CHAPTER I

INTRODUCTION
The financial market is the driver of the economic growth and development of any country. A sound financial market can take the country to the apex. Financial resources were by allocating through one of the ways such as portfolios, which are combination of various securities. Portfolio analysis includes analyzing the range of possible portfolios that can be constituted from a given set of securities.

A combination of securities with different risk return characteristics will constitute the portfolio of the investor. A portfolio is combination of various assets and instrument of investments. A portfolio is also built up out of the wealth or income of the investors over a period of time with a view to suit his risk and return preferences to that of the portfolio that he holds.

The portfolio analysis is an analysis of the risk-return characteristics of individual securities in the portfolio and changes that may take place in combination with other securities due to interactions among themselves and impact of each one of them on others.

As individuals are becoming more and more responsible for ensuring their own financial future, portfolio or fund management has taken on an increasingly important role in banks ranges of offering their own clients. In addition to an interest rates have come down and the stock market has gone up and come down again, clients have a choice of living their saving n deposit accounts, or putting those savings in unit trusts or investment portfolios each invest in equities and bonds. Investing in unit trust or mutual funds is one way for individuals and corporations alike to potentially enhance the returns on their savings

OBJECTIVES OF THE STUDY

To find out optimal portfolio, which gave optimal return at a minimum risk to the investor. To study whether the portfolio risk is less than individual risk on whose basis the portfolio or constituted. To analyze whether the selected portfolio is yielding a satisfactory and constant return to the investor.
To study which industrys combination is yielding a good return

SCOPE OF STUDY:
The study covers the calculation of correlation 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 include the calculation of individual Standard Deviation of securities and ends the calculation of weights of individual securities involved in the portfolio.

Purpose of the study:

The purpose of the study is to find out at what percent of investment should be invested between the two companies, on the basis of risk and return of each security in comparison. These percentages help in allocating the funds available for investment based on portfolios

LIMITATIONS OF THE STUDY

The fulfillment of project is limited to 45 days. Construction of portfolio is restricted to two-asset based in Markowitz Model. From BSE listing a very few and randomly selected scripts are analyzed. The portfolio is selected based on correlation. The study is purely based on secondary data.

RESEARCH METHODOLOGY Sources of Data

Generally data can be classified in to primary data and secondary data. The instruments used for collection of primary data are as follows: 1. Direct Personal Investigation Direct Personal Investigation: In this the investigator has to collect the information personally from the sources concerned. The investigator has to be on the spot for conducting the enquiry and has to meet the people from whom data have to be collected. By using this method, data can be collected which is relevant and accurate. The data collected is thus used for analysis.

Sources of Secondary Data: a. Official publications of the Indian bodies like SEBI and AMFI. b. Official publications of the International bodies like the United Nations Organization and its subsidiary bodies. c. Reports and publications of Trade Associations, Chambers of Commerce, Banks, Cooperative Societies, Stock Exchanges and Asset Management Companies. d. Technical trade journals like Outlook, Business India, Business Today and Newspapers. e. Internet f.. keeping in View the Risk and Returns Of the investor we assume the

Proportion of the investments

RESEARCH DESIGN 1.Sample size:

I have taken a 10 companies from two different sectors the sampling consists followings.

2. Sample design: Companies: A).Pharma companies

Aurobindo Dr Reddys Cipla Divis Ranbaxy

B). Software Companies

Wipro Satyam TCS Infosys NIIT

Implementation of study:
For implementation of the study, ten securities or stock constituting the sense market is selected, comprising of one-month opening share prices from the Times of India, dated from 11 th march to 29th march 2008. In order to know the risk of the stock or security, the formula to be used is given below: Variance = (1/n-1)(d) ^ 2 Standard Deviation () = Variance Where, (d) ^ 2 = Squares of Deviations taken from actual mean. n = No. of Observations After that it is required to compare the stock or securities of two companies with each other by using the below formula of correlation co-efficient as follows. Co-Variance (Cove AB) = (1/n)(dx * dy) Where, (dx*dy) = Summation of the product of Deviation between two companies. n = Number of observations

Correlation Coefficient(r) = Where, Cove AB = Co-Variance between A&B (A) * (B) = Product of Standard Deviation between A&B

The next step is the formation of the optimal portfolio on the basis of what percentage of should be invested when two securities and stock is combined i.e. calculation of portfolio weight by using minimum variance equation as follows.

(b)^2-rab(a)(b) (a)^2+(b)^2-2rab(a)(b)

Where, Ax = Proportion of security A Be = Proportion of security B a = Standard Deviation of Security A b = Standard Deviation of Security B rib = correlation Co-efficient between A&B The final step is to calculate the portfolio risk, combined risk, that shows how much the risk is reduced by combing two securities or sock by using the given below formula. p = Where, p = Portfolio Risk X1 = Proportion of Investment is Security 1 X2 = Proportion of Investment is Security 2 1 = Standard Deviation of Security 1 2 = Standard Deviation of Security 2 rab = Correlation Co-efficient between Security a&b

CHAPTER-II REVIEWOFLITERATURE

PORTFOLIO MANAGEMENT : MEANING OF PORTFOLIO:

A portfolio is a collection of securities, since it is really desirable to invest the entire funds of an individual or an institution or a single security. It is essential that every security be viewed in a portfolio context. Thus it seems logical that the expected return of the portfolio. Portfolio Analysis considers the determine of future risk and return in holding various blends of individual securities. Portfolio expected return is a weighted average of the expected return of the individual securities, but portfolio variance in short contrast, can be something reduced portfolio risk is because, risk depends greatly on the co-variance among returns of individual securities. Portfolios, which are combination of securities, may or may not take on the aggregate characteristics of their individual parts.

INTRODUCTION OF PORTFOLIO MANAGEMENT:

Portfolio Management and investment decisions as a concept came to be familiar with the conclusion of second world war when thing can be in the stock market can be liberally ruined the fortune of individual, companies, even governments it was then discovered that the investing I various scripts instead of putting all the money in a single securities yielded weather return with low risk percentage, it goes to the credit of HARY MERKOWITZ, 1991 noble laurelled to have pioneered the concept of combining high yielded securities with these low but steady yielding securities to achieve optimum correlation co-efficient of shares. Portfolio Management refers to the management of portfolios for others by professional investment managers it refers to the management of an individual investors portfolio by professionally qualified person ranging from merchant banker to specified portfolio company.

OBJECTIVES OF PORTFOLIO MANAGEMENT:

The main objective of investment portfolio management is to maximize the returns from the investments and to minimize the risk involved in investment. Moreover, risk in price or inflation erodes the value of money and hence investment must provide a protection against inflation.

Secondary Objectives:
The following are the other ancillary objectives: Regular Return Stable Income Appreciation Of Capital More Liquidity Safety Of Investment Tax Benefits

Portfolio Management services helps investors to make a wise choice between alternative investment with pit any post trading hassles this service renders optimum returns to the investors by proper selection of continuous change of one plan to another plan with in the same scheme, any portfolio management must specify the objectives like maximum returns, and risk capital appreciation, safety etc in their offer. (a). (b). (c). (d). Debentures partly convertible and non-convertible debentures debt with tradable warrants. Preferences shares Government securities and bonds Other debt instruments.

Under variable income securities:

(a).Equity Shares (b).Money market securities like treasury bills commercial paper etc. A portfolio manager has to decide up on the mix of securities on the basis of contrast with the client and objectives of portfolio.

NEED FOR PORTFOLIO MANAGEMENT:

Portfolio Management is a process encompassing many activities of investment in assets and securities. It is a dynamic and flexible concept and involves regular and systematic analysis, judgment and action. The objective of the service is to help the unknown and investors with the expertise of professionals in investment portfolio management. It involves construction of a portfolio based upon the investors objectives, constrains, preference for risk and returns and tax liability. The portfolio is reviewed and adjusted from time to time in tune with the market conditions. The
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evaluation of portfolio is to be one in terms of targets set for risk and returns, the changes in the portfolio are to be effected to meet the changing condition. Portfolio construction refers to the allocation of surplus funds in hand among a variety of financial assets open for investment. Portfolio theory concerns itself with the principles governing such allocation. The modern view of investment is oriented more go towards the assembly of proper combination of individual securities to form investment portfolio. A combination of securities held together will give a beneficial result if they grouped in a manner to secure higher returns after taking into consideration the risk elements.The modern theory is the view that by different regions. In different industries or those producing different types of product lines. Modern theory believes in the perspective of combination of securities under constraints of risk and returns.

PROCESS OF PORTFOLIO MAMAGEMENT:

Portfolio management is a complex activity which may be broken own into the following steps. Specification of invest objectives & constraints Choice of the asset mix Formulation of portfolio Strategy Selection of Securities Portfolio Execution Portfolio Revision Performance Evaluation

1.SPECIFICATION OF INVEST OBJETIVES AND CONSTRAINT:

The typical objectives sought by investors are current income, capital appreciation and safety of principal. The relative importance of these objectives should be specified. Further, the constraints arising from liquidity, time horizon, tax and special circumstances must be identified.

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1. CHOICE OF THE ASSET MIX:

The most important decision in portfolio management is the asset mix decision. Very broadly, this is concerned with the proportions of stocks and bonds in the portfolio. The appropriate stock bond mix depends mainly on the risk tolerance &investments horizon of the investor.

2.FORMULATION OF PORTFOLIO STRATERGY:

Once a certain asset mix is chosen, an appropriate portfolio strategy has to be hammered out. Two broad choices are available an active portfolio strategy or a passive portfolio strategy. An active portfolio strategy strives to earn superior risk adjusted returns by restoring to market timing, or sector rotation, on the other hand, involves holdings a broadly diversified portfolio & maintaining a pre-determined level of risk exposure.

3.SELECTION OF SECURITIES:
Generally, investors pursue an active stance with respect to security selection. For stock selection, investors commonly go by fundamental analysis and technical analysis. The factors that are considered in selection bonds are yield to maturity, credit rating, term to maturity, tax shelter and liquidity.

4. PORTFOLIO EXECUTION:
This is the phase of portfolio management which is concerned with implementing the portfolio plan by buying and selling specified securities in given amounts. Though often glossed over in portfolio management discussions, this is an important practical step that has a bearing on investment results.

5. PORTFOLIO REVISION:
The value of a portfolio as well as its composition the relative proportions of stock & bond components-may change as stocks & bonds fluctuate. Of course, the fluctuation in stock is often the dominant factor underlying this change. In response to such changes, periodic rebalancing of the

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portfolio is required. This primarily involves a shift from stocks to bonds or vice-versa. In addition, it may call for sector rotation as well as security switches.

6. PERFORMANCE EVALLUATION:
The performance of a portfolio should be evaluated periodically. The key dimensions of portfolio performance evaluation are risk & return and the key issue is whether the portfolio return is commensurate with its risk exposure. Such a review may provide useful feedback to improve the quality of the portfolio management process on a counting basis.

ELEMENTS OF PORTFOLIO MANAGEMENT:

Portfolio management is on-going process involving the following basis tasks: Identification of the investors objectives, constraints and preferences. Strategies are to be developed and implemented in tune with investment policy formulated. Review and monitoring of the performance of the portfolio. Finally the evaluation of the portfolio.

WHO CAN BE A PORTFOLIO MANAGER:

Only those who are registered & pay the required license fee are eligible to operate as portfolio managers. An application for this purpose should have necessary infrastructure with professionally qualified persons & with a minimum of two persons with experience in this business & a minimum net worth of Rs. 50 Lakhs. The certificate once granted is valid for three years. Fee payable for registration are 2.5 Lakhs every year for two years and 1Lakh for the third year. From the fourth year onwards, renewal fees per annum are Rs. 75,000. These are subjected to change by the SEBI. The SEBI has imposed a number of obligations & a code of conduct on them. The portfolio manager should have high standard of integrity, honesty & should not have been convinced of any economic offence or moral turpitude. He should not resort to rigging up of prices, insider trading or
13

creating false markets, etc. Their books of accounts are subject to inspection and audit by SEBI. The observance of the code of conduct and guidelines given by the SEBI are subject to inspection and penalties for violation are imposed. The manager has to submit periodical returns and documents as may be required by the SEBI from time to time.

SEBI GUIDELINES TO THE PORTFOLIO MANAGERS:

On 7th January 1993 the Securities Exchange Board Of India issued regulations to the portfolio manager for the regulation of portfolio management services by merchant bankers. They are as follows: Portfolio management services shall be in the nature of investment or consultancy management for an reneged fee at clients risk. The portfolio manager shall not guarantee return directly or indirectly the fee should not be depended up on or it should not be return sharing basis. Various terms of agreements, fees, disclosure of risk and repayment should be mentioned. Clients funds should be kept separately in client wise account, which should be subject to audit. Manager should report clients at intervals not exceeding 6 months. Portfolio manager should maintain high standard of integrity and not desire any benefit directly or indirectly from clients funds. The client shall be entitled to inspect the documents. Portfolio manager shall not invest funds belonging to clients in bade financing, bills discounting and lending operations. Client money can be invested n monad capital market instruments. Settlement on termination of contract as agreed in the contract.

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 Clients funds should be kept in a separate bank account opened in scheduled commercial bank. Purchase or sale of securities shall be made at prevailing market price.

FUNCTIONS OF PORTFOLIO MANAGER:

The main functions are as follows:

a) Advisory role:
Advice new investments, review the existing ones, identification of objectives, recommending high yielding securities etc.

b) Conducting Market & Economic Surveys:

This is essential for recommending good yield in securities. They have to study the current fiscal policy, budget proposal, industrial policies etc., Further the portfolio manager should take into account the credit policy, industrial growth, foreign exchange position, changes in corporate laws.

c)Financial Analysis:
He should evaluate the financial statement of the companys in order to understand their network, future earning prospects & strengths.

d)Study of stock Market:

He should see the trends at various stock exchanges & analyses scripts, so that he is able to identify the right securities for investment.

e)Study of Industry:
To know hid future prospects, technological changes etc. He should also foresee the problems of the industry.

f) Decide the type of portfolio:

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Keeping in mind, the objective of portfolio, a portfolio manager has to decide whether the portfolio should comprise equity, preferences shares, debentures-convertible, non-convertible partly convertible, money market securities etc., are a mix of more than one type. A proper mix ensures higher safety, yield & liquidity coupled with balanced risk.

INVESTMENT MANAGEMENT MEANING:

Investment is the employment of funds with the aim of achieving additional income or growth in value. The essential quality of an investment is that involves waiting for a reward. It involves the commitment of resources, which have been saved or put away from current consumption in the hope that some benefits will accrue in future. Investment is the allocation of monetary resources to assets that are expected to yield some minor positive return over a given period of time. These assets & investments in this from are called Financial Investment.

NATURE:
An individual investor postpones current consumption only in response to a rate of return which must be suitably adjusted for inflation and risk. This basic postulate, in fact, unfolds the nature of investment decision.Cash has an opportunity cost and when you decide to invest it you are deprived of this opportunity to earn a return on that cash. Also, when the general price level raises the purchasing power of cash. This explains the reason why individuals require a real rate of return on their investments. The basis investment decision would be a trade-off between risk and return.

OBJECTIVES:
1. The first basic objectives of investment is the return on it or yields. The yields are higher, the higher is he risk taken by investors. The risk less return is the bank deposit rate. Here the risk is least as funds are safe and returns are certain.
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2. Secondly, each investor has his own asset preferences and choice of investments. Thus, some risk adverse operators put their funds in bank or post office deposits of deposits or certificates with co-operatives and Pusss. Some invest in real estate, land and building while others etc., 3. Thirdly, every investor aims at providing for minimum comforts of house furniture, vehicles, consumer durables and other household requirements. After satisfying these minimum needs, he plans for his income, savings in insurance pension and provident is subordinated to the needs of the investor. 4. Lastly, after satisfying all the needs and requirements, the rest of the savings would be invested in financial assets, which will give him future income and capital appreciation so as to improve his future standard of living. These may be in stock or capital market investment.

QUALITIES FOR SUCCESSFUL INVESTING:

Contrary Thinking Patience Composure Flexibility Openness

GUIDELINES FOR INVESTMENT DECISION:

There are 10 commandments of investing, which should serve as basic guidelines for all investors.They are as follows: Accord top priority to a residential house. Integrate life insurance in your investment plan. Choose a risk posture consistent with your stage in investor life cycle. Tiptoe through the world of precious objects.
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 Avail of tax shelters. Adopt a suitable formula plan. Select fixed income instruments judiciously. Focus on fundamentals, but keep an eye on technical. Diversify moderately.

PORTFOLIO RISK:
Risk refers to possibility that the actual outcome of an investment will differ form its expected outcome. More specifically, most investors are concerned about the actual outcome being less than expected outcome. The wider the range of possible outcomes, the greater the risk. But proper management of risk involves the right choice of the investments whose risks are compensating. There are three types of risks, they are 1. Business risk or Unsystematic risk 2. Interest rate risk
3. Market risk or Systematic risk.

The Unsystematic risks are mismanagement, increasing inventory, wrong financial policy, defective marketing etc., Just as the risk of an individual security is measured by the variance or standard deviation of its return, the risk of a portfolio too is measured by the variance or standard deviation of its return. Although, the expected return on a portfolio is the weighted average of the expected returns on the individual securities in the portfolio, portfolio risk is not the weighted average of the risk of the individual securities in the portfolio (expect when the returns from the securities are uncorrelated).

18

To develop the equation for calculating portfolio risk we need information on weighted individual security risks 7 weighted co movements between the returns of securities included by covariance and coefficient of correlation.

COVARIANCE:
Covariance reflects the degree to which the returns of the two securities vary or change together. A positive covariance means that the returns of the two securities move in the same direction where as a negative covariance implies that the returns of the two securities move in opposite direction. The covariance between any two securities x & y is calculated as follows: 26 Cove y = Where, Cove y = Covariance of x & y Rx = Return of Security x Rye = Return of Security y E(Rx) = Expected Return on Security x E(Rye) = Expected Return on Security y Pi = Probabilities associated with states 1..n

COEFFICIENT OF CORRELATION:
Covariance & Correlation are conceptually analogous in the sense that both of them reflect the degree of co moments between two variables. Mathematically, they are related as follows:

Cor y =
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Cor y = Coefficient of correlation of x & y Cor y = covariance of x & y x & y = Standard deviation of x & y.

CHAPTER-III Company profile

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COMPANY PROFILE ORIGIN

India Infoline was founded by a group of professionals in 1995, a seemingly distant past in the international meticulous research was published and distributed in printed form to a client base comprising the whole business including leading MNCs, investment banks and consulting firms. India Infoline saw the opportunity to expand out client base, from a few hundreds to several millions and also value chain. In early 1999, when internet penetration in India was at its infancy and the future unknown and hard decision of killing our earlier business model and embracing the Internet, we discontinued delivering the printed form and made available quality research at the click of mouse. Thus, was born www.indiainfoline.com site has emerged as the most popular website on Indian business and finance.India Infoline is a one-stop financial services shop, most respected for quality of its advice, personalized service and cutting-edge technology. India Infoline Ltd is listed on both the leading stock exchanges in India, viz. the stock Exchange, Mumbai (BSE) and the National Stock Exchange (NSE). The India Infoline group, comprising the holding company, India Infoline Ltd and its subsidiaries, straddles the entire financial services space with offerings ranging from Equity research, Equities and derivatives trading, Commodities trading, Portfolio Management Services, Mutual Funds, Life Insurance, Fixed deposits, Gol Bonds and other small savings instruments to loan products and Investment banking. India Infoline also owns and manages the websites, www.indiainfoline.com and www.5paisa.com.
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VISION
To be the most respected company in the financial services space. To be the premier provider of investment advisory and financial planning services in India.

Approach to research
The Company follow a simple approach to research as follows Data collection Analysis Communication Feedback All the analysts of the firm have significant experience, which they share with each other. They believe that they have an innovative sources of data, that helps to keep ahead to identify trends. It would be unfair on our part not to mention the immense contribution which our clients and readers feed back forms to the QC as well as R&D for us. The feedback helps us in all stages- data collection and communication, most importantly, in improving our methodology as well.

STRENGTHS
The following are the strengths that set the firm apart.

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 The firm has been in information services for the last seven years and has assiduously built the necessary for the business. We have leveraged our content to create the India Infoline brand, which is synonymous with credible information on business and finance. The firms top management team represents a skill set, which is mutually exclusive but collectively exhaustive. The strength of the organization has been to continuously innovate and reinvent itse

STRUCTURE OF INDIA INFOLINE LTD

CHAIRMAN

EXECUTIVE DIRECTOR

BOARD OF DIRECTORS

NonExecutive Director

Independent Director

Independent Director

Independent Director

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THE MANAGEMENT TEAM Mr. Nirmal jain

is the founder and Chairman of India Infoline Ltd. He holds an MBA degree from IIM Ahmedabad and Chartered Accountant (All India Rank2) and a Cost Accountant.

Mr.R Venkataraman
Is the co-promoter and Executive Director of India Infoline Ltd. He holds a B.Tech Electronics and Electrical Communications Engineer from IIT Kharagpur and an MBA degree also.

THE BOARD OF DIRECTORS

Apart from Nirmal Jain and R Venkataraman, the Board of Directors of India Infoline comprises a Non-Executive Director and three Independent Directors. They are_ Mr Sat Pal Khattar

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 Mr Sanjiv Ahuja Mr Nilesh Vikamse Mr kranti Singh

INVESTORS RELATIONS:-

The India Infoline group, comprising the holding company, India infoline ltd and its wholly owned subsidiaries entire gamut of investment products ranging from Equities and derivatives trading, Commodities trading, Management Services, Mutual Funds, Life Insurance, Fixed Deposits, Gol bonds and other small savings. India Infoline also owns and manages the websites, www.indiainfoline.com and www.5paisa.com.

India Infoline Ltd company listed on both the leading stock exchanges in India namely the Stock Exchange, Mumbai(BSE) and National Stock Exchange (NSE). India Infoline is a forerunner in the field of equity research. India Infoline acknowledged by none other than forbes as Best of the Web and a must read for investors in Asia. India Infolines research is available not just over the internet but also on international wire services Ltd. (code:IILL), Thomson First Call and Internet Securities where it is amongst the most read Indian broking companies. India Infoline group has a significant presence across the country owing to its 125 offices across 45 cities in India. These offices are networked and are connected with the corporate office in Mumbai. The group has initiated significantly in technology and research, the results of which are there for everyone to see. The 5paisa.com is one the most advanced platforms available to retail investor in India.The group has memberships on BSE and NSE for equities trading and on MCX and NCDEX for commodities and has a SEBI license for portfolio Management under which, various schemes are offered which have been beating the benchmark indices since inception. India Infoline is the one-stop shop for all investments in India.

SUBSIDIARIES India Infoline Securities Pvt Ltd

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India Infoline securities Pvt Ltd is a 100% subsidiary of India Infoline Ltd, which is engaged in the businesses of Equities broking and portfolio Management Services. It holds memberships of both the leading stock exchanges of India viz. the Stock Exchange, Mumbai (BSE) and the National Stock Exchange (NSE). It offers broking services in the Cash and Derivatives segments of the NSE as well as the Cash segment of the BSE.

India Infoline Commodities Pvt Ltd

India Infoline Commodities Pvt Ltd is q 100% subsidiary of India Infoline Ltd, which is engaged in the business of commodities broking. Our experience in securities broking empowered us with the requisite skills and technologies allow us offer commodities broking as a contra-cyclical alternative to equities broking. We enjoy memberships with the MCX and NCDEX, two leading Indian commodities exchanges, and recently acquired membership of DGCX. WE have a multi-channel delivery model, making it among the select few to online as well as offline trading facilities.

India Infoline distribution Co ltd (IILD)

India Infoline.com Distribution Co Ltd is a 100% subsidiary of India Infoline ltd and is engaged in the business of distribution of Mutual Funds, IPOs, Fixed Deposits and other small saving products. It is one of the largest vendor-independent distribution houses and has a wide panIndia footprint of over 232 branches coupled with a huge number of feet-on-street, which help source and service customers across the length and breadth of India. Its unique value proposition of free doorstep expert advice coupled with free pick-up and delivery of cheques has been met with an enthusiastic response from customers and fund houses alike. Our business has expanded to include the online offerings and download application forms which they can later submit to the product provider.

India Infoline Insurance Services Ltd:-India Infoline insurance services Ltd is also a 100%
subsidiary of India Infoline Ltd and is a registered corporate agent with the insurance regulatory and development authority (IRDA). It is the largest corporate agent for ICICI Prudential Life Insurance Company Ltd, which is Indias largest Pvt Life Insurance Company.

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India Infoline Investment Services Ltd:-India Infoline Services Ltd is also a 100%
subsidiary of India Infoline Ltd. It has a NBFC license from RBI and offers margin-funding facility to the broking customers.

India Infoline Insurance Brokers Ltd.

India Infoline Insurance Brokers Ltd is 100% subsidiary of India Infoline Ltd. and is a newly formed subsidiary which will carry out the business of Insurance of Broking. We have applied to IRDA for the insurance broking license and the clearance for the same is awaited.

5paisa.com
5paisa is the trade name of India Infoline Securites Private Limited (5paisa), member of National Stock Exchange and The Stock exchange, Mumbai. 5paisa is a wholly owned subsidiary of India portal. 5paisa has emrged as one of leading players in e-broking space in India. Our key product offerings are as follows:

Investor Terminal (IT)

Investor Terminal is recommended for infreques=nt investors, who fall into the buy and Hold school of investing, made very popular by warren Buffet the Oracle of Omaha. A typical retail investor is a busy corporate executive or a businessmen who makes equity investments for long term and does not trade everyday. He prefers a trading interface which works behind proxy and firewalls as they access the Internet and the stock markets from their work place, where a direct connection is difficult because of corporate IT security policies. This product does not have intra-day tick by tick charts.

Target of Investor Terminal

Investors who invest quite often, churn their portfolios regularly and keep a close watch on the market. They need to watch live quoted and live charts.

Active stock market traders with medium volumes.

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Students and researchers who need live streaming quotes and intra day charts.

Corporate treasury people.

Trader terminal (TT):-Trader Terminal is for the dedicated day traders, who churn their
portfolio on minor movements in the market, sometimes seferal times a day. Their rapid and high volume trading requires a powerful interface for lightning fast order execution. They moitor marked to market positions on a minute-to-minute basis, with facilities for panic exit. They need all the analysis fundamental and technical, market gossip, price and volume information and much more all at one click.

Target of Trader Terminal

It is for dedicated day traders, who churn their portfolio on minor movements in the market, sometimes several times a day. Their rapid and high volume trading requires a powerful interface for lightening fast order execution.

High net worth individuals with large and active equities portfolio who need to monitor and action swiftly.

Large corporate or trust who have dedicated staff to monitor, analyze and shuffle their portfolios. Features of Trader Terminal

Trade execution in a fraction of a second! Live streaming quotes. Price watch on any number of scrips.
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Intra day charts, updated live, tick-by-tick. Live margin, position, marked to market profit & Loss report. The lowest Brokerage on the face of the earth! Set any number of price alerts on any no of scrips Flexibility to customize screen layout and setting Facility to customize any no of portfolios and watch lists Facility to cancel all pending orders in one click. Top gainers, top losers, most active, updated live Index information : Index chart, Index stock Information value

Market depth i.e. best 5 bids and offers, updated live for all scrips Instant trade confirmation Online access to both accounts and DP Live updated order and trade book Details of pending, executed and rejected orders Online access to customer services 128-bid super safe encryption Facility to place orders on the phone in all major cities Facility to place after market orders Online fund transfer facility from leading banks. Online intra-day technical calls
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Exhaustive data base of over 5000 companies Historical charts and technical analysis tools. India Infolines world- acclaimed news service and research Lots more.last but not the least ideas that help people make money.

INDUSTRY PROFILE

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Management Consulting Services . . . Founded in 1985, Madras Consultancy Group (McG) is a management consulting firm with a special focus on : (http://www.consultmcg.com) Market Entry Strategy Market Research & Industry Studies Indian Regulatory Environment Marketing Consultancy Feasibility Studies Training McG has successfully completed over 300 assignments in diverse fields such as steel, aluminium, plastics, chemicals, automobile, engineering & electronic components, telecom services, packaging, material handling, building products, industrial machinery and equipment. Customer Satisfaction studies have been undertaken for large manufacturing and distribution firms in India. McG has undertaken market research studies in South East Asia and South Asia. Understanding the Indian Regulatory Environment is made simple with McGs analysis and interpretation. Consulting services are provided for setting up operations in India. Over the decade, McG has meticulously developed and updated a database on the Indian economy, industry and the markets. McG has a team of well qualified and experienced advisers, consultants and researchers. Several large Indian corporates as well as many International firms have availed of McGs consulting services and continue to do so.

Madras Consultancy Group 3-B, K.G. Vallencia 57, 1st Main Road, Gandhi Nagar Adyar, Chennai 600020 INDIA.

Website www.consultmcg.com Tel No. 91 (44) 4211 3434 / 4211 3492 Fax No.91 (44) 4211 3490

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CHAPTER IV DATA ANALYSIS& INTERPRETATION

PORTFOLIO ANALYSIS Calculation of Standard Deviation of AUROBINDO FARMA:

Date X Share X Average(Rest)
32

X-x=d Deviation

d^2 Squared

10-03-2010 11-03-2010 12-03-2010 13-03-2010 14-03-2010 17-03-2010 18-03-2010 19-03-2010 20-03-2010 21-03-2010 TOTAL

Price(Rest) 615.50 618.45 612.00 610.70 600.05 610.10 627.10 627.05 648.10 678.10 6247.60

Dev 624.76 624.76 624.76 624.76 624.76 624.76 624.76 624.76 624.76 624.76

-9.26 -6.31 -12.76 -14.06 -24.71 -14.66 2.34 2.29 23.34 53.79

85.74 39.81 162.81 197.68 610.58 214.91 5.47 5.24 544.75 2893.36 4760.35

= Where, X=Arithmetic Mean x=Value of Variable N=No.Of items

= 624.76

Variance

= (1/n-1)(

^ 2)

= (1/10-1)(4760.81) = 0.1 * 4760.35 = 529.92 = =529.92 = 22.99

INTERPRETATION:
According to the above table the analasys should be on the basis of standard deviation and in the analasys to the date 10-03-2010 to 21-03-2010 then the investor can get more profit 2893.36 in 2103-2010 and the loss is 5.24 get date is 19-03-2010.

33

Calculation of Standard Deviation of Infosis

X Share Price(Rest) 2123.44 2115.25 2105.65 2019.05 2078.20 2047.25 2117.60 2096.70 2096.70 2057.00 20857 x Average(Rest) Dev 2085.7 2085.7 2085.7 2085.7 2085.7 2085.7 2085.7 2085.7 2085.7 2085.7 X-x=d Deviation 37.74 29.55 19.96 -66.65 -7.5 -38.2 31.8 11 114 -28.7 d^2 Squared 1424.30 873.20 398.00 4442.22 56.25 1459.24 1017.61 121 121 823.69 10736.53

Date 10-03-2010 11-03-2010 12-03-2010 13-03-2010 14-03-2010 17-03-2010 18-03-2010 19-03-2010 20-03-2010 21-03-2010 Total

= Where, X=Arithmetic Mean x=Value of Variable N=No.Of items

= 2085.7

Variance

= (1/n-1)(

^ 2)

= (1/10-1)(10736.53) = 0.1 * 10736.53 = 1192.94 = = = 34.53

INTERPRETATION:
According to the above table the analasys should be on the basis of standard deviation and in the analasys to the date 10-03-2010 to 21-03-2010 then the investor can get more profit 4442.22 in 1303-2010 and the loss is 56.25 get date is 14-03-2010.

34

35

CALCULATION OF STANDARD DEVIATION OF DR .REDDY

X Share Price(Rest) 678.40 661.00 648.45 672.45 682.90 682.00 686.30 682.15 692.15 728.25 6794.60 x Average(Rest) Dev 679.46 679.46 679.46 679.46 679.46 679.46 679.46 679.46 679.46 679.46 X-x=d Deviation 1.06 -18.46 -31.01 -7.01 3.44 2.54 6.84 2.69 12.69 48.49 d^2 Squared 1.12 340.77 961.62 49.14 11.83 6.45 46.78 7.23 161.03 2380.46 3966.44

Date 10-03-2010 11-03-2010 12-03-2010 13-03-2010 14-03-2010 17-03-2010 18-03-2010 19-03-2010 20-03-2010 21-03-2010 Total

= Where, X=Arithmetic Mean x=Value of Variable N=No. Of items

= 679.46 ^ 2)

Variance = (1/n-1)(

= (1/10-1)(3966.43) = 440.71 = = = 20.99

INTERPRETATION:
According to the above table the analasys should be on the basis of standard deviation and in the analasys to the date 10-03-2010 to 21-03-2010 then the investor can get more profit 2380.46 in 2103-2010 and the loss is 1.12 get date is 10-03-2010.

36

37

CALCULATION OF STANDARD DEVIATION OF NIIT

X Share Price(Rest) 400.50 397.55 445.35 430.70 430.10 434.55 440.15 460.40 460.40 451.25 4350.95 x Average(Rest) Dev 435.09 435.09 435.09 435.09 435.09 435.09 435.09 435.09 435.09 435.09 X-x=d Deviation 34.59 -37.54 10.26 -4.39 -4.99 -0.54 4.91 25.31 25.31 24.91 d^2 Squared 1196.46 1409.25 105.26 19.27 24.9 0.29 24.1 640.59 640.59 620.5 4680.13

Date 10-03-2010 11-03-2010 12-03-2010 13-03-2010 14-03-2010 17-03-2010 18-03-2010 19-03-2010 20-03-2010 21-03-2010 TOTAL

= Where, X=Arithmetic Mean x=Value of Variable N=No.Of items

= 435.09

Variance = (1/n-1)(

^ 2)

= (1/10-1)(4680.13) = 520.01 = = = 22.80

INTERPRETATION:
According to the above table the analasys should be on the basis of standard deviation and in the analasys to the date 10-03-2010 to 21-03-2010 then the investor can get more profit 1409.25 in 1103-2010 and the loss is 0.29 get date is 14-03-2010.

38

39

CALCULATION OF STANDARD DEVIATION OF CIPLA

X Share Price(Rest) 232.35 236.55 230.60 227.60 222.95 232.00 240.95 237.30 234.20 236.80 2331.30 x Average(Rest) Dev 233.13 233.13 233.13 233.13 233.13 233.13 233.13 233.13 233.13 233.13 X-x=d Deviation -0.78 3.42 -2.53 -5.53 -10.18 -1.13 7.82 4.17 1.07 3.67 d^2 Squared 0.6 11.69 6.4 30.58 103.63 1.27 61.15 17.38 1.14 13.46 247.36

Date 10-03-2010 11-03-2010 12-03-2010 13-03-2010 14-03-2010 17-03-2010 18-03-2010 19-03-2010 20-03-2010 21-03-2010 Total

= Where, X=Arithmetic Mean x=Value of Variable N=No.Of items

= 233.13

Variance = (1/n-1)(

^ 2)

= (1/10-1)(247.36) = 27.48 = = = 5.24

INTERPRETATION:
According to the above table the analasys should be on the basis of standard deviation and in the analasys to the date 10-03-2010 to 21-03-2010 then the investor can get more profit 103.63 in 1403-2010 and the loss is 0.6 can get date is 10-03-2010.

40

41

CALCULATION OF STANDARD DEVIATION OF SATYAM COMPUTERS

X Share Price(Rest) 438.60 442.40 452.15 432.70 432.85 429.30 466.65 464.20 464.20 472.25 4495.30 x Average(Rest) Dev 449.53 449.53 449.53 449.53 449.53 449.53 449.53 449.53 449.53 449.53 X-x=d Deviation -10.93 -7.13 2.62 -16.83 -16.53 -20.23 17.12 14.67 14.67 22.72 d^2 Squared 119.46 50.83 6.86 283.24 273.24 409.25 293.03 215.20 215.20 516.19 2382.00

Date 10-03-2010 11-03-2010 12-03-2010 13-03-2010 14-03-2010 17-03-2010 18-03-2010 19-03-2010 20-03-2010 21-03-2010 Total

= Where, X=Arithmetic Mean x=Value of Variable N=No.Of items

= 449.53

Variance = (1/n-1)(

^ 2)

= (1/10-1)(2382.00) = 264.66 = = = 16.26

INTERPRETATION:
According to the above table the analasys should be on the basis of standard deviation and in the analasys to the date 10-03-2010 to 21-03-2010 then the investor can get more profit 516.14 in 2103-2010 and the loss is 6.86 get date is 12-03-2010.
42

43

CALCULATION OF STANDARD DEVIATION OF TCS

X Share Price(Rest) 1212.20 1238.30 1264.50 1213.50 1236.20 1236.10 1303.94 1289.50 1289.40 1261.25 12544.99 x Average(Rest) Dev 1254.49 1254.49 1254.49 1254.49 1254.49 1254.49 1254.49 1254.49 1254.49 1254.49 X-x=d Deviation -42.29 -16.19 10 -40.99 -18.29 -18.19 49.45 35.01 34.89 6.76 d^2 Squared 1788.44 262.11 100.00 1680.18 334.52 330.76 2445.30 1225.70 1217.31 45.69 9430.01

Date 10-03-2010 11-03-2010 12-03-2010 13-03-2010 14-03-2010 17-03-2010 18-03-2010 19-03-2010 20-03-2010 21-03-2010 TOTAL

= Where, X=Arithmetic Mean x=Value of Variable N=No.Of items

= 1254.49

Variance = (1/n-1)(

^ 2)

= (1/10-1)(9430.01) = 1047.88 = = = 32.36

INTERPRETATION:
According to the above table the analasys should be on the basis of standard deviation and in the analasys to the date 10-03-2010 to 21-03-2010 then the investor can get more profit 2445.30 in1803-2010 and the loss is 45.69 get date is 21-03-2010.
44

45

CALCULATION OF STANDARD DEVIATION OF DIVIS LABS

X Share Price(Rest) 2833.25 2928.85 2846.55 2877.80 2879.80 3002.12 3035.00 3019.10 2951.40 3074.80 29448.80 x Average(Rest) Dev 2944.88 2944.88 2944.88 2944.88 2944.88 2944.88 2944.88 2944.88 2944.88 2944.88 X-x=d Deviation -11.63 -16.03 -98.33 -67.08 -65.08 57.24 90.12 74.22 6.52 129.92 d^2 Squared 135.25 256.96 9668.78 4499.72 4235.40 3276.41 8121.14 5508.60 42.51 16879.20 52623.97

Date 10-03-2010 11-03-2010 12-03-2010 13-03-2010 14-03-2010 17-03-2010 18-03-2010 19-03-2010 20-03-2010 21-03-2010 TOTAL

= Where, X=Arithmetic Mean x=Value of Variable N=No.Of items

= 2944.88

Variance = (1/n-1)(

^ 2)

= (1/10-1)(52623.97) = 5847.11 = = = 76.46

INTERPRETATION:
According to the above table the analasys should be on the basis of standard deviation and in the analasys to the date 10-03-2010 to 21-03-2010 then the investor can get more profit 16879.20 in 21-03-2010 and the loss is 42.51 get date is20-03-2010.
46

47

CALCULATION OF STANDARD DEVIATION OF WIPRO X Share Price(Rest) 564.60 573.00 581.90 555.25 561.15 565.90 595.15 600.90 600.90 586.15 5784.9 x Average(Rest) Dev 578.49 578.49 578.49 578.49 578.49 578.49 578.49 578.49 578.49 578.49 X-x=d Deviation -12.05 -3.65 5.25 -21.4 -15.5 -10.75 18.5 24.25 24.25 9.5 d^2 Squared 154.20 13.32 27.56 457.96 240.25 115.56 342.25 588.06 588.06 90.25 2617.47

Date 10-03-2010 11-03-2010 12-03-2010 13-03-2010 14-03-2010 17-03-2010 18-03-2010 19-03-2010 20-03-2010 21-03-2010 TOTAL

= Where, X=Arithmetic Mean x=Value of Variable N=No.Of items

= 578.49

Variance = (1/n-1)(

^ 2)

= (1/10-1)(2617.47) = 290.83 = = = 17.05

INTERPRETATION:
According to the above table the analasys should be on the basis of standard deviation and in the analasys to the date 10-03-2010 to 21-03-2010 then the investor can get more profit 588.06 in 1903-2010&20-03-2010 and the loss is 13.32 get date is 11-03-2010.

48

CALCULATION OF STANDARD DEVIATION OF RANBAXY

X Share Price(Rest) 323.78 320.70 312.25 311.20 316.25 333.20 330.15 333.00 338.90 351.90 3271.33 x Average(Rest) Dev 327.13 327.13 327.13 327.13 327.13 327.13 327.13 327.13 327.13 327.13 X-x=d Deviation -3.35 -6.43 -14.88 -15.93 -10.88 6.07 3.03 5.87 11.77 24.77 d^2 Squared 11.22 41.34 221.44 253.76 118.33 36.84 9.18 34.45 138.53 613.55 1478.64

Date 10-03-2010 11-03-2010 12-03-2010 13-03-2010 14-03-2010 17-03-2010 18-03-2010 19-03-2010 20-03-2010 21-03-2010 TOTAL

= Where, X=Arithmetic Mean x=Value of Variable N=No.Of items

= 327.13

Variance = (1/n-1)(

^ 2)

= (1/10-1)(1478.64) = 164.29 = = = 12.81

INTERPRETATION:
49

According to the above table the analasys should be on the basis of standard deviation and in the analasys to the date 10-03-2010 to 21-03-2010 then the investor can get more profit 613.55 in 2103-2010 and the loss is 9.18 get date is 18-03-2010.

PORTFOLIO CORRELATION BETWEEN AUROBINDO & INFOSIS

Dev of AUROBINDO dx -9.26 -6.31 -12.76 -14.06 -24.71 -14.66 2.34 2.29 23.34 53.79 Total Dev of Infosys dy 37.74 29.55 19.96 -66.65 -7.50 -38.20 31.80 11.00 114.00 -28.70 (dx*dy)= Product of Dev (dx)(dy) -349.47 -186.46 -254.69 937.09 185.32 560.01 74.41 25.19 2660.76 -1543.77 2108.40

Date 10-03-2010 11-03-2010 12-03-2010 13-03-2010 14-03-2010 17-03-2010 18-03-2010 19-03-2010 20-03-2010 21-03-2010

Co-Variance (Cov AB)

= (1/n) = (1/10) = 210.84

Correlation Coefficient (r)

= = 210.84 / (22.99)(34.53) = 0.265

50

INTERPRETATION:
According to the above table the analasys should be on the basis of Correlation and in the analasys to the date 10-03-2010 to 21-03-2010 then the investor can get more profit 2660.73 in 20-03-2010 and the loss is -1543.77 get date is 21-03-2010.

CORRELATION BETWEEN Dr REDDYS & NIIT

Date 10-03-2010 11-03-2010 12-03-2010 13-03-2010 14-03-2010 17-03-2010 18-03-2010 19-03-2010 20-03-2010 21-03-2010 TOTAL Dev of Dr Reddys dx 1.06 -18.46 -31.01 -7.01 3.44 2.54 6.84 2.69 12.69 48.49 Dev of NIIT dy 34.59 -37.54 10.26 -4.39 -4.99 -0.54 4.91 25.31 25.31 24.91 Product of Dev (dx)(dy) 36.66 692.98 -318.16 30.77 -17.16 -1.37 33.58 68.08 321.18 1207.88 (dx*dy)= 205.46

Co-Variance (Cov AB) = (1/n) = (1/10) = 205.44

Correlation Coefficient (r) = =205.44 / (20.99)(22.80) = 0.42

INTERPRETATION:
According to the above table the analasys should be on the basis of Correlation and in the analasys to the date 10-03-2010 to 21-03-2010 then the investor can get more profit 1207.88 in 21-03-2010 and the loss is -17.16 get date is 14-03-2010.
51

CORRELATION BETWEEN INFOSYS & SATYAM COMPUTERS

Dev of Infosys Dev of Satyam dx dy 37.74 -10.93 29.55 -7.13 19.96 2.62 -66.65 -16.83 -7.50 -16.53 -38.20 -20.23 31.80 17.12 11.00 14.67 114.00 14.67 -28.70 22.72 TOTAL (dx*dy)= Product of Dev (dx)(dy) -412.49 -210.69 52.29 1121.72 123.97 772.78 544.41 161.37 1672.3 -652.06 3173.71

Date 10-03-2010 11-03-2010 12-03-2010 13-03-2010 14-03-2010 17-03-2010 18-03-2010 19-03-2010 20-03-2010 21-03-2010

Co-

Variance (Cov AB) = (1/n)

52

= (1/10) = 317.37

Correlation Coefficient (r) = = 317.37 / (34.53)(16.26) = 0.56

INTERPRETATION:
According to the above table the analasys should be on the basis of Correlation and in the analasys to the date 10-03-2010 to 21-03-2010 then the investor can get more profit 1672.3 in 20-03-2010 and the loss is -652.06 get date is 21-03-2010.

53

CORRELATION BETWEEN TCS & CIPLA

Dev of TCS Date 10-03-2010 11-03-2010 12-03-2010 13-03-2010 14-03-2010 17-03-2010 18-03-2010 19-03-2010 20-03-2010 21-03-2010 TOTAL Dx -42.29 -16.19 10.00 -40.99 -18.29 -18.19 49.45 35.01 34.89 6.76 Dev of CIPLA dy -0.78 3.42 -2.53 -5.53 -10.18 -1.13 7.82 4.17 1.07 3.67 Product of Dev (dx)(dy) 32.98 -55.36 -25.30 226.67 186.19 20.55 386.69 145.99 37.33 24.80 (dx*dy)= 980.54

Co-Variance (Cov AB) = (1/n) = (1/10) = 98.05

Correlation Coefficient (r) = = 98.05 / (32.36)(5.24) = 0.57

INTERPRETATION:
According to the above table the analasys should be on the basis of Correlation and in the analasys to the date 10-03-2010 to 21-03-2010 then the investor can get more profit 386.69 in 18-03-2010 and the loss is -55.3 get date is 11-03-2010.

54

55

CORRELATION BETWEEN DIVIS & RANBAXY

Dev of Divis Date 10-03-2010 11-03-2010 12-03-2010 13-03-2010 14-03-2010 17-03-2010 18-03-2010 19-03-2010 20-03-2010 21-03-2010 dx -11.63 -16.03 -98.33 -67.08 -65.08 57.24 90.12 74.22 6.52 129.92 TOTAL Dev of Ranbaxy dy -3.35 -6.43 -14.88 -15.93 -10.88 6.07 3.03 5.87 11.77 24.77 Product of Dev (dx)(dy) 38.96 103.07 1463.15 1068.58 708.07 347.44 273.06 435.61 76.77 3218.11 (dx*dy)= 7732.82

Co-Variance (Cov AB) = (1/n) = (1/10) = 773.28

Correlation Coefficient (r) =

)

773.28 / (76.46)(12.81 = 0.78

INTERPRETATION:
According to the above table the analasys should be on the basis of Correlation and in the analasys to the date 10-03-2010 to 21-03-2010 then the investor can get more profit 3218.11 in 21-03-2010 and the loss is38.96 get date is 10-03-2010.

56

57

CORRELATION BETWEEN DIVIS & WIPRO

Dev of Divis Date 10-03-2010 11-03-2010 12-03-2010 13-03-2010 14-03-2010 17-03-2010 18-03-2010 19-03-2010 20-03-2010 21-03-2010 TOTAL dx -11.63 -16.03 -98.33 -67.08 -65.08 57.24 90.12 74.22 6.52 129.92 Dev of Wipro dy -12.05 -3.65 5.25 -21.4 -15.5 -10.75 18.5 24.25 24.25 9.5 Product of Dev (dx)(dy) 140.14 58.50 -516.23 1435.51 1008.74 -615.33 1667.22 1799.83 158.11 1234.24 (dx*dy)= 6370.74

Co-Variance (Cov AB) = (1/n) = (1/10) = 637.07

Correlation Coefficient (r) = = 637.07 / (76.46)(17.05) = 0.488

INTERPRETATION:
According to the above table the analasys should be on the basis of Correlation and in the analasys to the date 10-03-2010 to 21-03-2010 then the investor can get more profit 1799.83 in 19-03-2010 and the loss is -615.66 get date is 17-03-2010.

58

59

CORRELATION BETWEEN Dr REDDYS & TCS

Dev of Dr Reddy Date 10-03-2010 11-03-2010 12-03-2010 13-03-2010 14-03-2010 17-03-2010 18-03-2010 19-03-2010 20-03-2010 21-03-2010 TOTAL dx 1.06 -18.46 -31.01 -7.01 3.44 2.54 6.84 2.69 12.69 48.49 Dev of TCS dy -42.29 -16.19 10.00 -40.99 -18.29 -18.19 49.45 35.01 34.89 6.76 Product of Dev (dx)(dy) -44.82 298.86 -310.10 287.33 -62.91 -46.20 338.23 94.17 442.75 327.79 (dx*dy)= 1325.10

Co-Variance (Cov AB) = (1/n) = (1/10) = 132.51

Correlation Coefficient (r) = =132.51 / (20.99)(32.36) = 0.18

INTERPRETATION:
According to the above table the analasys should be on the basis of Correlation and in the analasys to the date 10-03-2010 to 21-03-2010 then the investor can get more profit 338.23 in 20-03-2010 and the loss is -310.9 get date is 12-03-2010.

60

PORTFOLIO WEIGHTS PORTFOLIO WEIGHTS OF AUROBINDO & INFOSYS

Deriving the minimum risk portfolio, the following formula is used:

(b)^2-rab(a)(b) (a)^2+(b)^2-2rab(a)(b)

Where, Xa = Portfolio of AUROBINDO Xb = Portfolio of Infosys a = Standard Deviation of AUROBINDO b = Standard Deviation of Infosys rab = Correlation Co-efficient between A & B = = = (34.53)-(0.235)(22.99)(34.53) / (22.99)^2+(34.53)^2-(2)(0.265)(22.99)(34.53) 583.48 / 1300.14 0.44

Xb = 1- Xa = 0.56

61

62

PORTFOLIO WEIGHTS OF Dr REDDYS & NIIT

Deriving the minimum risk portfolio, the following formula is used:

(b)^2-rab(a)(b) (a)^2+(b)^2-2rab(a)(b)

Where, Xa = Portfolio of Dr REDDYS Xb = Portfolio of NIIT a = Standard Deviation of Dr REDDYS b = Standard Deviation of NIIT rab = Correlation Co-efficient between A & B

(22.80) )^2-(0.42)(20.99)(22.80) / (20.99) )^2+(22.80) )^2-(2)(0.42)

(20.99) (22.80)

= =

318.85 / 558.43 0.57

Xb = 1- Xa = 1-0.57 = 0.43

63

PORTFOLIO WEIGHTS OF INFOSYS & SATYAM COMPUTERS

Deriving the minimum risk portfolio, the following formula is used:
= (b)^2-rab(a)(b) (a)^2+(b)^2-2rab(a)(b)

Where, Xa = Portfolio of INFOSYS Xb = Portfolio of Satyam Computers a = Standard Deviation of INFOSYS b = Standard Deviation of Satyam Computers rab = Correlation Co-efficient between A & B

= (16.26) )^2-(0.56)(16.26)(34.53) / (16.26)^ 2+(34.53)^ -(2)(0.56)(16.26) (34.53) =(50.83) / (827.57) =0.6 Xb = 1- Xa = 1-0.06 = 0.94

64

PORTFOLIO WEIGHTS OF TCS & CIPLA

Deriving the minimum risk portfolio, the following formula is used:
= (b)^2-rab(a)(b) (a)^2+(b)^2-2rab(a)(b)

Where, Xa = Portfolio of TCS Xb = Portfolio of CIPLA a = Standard Deviation of TCS b = Standard Deviation of CIPLA rab = Correlation Co-efficient between A & B

=(5.24)^2-(0.57)(5.24)(32.36) / (5.24)^2+(32.36)^2-(2) (0.57)(5.24)(32.36) = = Xb 69.2 / 881.2 0.07

= 1- Xa = 1-0.07 = 0.93

65

66

PORTFOLIO WEIGHTS OF DIVIS & RANBAXY

Deriving the minimum risk portfolio, the following formula is used:
= (b)^2-rab(a)(b) (a)^2+(b)^2-2rab(a)(b)

Where, Xa = Portfolio of DIVIS Xb = Portfolio of RANBAXY a = Standard Deviation of DIVIS b = Standard Deviation of RANBAXY rab = Correlation Co-efficient between A & B

=(12.81)^2-(0.78)(12.81)(76.46) / (12.81)^2(76.46)^2-(2)(0.78)(12.81)(76.46) = = 599.88 / (4482.28) 0.13

Xb = 1- Xa = 1-0.13 = 0.87

67

PORTFOLIO WEIGHTS OF DIVIS & WIPRO

Deriving the minimum risk portfolio, the following formula is used:
= (b)^2-rab(a)(b) (a)^2+(b)^2-2rab(a)(b)

Where, Xa = Portfolio of DIVIS Xb = Portfolio of WIPRO a = Standard Deviation of DIVIS b = Standard Deviation of WIPRO rab = Correlation Co-efficient between A & B

=(17.05)^2-(0.48)(17.05)(76.46) / (17.05)^2+(76.46)^2-(2)(0.48)(17.05)(76.46) = = 335.04 / 4885.5 0. 068

Xb = 1- Xa = 1-0.068 = 0.94

68

69

PORTFOLIO WEIGHTS OF Dr REDDYS & TCS

Deriving the minimum risk portfolio, the following formula is used:
= (b)^2-rab(a)(b) (a)^2+(b)^2-2rab(a)(b)

Where, Xa = Portfolio of Dr REDDYS Xb = Portfolio of TCS a = Standard Deviation of Dr REDDYS b = Standard Deviation of TCS rab = Correlation Co-efficient between A & B

= = =

(32.36)^2-(0.19)(32.36)(20.99) / (32.36)^2+(20.99)^2-(2)(0.195)(32.36)(20.99) 918.11 / 1229.64 0.74

Xb = 1- Xa = 1-0.74 = 0.26

70

71

PORTFOLIO RISK PORTFOLIO RISK BETWEEN AUROBINDO & INFOSYS

Portfolio Risk is calculated with the help of the following formula: p = (X1)^2 (1)^2 + (X2)^2 (2)^2 + (2)* rab (X1) (X2) ( 1) (2) where, p = Portfolio Risk X1 = Proportion of Investment is Security 1 X2 = Proportion of Investment in Security 2 1 = Standard Deviation of Security 1 2 = Standard Deviation of Security 2 rab = Correlation Co-efficient between Security a & b X1 = 0.44, X2 = 0.56, 1 = 22.99, 2 = 34.53, rab= 0.263

p = (0.44)^2(22.99)^2+(0.56)^2(32.53)^2+(2)(0.265)(0.44)(0.56)(22.99)(34.52)

24.08

72

PORTFOLIO RISK BETWEEN Dr REDDYS & NIIT

Portfolio Risk is calculated with the help of the following formula: p = (X1)^2 (1)^2 + (X2)^2 (2)^2 + (2)* rab (X1)(X2)( 1)(2) where, p = Portfolio Risk X1 = Proportion of Investment is Security 1 X2 = Proportion of Investment in Security 2 1 = Standard Deviation of Security 1 2 = Standard Deviation of Security 2 rab = Correlation Co-efficient between Security a & b X1 = 0.57, X2 = 0.43, 1 = 20.99, 2 = 22.80, rab= 0.42 p =(0.57)^2 (20.99)^2+ (0.43)^2 (22.80)^2+(2)(0.42)(0.57)(0.43)(20.99)(22.80) =18.37

73

PORTFOLIO RISK BETWEEN INFOSYS & SATYAM COMPUTERS

Portfolio Risk is calculated with the help of the following formula:

p = (X1)^2 (1)^2 + (X2)^2 (2)^2 + (2)* rab (X1)(X2)( 1)(2)

where, p = Portfolio Risk X1 = Proportion of Investment is Security 1 X2 = Proportion of Investment in Security 2 1 = Standard Deviation of Security 1 2 = Standard Deviation of Security 2 rab = Correlation Co-efficient between Security a & b X1 = 0.06, X2 =-0.94, 1 = 34.53, 2 = 16.26, rab = 0.56 p =

(0.06)^2(34.52)^2+(0.94)^2(16.26)^2+(2)(0.56)(0.06)(0.94)(34.53)(16.26)

16.53

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PORTFOLIO RISK BETWEEN TCS & CIPLA

Portfolio Risk is calculated with the help of the following formula:

p =

(X1)^2

(1)^2 + (X2)^2 (2)^2 + (2)* rab (X1)(X2)( 1)(2)

where, p = Portfolio Risk X1 = Proportion of Investment is Security 1 X2 = Proportion of Investment in Security 2 1 = Standard Deviation of Security 1 2 = Standard Deviation of Security 2 rab = Correlation Co-efficient between Security a & b X1 = 0.07, X2 = 0.93, 1 = 32.36, 2 = 5.24, rab= 0.57 p =

(0.07)^2(32.36)^2+(0.93)^2(5.24)^2+(2)(0.57)(0.07)(32.33)(0.93)(5.24)

6.43

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PORTFOLIO RISK BETWEEN DIVIS & RANBAXY

Portfolio Risk is calculated with the help of the following formula: p = (X1)^2 (1)^2 + (X2)^2(2)^2 + (2)* rab (X1)(X2)( 1)(2)

where, p = Portfolio Risk X1 = Proportion of Investment is Security 1 X2 = Proportion of Investment in Security 2 1 = Standard Deviation of Security 1 2 = Standard Deviation of Security 2 rab = Correlation Co-efficient between Security a & b X1 = 0.13, X2 = 0.87, 1 = 76.46, 2 = 12.81, rab = 0.78

p =

(0.13)^2(76.46)^2+(0.87)^2(12.81)^2+(2)(0.78)(0.13)(0.87)(76.46)(12.81)
19.18

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PORTFOLIO RISK BETWEEN DIVIS & WIPRO

Portfolio Risk is calculated with the help of the following formula: p = (X1)^2 (1)^2 + (X2)^2(2)^2 + (2)* rab (X1)(X2)( 1)(2)

where,

p = Portfolio Risk X1 = Proportion of Investment is Security 1 X2 = Proportion of Investment in Security 2 1 = Standard Deviation of Security 1 2 = Standard Deviation of Security 2 rab = Correlation Co-efficient between Security a & b X1 = 0.06, X2 = 0.94, 1 = 76.46, 2 = 17.05, rab= 0.48

p =

(0.06)^2(76.46)^2+(0.94)^2(17.05)^2+(2)(0.48)(0.06)(0.94)(76.94)(17.05)
17.19

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PORTFOLIO RISK BETWEEN Dr REDDYS & TCS

Portfolio Risk is calculated with the help of the following formula: p = (X1)^2 (1)^2 + (X2)^2 (2)^2 + (2)* rab (X1)(X2)( 1)(2) where, p = Portfolio Risk X1 = Proportion of Investment is Security 1 X2 = Proportion of Investment in Security 2 1 = Standard Deviation of Security 1 2 = Standard Deviation of Security 2 rab = Correlation Co-efficient between Security a & b X1 =0.74, X2 = 0.26, 1 = 20.99, 2 = 32.36, rab = 0.19 p =

(0.74)^2 (20.99)^2+(0.26)^2(32.36)^2+(2)(0.19)(0.74)(0.26)(20.99)(32.36)

19.01

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CHARTS AND GRAPHS STANDARD DEVIATION & AVERAGES Company Name

AUROBINDO Dr REDDY CIPLA NIIT INFOSYS SATHYAM COMP TCS DIVIS WIPRO RANBAXY

Average
624.76 679.46 233.13 435.09 2085.70 449.53 1254.88 2944.88 576.65 327.13

Standard Deviation
22.99 20.99 5.24 22.80 34.53 16.26 32.36 76.46 17.05 12.81

INTERPRETATION:
In the PortFolio Management the risk can be Segregated Major Share of risk to be devison with throw at the minor Share of risk to theCipla&it will be measured by using risk analysis

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INTERPRETATION:
In the PortFolio Management the risk can be Segregated Major Share of risk to be devison with throw at the minor Share of risk to theCipla&it will be measured by using risk analysis

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Combinations AUROBINDO/INFOSYS Dr REDDYS/NIIT INFOSYS/SATHYAM COMP TCS/CIPLA DIVIS/RANBAXY DIVIS/WIPRO Dr REDDY/TCS

Correlation 0.26 0.42 0.56 0.57 0.78 0.48 0.18 24.08 18.37 16.52 6.43 19.18 17.19 19.01

Portfolio Risk

CORRELATION

AUROBINDO/INFOSYS Dr REDDYS/NIIT

0.48

0.18

0.26

0.42

INFOSYS/SATHYAM COMP TCS/CIPLA DIVIS/RANBAXY DIVIS/WIPRO Dr REDDY/TCS

0.78 0.57

0.56

INTERPRETATION:
In the PortFolio Management the risk can be Segregated Major Share of risk to be devison with throw at the minor Share of risk to theTcs/Cipla and it will be measured by using risk analysis

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PORTFOLIO RISK

PORTFOLIO RISK

AUROBINDO/INFOSYS Dr REDDYS/NIIT INFOSYS/SATHYAM COMP TCS/CIPLA DIVIS/RANBAXY DIVIS/WIPRO Dr REDDY/TCS

19.01 17.19

24.08

18.37 19.18 6.43 16.56

INTERPRETATION:
In the PortFolio Management the risk can be Segregated Major Share of risk to be devison with throw at the minor Share of risk to theTcs/Cipla and it will be measured by using risk analysis

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ANALYSIS:

Company Name AUROBINDO Dr.REDDY CIPLA NIIT INFOSYS SATYAM TCS DIVIS WIPRO RANBAXY

Average 624.76 679.46 233.13 435.09 2085.70 449.53 1254.88 2944.88 576.65 327.13

Standard Deviation 22.99 20.99 5.24 22.80 34.53 16.26 32.36 76.46 17.05 12.84

INTERPRETATION To Analyze Whether the selected portfolio is Cipla.It is the Satisfactory and Constant Return to the Investor.

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Combination AUROBINDO/INFOSYS Dr.REDDY/NIIT INFOSYS/SATYAM TCS/CIPLA DIVIS/RANBAXY DIVIS/WIPRO REDDYS/TCS

Correlation Coefficient 0.26 0.42 0.56 0.57 0.78 0.48 0.18

Portfolio Risk 15.40 1.58 14.29 4.01 5.36 25.26 16.23

Whether the Combination Industries are TCS&Cipla.It is yield by the good return to the Investor

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CHAPTER V SUGGETIONS,FINDINGS& CONCLUSION

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SUGGESTIONS
Following are some of the suggestions: 1. As market is not doing well, investor should wait for sometimes, in order to get positive returns. 2. In order to enjoy more returns, he should invest in more; investor should invest in more risky securities as a risk taker.
3. If he is a risk-averse investor, then he should invest in less risky securities and enjoy normal returns.

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FINDINGS
During the study, following are some of the observations that are found out: As the market is not doing well, current prices of various stocks fallen when compared to purchase prices. Therefore, investor may incur negative returns also. 1. Since the term returns from an investment refers to the benefits that an investor receive from that particulars investment, hence we can infer that portfolio is generating more returns when compared to individual. 2. If risk parameter is taken in consideration, portfolio has low risk to that of individual risk. 3. When beta ( which reflects the movement in stocks or a portfolio return in relation to that of market return) is considered, portfolio A is less volatile then of portfolio B. From the above analysis, we conclude that portfolio A is having less risk as well as generating more returns comparing the portfolio B, if investor is not a risk taker then definitely invest in portfolio. A where he enjoy taking less risk and more returns.

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CONCLUSIONS

CONCLUSIONS REGARDING CORRELATION:

In case of perfect positive corralled securities or stock, the risk can be reduced to a minimum level, were as in the case of negative correlated securities the risk can be reduced to zero, which is company risk but the market risk prevails the same for the security or stock in portfolio. Positive correlation means both the securities are moving in the same direction i.e., either upward or downward. Where as negative correlation means, the securities are moving in opposite direction, which is more portfolio.

CONCLUSION FOR PORTFOLIO RISK & INVESTMENT: AUROBINDO & INFOSYS:

As per the calculations the Aurobindo bear a major proportion of 0.85 and where as Infosys bears a proportion of 0.14 but the Standard Deviation of In Aurobindo carries 22.99% where as the Infosys having its Standard Deviation as 34.53%. The portfolio of the investment and the Standard Deviation between the risk and the investment and the Standard Deviation between the both securities is irrelevant to each other. There is a large difference between the risk and the investment proportions.The portfolio risk is limited to the extent of 15.40% which is the half of Infosys risk, the investors should take this much of the risk in portfolio as compared to the Infosys risk.

Dr Reddy & NIIT:

As per the calculations the Hcl Tech bear a lower proportion of 0.49 and where as NIIT bears a proportion of 0.508 but the Standard Deviation of Hcl Tech carries 168.55% where as the NIIT having its Standard Deviation as 22.80%. The proportion of the investment and the Standard Deviation between the risk and the investment and the Standard Deviation between the both securities is relevant to each other. There is a smaller difference between the risk and the investment proportions. The portfolio risk is limited to the extent of 18.59% which is less than the half of individual risk, the investors should take this much of the risk in portfolio as compared to the individual risk.

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INFOSYS & SATYAM COMPUTERS:

As per the calculations the Infosys beat a minor proportion of 0.05 and where as Satyam Computers bears a proportion of 0.94 but the Standard Deviation of Infosys carries 34.53% where as the Satyam having its Standard Deviation as 16.26%. The proportion of the investment and the Standard Deviation between the risk and the investment and the Standard Deviation between the both securities is irrelevant to each other. There is a smaller difference between the risk and the investment proportions. The portfolio risk is limited to the extent of 14.29% which is less than the half of Infosys individual risk, the investors should take this much of the risk in portfolio as compared to the Infosys individual risk.

TCS & CIPLA:

As per the calculations the TCS bear a minor proportion of 0.07 and where as CIPLA bears a proportion of 0.92. but the Standard Deviation of TCS carries 32.36% where as the Uni Tech having its Standard Deviation as 5.24%. The proportion of the investment and the Standard Deviation between the risk and the investment between the both securities is irrelevant to each other. There is a large difference between the risk and the investment proportions.The portfolio risk is limited to the extent of 4.01% which is less than the half of Cipla individual risk, the investors should take this much of the risk in portfolio as compared to the individual risk.

DIVIS & RANBAXY:

As per the calculations the Divis bear a major proportion of 0.77 and where as Ranbaxy bears a proportion of 0.22 but the Standard Deviation of Divis carries 76.46% where as the Ranbaxy having its Standard Deviation as 12.81%. The proportion of the investment and the Standard Deviation between the risk and the investment and the Standard Deviation between the both securities is irrelevant to each other. There is a large difference between the risk and the investment proportions. As portfolio risk is limited to the extent of 5.32% which is less than the half of Ranbaxy individual risk, the investors should take this much of the risk in portfolio as compared to the individual risk.

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DIVIS & WIPRO:

As per the calculations the Divis bear a major proportion of 0.10 and where as Wipro bears a proportion of 0.89 but the Standard Deviation of Divis carries 76.46% where as the Wipro having its Standard Deviation as 17.05%. The proportion of the investment and the Standard Deviation between the risk and the investment and the Standard Deviation between the both securities is irrelevant to each other. There is a large difference between the risk and the investment proportions. As portfolio risk is limited to the extent of 25.26% which is more than the half of Wipro individual risk, the investors should take this much of the risk in portfolio as compared to the individual risk.

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CHAPTER VI BIBLIOGRAPHY

91

BIBLIOGRAPHY BOOKS REFERRED:

Security Analysis & Portfolio Management ------ PRASANNA CHANDRA Security Analysis & Portfolio Management ------ FISHER D.E. & JORDAN R.J. Investment Management & Security Analysis ----- PREETI SINGH.

VISITED WEBSITES:
www.nseindia.com www.investopedia.com www.bseindia.com www.economictimes.com www.bloomberg.com www.monycontrol.com

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