCIPLA

0.6

TEEC,M

MTNLBHARTI ARTL 0.9

$N/'N

ING VYSYAICICI

0.+

'.T.

WIPROSATYAM

0.1-

11

r AB Co! AB" VAVB


56/79

&5$$T $M&5$ CEMENT T ($C ):

7ear

,penin8

are price("0)

Coin8

are price("1) ("1"0)

("1"0):"0;100

#$$%$'$ '().$$ *$*.+, '*%.+, +,.#-

#$'$$'' *$(.'$ )$'.,, %,.), *'.'+

#$''$'# )$,.$$ -%.($ &*#,.)$ &+$.*,

#$'#$'* +$.$$ ')'.*$ ('.*$ -(.(*

#$'*$') ')).+$ ''%.*, ,.), &'-.,+

TOTAL RETURN >0.10

A!erae ret/rn %,.',", '%.$*

LARSEN AND TOUBRO (LNT):

7ear

,penin8are price

("0)

Coin8are price

("1) ("1"0)("1"0):"0;100

#$$%$'$ #'*.-$ ,#-.*, *'*.(, ')(.--

#$'$$'' ,*$.$$ %+#.$$ ),#.$$ +,.#+

#$''$'# %++.-$ '+)).#$ +,,.,$ +(.,*

#$'#$'* '+),.$$ '))#.%, &)$#.$, '.-%

#$'*$') ')$$.$$ '-$*.#$ *$*.#$ #'.((

TOTAL RETURN1.0

A!erae ret/rn *'+.),", (*.(%

RANBAXY LABORATORIES:

16

$vera8e return < = :N


57/79

7ear

,penin8are price

("0)

Coin8are price

("1) ("1"0)("1"0):"0;100

#$$%$'$ ,%-.+$ '$%+.#$ ,$$.)$ +*.-'

#$'$$'' ''$$.'$ '#,'.)$ ','.*$ '*.-,

#$''$'# '#,#.$$ *(#.*, &++%.(, &-'.$(#$'#$'* *().)$ *%'.+, #-.), -.,*

#$'*$') *%*.$$ *)%.', &)*.+, ''.'(

TOTAL RETURN0.>

A!erae ret/rn ),.$%", %.$#

CIPLA:

7ear

,penin8are price

("0)

Coin8are price

("1) ("1"0)("1"0):"0;100

#$$%$'$ %$).$$ '*'-.#, )'*.#, ),.-'

#$'$$'' '**%.$$ *'-.#, &'$#'.-, &-(.*'

#$''$'# *#$.$$ ))*.)$ '#*.)$ *+.,(

#$'#$'* )),.$$ #,$.-$ &'%).*$ &)*.((

#$'*$') #,*.)$ #*%.*$ &').'$ &,.,(

TOTAL RETURN51.'

A!erae ret/rn &)'.#(", &+.#,

MTNL:

1;


58/79

7ear

,penin8are price

("0)

Coin8are price

("1) ("1"0)("1"0):"0;100

#$$%$'$ %,.', '*-.-$ )#.,, )).-#

#$'$$'' '*%.'$ ',).%$ ',.+$ ''.*(

#$''$'# ',(.$$ ')).#$ ''.+$ -.,(#$'#$'* '),.#$ ')#.+, .*, &'.(#

#$'*$') ')*.$$ ',#.*, %.*, (.,)

TOTAL RETURN.0

A!erae ret/rn (+.,(", '*.-'

BHARTI ARTL:

7ear

,penin8are price

("0)

Coin8are price

("1) ("1"0)("1"0):"0;100

#$$%$'$ #*.,$ '$,.'$ +'.($ *)-.#*

#$'$$'' '$(.#, #',.($ '$%.*, '$#.%#

#$''$'# #'+.%$ *),.-$ '#(.+$ ,-.%*

#$'#$'* *)+.%$ (#+.+, #-%.%, +$.#)

#$'*$') (*,.$$ +(#.+$ ##-.+$ *,.+-

TOTAL RETURN '.1>

A!erae ret/rn (#).'%", '#,.'+

ING VYSYA:

1:


59/79

7ear

,penin8are price

("0)

Coin8are price

("1) ("1"0)

("1"0):"0;100

#$$%$'$ #,#.$, ,)%.$$ #%(.%, ''-.+'

#$'$$'' ,($.$$ ,+,.-, #,.-, ).($

#$''$'# ,+,.$$ '(#.#, &)##.-, &-#.#(

#$'#$'* '().,$ ',-.), &-.$, &).#%

#$'*$') ',%.$$ '+,.', #(.', '(.),

TOTAL RETURN'.1

A!erae ret/rn (#.*'", '#.)(

ICICI:

7ear

,penin8are price

("0)

Coin8are price

("1) ("1"0)("1"0):"0;100

#$$%$'$ ')'.-$ #%,.-$ ',).$$ '$+.(+

#$'$$'' #%%.-$ *-$.-, -'.$, #*.-'

#$''$'# *-).+, ,+).-$ #$%.+, ,,.%+#$'#$'* ,+(.#, +%$.)$ *$).', ,'.++

#$'*$') ++%.$$ %,$.#, ('.#, (.+%

TOTAL RETURN'K.1

A!erae ret/rn #)-.')", )%.)*

WIPRO:

1>


60/79

7ear

,penin8are price

("0)

Coin8are price

("1) ("1"0)

("1"0):"0;100

#$$%$'$ '()).)$ '-*-.($ %*.# ,.(-

#$'$$'' '-)).)$ -)+.$$ &%%(.)$ &,-.'#

#$''$'# -,*.$$ )(*.), +%.,, &*+.),

#$'#$'* )().$$ ($).,, ')$.,, *$.#%

#$'*$') ($-.%$ ,,).*, &,*.,, &+.+'

TOTAL RETURN5.'

A!erae ret/rn &(+.)#", &'*.(+

SATYAM COMP:

7ear

,penin8are price

("0)

Coin8are price

("1) ("1"0)("1"0):"0;100

#$$%$'$ #+$.'$ *(-.*, +-.#, *'.',

#$'$$'' *-$.$$ )$%.%$ *%.%$ '$.-+

#$''$'# )'#.$$ -*-.+$ *#,.+$ -%.$+

#$'#$'* -)$.-$ )+*.%, ,(.-, &*).((

#$'*$') )+(.$$ )-).%, &''.$, .#-

TOTAL RETURN.

A!erae ret/rn +).$+", '(.+#

CALC0LATION O1 STAN2AR2 23VIATION:

6C

Standard /eviation E -ariance


61/79

GUJARAT AMBUJA CEMENT LTD:

7ear eturn ()$v8. eturn

(> )d<

(>)d!

#$$%$'$ +,.#- '%.$* ((.#) )*+-.-)

#$'$$'' *'.'+ '%.$* '#.', ')-.(#

#$''$'# &+$.*, '%.$* &('.*# *-($.')

#$'#$'* -(.(* '%.$* ,-.($ **'-.-(

#$'*$') &'-.,+ '%.$* &*(.(( '*)*.%( T,T$

=d!


62/79

RANBAXY LABORATORIES:


(> )d<

(>)!

#$$%$'$ +*.-' %.$# -).(% ,,-+.($

#$'$$'' '*.-, %.$# ).-* ##.*-

#$''$'# &-'.$( %.$# +$.$+ ()'#.+'

#$'#$'* -.,* %.$# &'.)% #.##

#$'*$') ''.'( %.$# #.') ).,+

T,T$

=d!


63/79


(> )d<

(>)d!

#$$%$'$ )).-# '*.-# *' %('

#$'$$'' ''.*( '*.-# .*( ,.,-

#$''$'# -.,( '*.-# &(.'( *-.%,#$'#$'* &'.(# '*.-# &',.*) #*,.*#

#$'*$') (.,) '*.-# &-.'+ ,'.,,

T,T$

=d!


64/79

(> ) (>)

#$$%$'$ ''-.+' '#.)( '$,.*, ''$%+.(#

#$'$$'' ).($ '#.)( &-.+( ('.-+

#$''$'# &-#.#( '#.)( &+).-# -'--.)+

#$'#$'* &).#% '#.)( &'(.-, #+$.,(#$'*$') '(.), '#.)( *.%% ',.%#

T,T$

=d!


65/79


(> )d<

(>)d!

#$$%$'$ ,.(- &'*.(+ '%.*, *-).)#

#$'$$'' &,-.'# &'*.(+ &)*.)) '++-.$*

#$''$'# &*+.), &'*.(+ ).-- ('*.,,

#$'#$'* *$.#% &'*.(+ )*.%- '%**.*(#$'*$') &+.+' &'*.(+ &).+- #*.-#

T,T$

=d! )d<

(>)d!

#$$%$'$ *'.', '(.+# ').** #$,.,,

#$'$$'' '$.-+ '(.+# &(.$) *(.)+

#$''$'# -%.$+ '(.+# (#.#( *+-(.*'

#$'#$'* &*).(( '(.+# ,'.)+ #$,$.'%#$'*$') .#- '(.+# '%.$% *().)*

T,T$

=d!


66/79

GACL& LNT:

7E$ev. ,4 $C(dx)

ev. ,4 NT(dy)

"roduct o4 dev.(dx)(dy)

#$$%$'$ ((.#) +*.$+ ,,$*.#'%#

#$'$$'' '#.', #'.,% #(#.*'+,

#$''$'# &('.*# ##.+) &')$$.,)++

#$'#$'* ,-.( &+,.)+ &)%#*.()+

#$'*$') &*(.(( &)#.$* ',)$.+'%+

T,T$

=dx. dy <9*!.160-

COVa8 '"4,&'74%+#.'($-7 #),.,)

'orrelation of coefficient #),.,)"4,(.%'74(,.'#7 $.$((

I*r+r#&a&i*:

The prime obective of this combination is to reduce risk of portfolio. 8east preference is

given to the portfolio returns. As per the calculations ?A'8, bears a proportion of C.1;

"hereas 80T bears a proportion of C.*). The standard deviations of the companies are

16.>& for ?A'8 and 61.&( for 80T.

This combination yields a return of a return of ):.()): and a risk of **.()

respectively.

RANBAXY & CIPLA:

7E$ ev. ,4 $C

ev. ,4 NT(dy)


66

Correation o4 coe44icient < C,?a@ : Aa; A@


67/79

(dx)

#$$%$'$ -).(% ,*.%( )$*$.#-#)

#$'$$'' ).-* &(+.$( &*#'.%#*+

#$''$'# +$.$+ )(.+' *-)+.,))+

#$'#$'* &'.)% &*,.)' ,#.-($%

#$'*$') #.') #.(% &,.-,((

T,T$

=dx. dy <-03.*9--

COVa8 '"4,&'74-,$*.+%--7 '+-,.%-

Correlation of coefficient '+-,.%-"4,).+#74,#.)*7 $.(,

I*r+r#&a&i*:

As per the calculations =A0BAD, bears a proportion of C.** "hereas '#P8A bears a

proportion of C.16. The standard deviations of the companies are 1*.:( for =A0BAD

and 1(.*) for '#P8A.

This combination yields a return of a return of


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$C(dx)

(dy)(dx)(dy)

#$$%$'$ *' ###.$, (++*.,,

#$'$$'' .*( #.$( ,#.$('(

#$''$'# &($'( &(-.#, )').#(

#$'#$'* &',.*) &)).%) (+%.*-%(#$'*$') &-.'+ &+-.,% (#+.+%(#

T,T$

=dx. dy <*66*.1+-+

COVa8 '"4,&'74+((+.')-)7 #'(-.$)

'orrelation of coefficient #'(-.$)"4'-.%-74'#(.,'7

I*r+r#&a&i*:The proportion of investment for 2T08 is ; and &(6.1& respectively.

This combination yields a return of (1).>> and a risk of (1(.*1. hence investor

should invest his maor proportion in B!A=T# A=T8 in order to minimi+e risk.

ING VYSYA & ICICI:

7E$ev. ,4 $C(dx)

ev. ,4 NT(dy)


#$$%$'$ '$,.*, ,%.#, (#)'.%+-,

#$'$$'' &-.+( ,.-# #$#.',%#

#$''$'# &+).-# (.,, &,,).%'(

#$'#$'* &'(.-, #.), &)'.$*-,

#$'*$') *.%% &)#.,) &'(%.-*)(

T,T$

=dx. dy <6-*.+*6

COVa8 '"4,&'74,(-+.),+(7 ')'%.('

Correlation of coefficient ')'%.('"4(+.#,74*+.+*7 $.,)

6:


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'nterpretationB

#n this situation optimum "eights of #0? -SA and #'#'# are C.C) and C.>;

respectively. The portfolio risk is ):.:&, "hich is lesser than the individual risks of t"o

companies. !ence, it is recommended to invest the maor proportion of the funds in

#'#'#, in order to reduce the portfolio risk.

WIPRO & SATYAM:

7E$ev. ,4 $C(dx)

ev. ,4 NT(dy)


#$$%$'$ '%.*, ').** #--.#+,,

#$'$$'' &)*.)) &(.$) #(#.**-(

#$''$'# ).-- (#.#( &',)#.'+$#

#$'#$'* )*.%- ,'.)+ ##(*.,-,(

#$'*$') &).+- '%.$% &%#.%(+*

T,T$

=dx. dy <116*.0*0!

COVa8 '"4,&'74''(+.$+$#7 #**.(#

Correlation of coefficient #**.(#"4*).-(74)$.)'7 $.'-

I*r+r#&a&i*:

The proportion of investments for W#P=F is C.1> and for SATA2 it is C.*&. The

standard deviations of the companies are )*.;6 and *C.*& respectively.

This combination yields a return of


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2eri!in t9e ini/ ri;< =ortfolio> t9e follo?in for/la i; /;e6:

W9ere>

Xa i; t9e =ro=ortion of ;ec/rit@ A

X8 i; t9e =ro=ortion of ;ec/rit@ B

a ;tan6ar6 6e!iation of ;ec/rit@ A

8 ;tan6ar6 6e!iation of ;ec/rit@ B

ra8 correlation co&efficient 8et?een AB

GACL& LNT:

4(,.'#7#& $.$((4,(.%'7 4(,.'#7 Xa

4,(.%'7# 4(,.'#7# 4$.$((7 4,(.%'7 4(,.'#7

$.,-

X8 '& Xa

'& $.,-

$.)*

RANBAXY& CIPLA:

;C

Wa E @ σ b( < rab @σa @Vb

@σa( R @σ b( H (rab @σa @σ b


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4,#.)*7#- $.(,4,).+#7 4,#.)*7

Xa

4,).+#7# 4,#.)*7# 4$.(,7 4,).+#7 4,#.)*7

$.))

X8 '&Xa

'&$.)) $.,(

MTNL& BHARTI ARTL:

4'#(.,'7# D $.%, 4'-.%-7 4'#(.,'7

Xa

4'-.%-7# 4'#(.,'7# D #4$.%,7 4'-.%-7 4'#(.,'7

&'.', X8 ' D Xa

'& 4&'.',7

#.',

ING VYSYA & ICICI:

4*+.+*7# D $.,)4(+.#,7 4*+.+*7

Xa

4(+.#,7# 4*+.+*7# D # 4$.,)7 4(+.#,7 4*+.+*7

$.$*

X8 ' D Xa

' D $.$*

$.%-

WIPRO & SATYAM:

;&


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4)$.)'7# D $.'-4*).-(7 4)$.)'7

Xa

4*).-(7# 4)$.)'7# D # 4$.'-7 4*).-(7 4)$.)'7

$.,%

X8 ' D X8

' D $.,%

$.)'

CALCULATION OF PORTFOLIO RISK:

or to ecuritieB

T"o securities portfolio is a portfolio "hich consists t"o securities. #n t"o securities portfolio the investment takes place in companies securities.

Where,

VP E portfolio risk

Da E proportion of investment in security A

Db E proportion of investment in security B

= &( E correlation co


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Fr &(r## s#"!ri&i#s:

Three securities portfolio consists of three securities or "hich invests in three securities.

T(# $))6i*, $rm!)a is !s#% $r s&a*%ar% %#;ia&i*:

GACL& LNT:

= E4$.,-7# ;4,(.%'7# 4$.)*7# ;4(,.'#7# #4$.,-74$.)*74$.$((74,(.%'74(,.'#7

E'%,(.#,%'),

)).#*

RANBAXY& CIPLA:

= E4$.))7# ;4,).+#7# 4$.,(7# ;4,#.)*7# #4$.))74$.,(74$.(,74,).+#74,#.)*7

E#*().,*-*)+

)+.(*

MTNL& BHARTI ARTL:

= E4&'.',7# ;4'-.%-7#4#.',7#;4'#(.,'7##4&'.',74#.',74$.%,74'-.%-74'#(.,'7

E(*-#%.*(,%*

;)

= E44a7#4Xa7#487#4X87# 4c7#4Xc7# #4Xa74X874ra874a7487

#4Xa74Xc74rac74a74c7 #4X874Xc74r8c74874c77


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#,#.),

ING VYSYA & ICICI:

= E4$.$*7# ;4(+.#,7# 4$.%-7# ;4*+.+*7# #4$.$*74$.%-74$.,)74(+.#,74*+.+*7

E',$(.')$+)%

*+.+'

WIPRO & SATYAM:

= E4$.,%7# ;4*).-(7# 4$.)'7# ;4)$.)'7# #4$.,%74$.)'74$.'-74*).-(74)$.)'7

E+'$.(#**+*,

#+.)-

CALCULATION OF PORTFOLIO RETURN:

R= W'R' W#R# 4for t?o ;ec/ritie;7

R= W'R' W#R# W*R* 4for t9ree ;ec/ritie;7

;*


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W9ere>

W'> W#> W* are t9e ?ei9t; of t9e ;ec/ritie;

R'> R#> R* are t9e 3F=ecte6 ret/rn;

GACL& LNT:

R= 4$.,-74'%.$*7 4$.)*74(*.(%7

*+.#**+

RANBAXY& CIPLA:

R= 4$.))74%.$#7 4$.,(74&+.#,7

&$.(,'#

MTNL& BHARTI ARTL:

R= 4&'.',74'*.'-7 4#.',74'#,.'+7

#,*.%%

ING VYSYA & ICICI:

R= 4$.$*74'#.)(7 4$.%-74)%.)*7

)+.*#$%

WIPRO & SATYAM:

R= 4$.,%74&'*.(+7 4$.)'74'(.+#7

& '.'-,

SUGGESTIONS:

;1


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Select your investments on economic grounds.

Public kno"ledge is no advantage.

Buy stock "ith a disparity and discrepancy bet"een the situation of the firm < and

the expectations and appraisal of the public @'ontrarian approach vs. 'onsensus

approach.

Buy stocks in companies "ith potential for surprises.

Take advantage of volatility before reaching a ne" e%uilibrium.

8isten to rumors and tips, check for yourself.

/on$t put your trust in only one investment. #t is like putting all the eggs in one

basket . This "ill help lesson the risk in the long term.

The investor must select the right advisory body "hich is has sound kno"ledge

about the product "hich they are offering.

Professionali+ed advisory is the most important feature to the investors.

Professionali+ed research, analysis "hich "ill be helpful for reducing any kind of

risk to overcome.

CONCLUSIONS:

;6


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When "e form the optimum of t"o securities by using minimum variance e%uation, then

the return of the portfolio may decrease in order to reduce the portfolio risk.

The combination of securities "ill lead to increase the returns for that "e have to follo"

appropriate techni%ues and al"ays the combination of securities should decrease the risk.

BIBLIOGRAPHY

;;


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oo2 re4erredB

Security analysis and Portfolio Analysis of Banking Sector < -.A. Avadhani

Security analysis and Portfolio Analysis of Banking Sector < 3ischer 5 4ordan

#nvestment decisions < -.J. Bhalla

Security analysis 5 Portfolio Analysis of Banking Sector < =obbins

Portfolio Analysis of Banking Sector H S.Jevin

@#7sis:

""".geoit.com

""".investopedia.com

""".capitalmarket.com

""".icicidirect.com

""".bse.com

""".nse.com

;:

http://www.geojit.com/http://www.investopedia.com/http://www.capitalmarket.com/http://www.icicidirect.com/http://www.bse.com/http://www.nse.com/http://www.geojit.com/http://www.investopedia.com/http://www.capitalmarket.com/http://www.icicidirect.com/http://www.bse.com/http://www.nse.com/


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