Portfolio Project2013

INTRODUCTION
Portfolios are combinations of assets held by the investors. These

combinations may be of various asset classes like equity and debt and of different
issuers like Government bond and corporate debt or of various instruments like
discount bonds, warrants, debentures and Blue chip equity or scrips of emerging blue
chip companies.
The traditional Portfolio Theory aims at the selection of such securities
that would fit in well with the asset preferences, need and choice of investor. odern
Portfolio Theory postulates that ma!imi"ation of return and or minimi"ation of risk
will yield optimal returns and choice and attitudes of investors are only a starting
point for investment decision and that vigorous risk#return analysis is necessary for
optimi"ation of returns. The return on portfolio is weighted average of returns of
individual stocks and the weights are proportional to each stocks percentages in the
total portfolio.
Portfolio analysis includes portfolio construction, and performance of
portfolio. $ll these are part of the sub%ect of portfolio anagement which is a
dynamic concept, sub%ect to daily and hourly changes based on information flows,
money flows and economic and non#economic forces operating in the country on the
markets and securities.
$ very common name for all traders in the stock market, B&', stands for
Bombay &tock '!change. (t is the oldest market not only in the country, but also in
$sia. (n the early days, B&' was known as )The *ative &hare + &tock Brokers
$ssociation.) (t was established in the year ,-./ and became the first stock e!change
in the country to be recogni"ed by the government. (n ,0/1, B&' obtained a
permanent recognition from the Government of (ndia under the &ecurities 2ontracts
34egulation5$ct,,0/1.

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(n the past and even now, it plays a pivotal role in the development of the country6s
capital market. This is recogni"ed worldwide and its inde!, &'*&'7, is also tracked
worldwide. 'arlier it was an $ssociation of Persons 3$8P5, but now it is a
demutualised and corporatised entity incorporated under the provisions of the
2ompanies $ct, ,0/1, pursuant to the B&' 32orporatisation and 9emutuali"ation5
&cheme, :;;/ notified by the &ecurities and '!change Board of (ndia 3&'B(5.
The *ational &tock '!change of (ndia <imited has genesis in the report of
the =igh Powered &tudy Group on 'stablishment of *ew &tock '!changes, which
recommended promotion of a *ational &tock '!change by financial institutions 3>(s5
to provide access to investors from all across the country on an equal footing. Based
on the recommendations, *&' was promoted by leading >inancial (nstitutions at the
behest of the Government of (ndia and was incorporated in *ovember ,00: as a ta!#
paying company unlike other stock '!change in the country.
8n its recognition as a stock e!change under the &ecurities 2ontracts
34egulation5 $ct, ,0/1 in $pril ,00?, *&' commenced operations in the @holesale
9ebt arket 3@95 segment in Aune ,00B. The 2apital arket 3'quities5 segment
commenced operations in *ovember ,00B and operations in 9erivatives segment
commenced in Aune :;;;.
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OB1ECTIVES OF THE STUDY
To &eek Portfolio anagement process.
To know the risk return characteristics of corporate market.
To observe correlation between different stocks.
To unlearn status of the market porfolios.
To elicit the portfolio returns and portfolio risks.
To evidence features of effectiveness offering ma!imum return for
minimum risks.
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NEED OF THE STUDY
$ number of financial institutions, mutual funds and other agencies are
undertaking the task of investing money of small investors, on their behalf. Growth in the
number and si"e of ingestible funds C a large part of household savings is being directed
towards financial assets. (ncreased market volatility C risk and return parameters of
financial assets are continuously changing because of frequent changes in governmentDs
industrial and fiscal policies, economic uncertainty and instability. Greater use of
computers for processing mass of data.
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SCOPE OF THE STUDY
The study covers the calculation of correlations between the different securities in
order to find out at what percentage funds should be invested among the companies in the
portfolio. The study covers calculation of individual &tandard 9eviation of securities and
ends calculation weightages of individual securities involved in the portfolio. These
percentages help in allocating the funds available for investment based on risky portfolios.

RESEARCH METHODOLOGY
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Research is a systematic investigation to establish facts or principles or to collect
information on a sub%ect.
Research Methodology is the systematic way to solve a problem.
RESEARCH DESIGN:
$ccording to 9avid A <uck and 4onald & 4ubin, E$ research design is the
determination and statement of the general research approach or strategy adopted for
the particular pro%ect.
The research design is descriptive. The research design encompasses the
various approaches to be used in solving the research problem, sources and
information related to the problem and time frame. $mong the different research
methodologies such as quantitative, qualitative, e!perimental, quasi#e!perimental,
and case study, ( opted to use the descriptive method to validate my findings.
9escriptive research involves gathering data that describe events and then organi"es,
tabulates, depicts, and describes the data collection. Through this method, the
elements of both qualitative and quantitative research methodologies are utili"ed
within. This enabled me to describe. 4esearch design and research methodology is the
procedure of collecting, analy"ing and interpreting the data to diagnose the problem
and react to the opportunity in such a way where the costs can be minimi"ed and the
desired level of accuracy can be achieved to arrive at a particular conclusion.
DATASOURCES:
Primary sources are original sources from which the researcher directly collects data
that have not been previously collected, e.g., collection of data directly by the
researcher on brand awareness, brand preference, brand loyalty and other aspects of
consumer behaviour from a sample of consumers by interviewing them. The
secondary sources consist of readily available compendia and already compiled
statistical statements and reports whose data may be used by researches for their
studies, e.g., census reports, annual reports and financial statements of companies.
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Primary Data:
Primary data is information collected by the researcher directly through instruments
such as surveys, interviews, focus groups or observation. Tailored to his specific
needs, primary research provides the researcher with the most accurate and up#to#date
data.
Secondary Data:
&econdary data, on the other hand, is basically primary data collected by someone
else. 4esearchers reuse and repurpose information as secondary data because it is
easier and less e!pensive to collect. =owever, it is seldom as useful and accurate as
primary data.
&8F42'& 8> 9$T$ 28<<'2T(8*G The methodology adopted or
employed in this study was ostly on secondary data collection i.e..,
2ompanies $nnual 4eports
(nformation from (nternet
Publications
(nformation provided by (nter 2onnected &tock '!change.
PERIOD OF STUDY: 9uration of the pro%ect is only B/ days, so not possible to
evaluate other sector performance also.
>or different companies, financial data has been collected from the year :;;-#:;,:.
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LIMITATIONS OF THE STUDY
Hery few and randomly selected scripts I companies analy"ed from B&' <istings.
9ata collection was strictly confined to secondary source. *o primary data is
associated with the pro%ect.
9etailed study of the topic was not possible due to limited time and other factors of
the pro%ect.

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REVIEW OF LITERATURE
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PORTFOLIO MANAGEMENT & ITS PHASES
P84T>8<(8 $*$G''*T is a process encompassing many activities aimed at
optimi"ing investment of funds, each phase is an integral part of the whole process
and the success of portfolio management depends upon the efficiency in carrying out
each phase. >ive phases can be identifiedG#
,. &ecurity analysis
:. Portfolio analysis
?. Portfolio selection
B. Portfolio revision
/. Portfolio evaluation
SECURITY ANALYSISG (t refers to the analysis of trading securities from the point
of view of their prices, return, and risk. $ll investment is risky and the e!pected return
is related to risk. The securities available to an investor for investment are numerous
and of various types. The shares of over more than .;;; companies are listed in stock
e!changes of the country. &ecurities are classified into ownership securities such as
equity shares and preference shares and debentures and bonds. 4ecently ,a number of
new securities such as convertible debentures and deep discount bonds, "ero coupon
bonds, >le!i bonds, >loating rate bonds G94s 'uro currency bonds etcJ, are issued
to raise funds for their pro%ects by companies from which investor has to choose those
securities the is worthwhile to be included in his investment portfolio. This calls for
detailed analysis of the available securities.
&ecurity analysis is the initial phase of the portfolio management process e!amines
the risk return characteristics of individual securities. $ basic strategy in securities
investment is to buy under priced securities and sell over priced securities. But the
problem is how to identify such securities in other words mispriced securities. This is
what security analysis is all about.
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PORTFOLIO REVISION
The portfolio which is once selected has to be continuously reviewed over a period
of time and then revised depending on the ob%ectives of the investor. The care taken in
construction of portfolio should be e!tended to the review and revision of the portfolio.
>luctuations that occur in the equity prices cause substantial gain or loss to the investors.
The investor should have competence and skill in the revision of the portfolio.
The portfolio management process needs frequent changes in the composition of stocks and
bonds. (n securities, the type of securities to be held should be revised according to the
portfolio policy.
$n investor purchases stock according to his ob%ectives and return risk
framework. The prices of stock that he purchases fluctuate, each stock having its own cycle
of fluctuations. These price fluctuations may be related to economic activity in a country or
due to other changed circumstances in the market.
(f an investor is able to forecast these changes by developing a framework for
the future through careful analysis of the behaviour and movement of stock prices is in a
position to make higher profit than if he was to simply buy securities and hold them through
the process of diversification. echanical methods are adopted to earn better profit through
proper timing. The investor uses formula plans to help him in making decisions for the.
future by e!ploiting the fluctuations in prices
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PORTFOLIO THEORIES
Markowitz Model:
arkowit" model is a theoretical framework for analysis of risk and return and
their relationships. =e used statistical analysis for the measurement of risk and
mathematical programming for selection of assets in a portfolio in an efficient
manner. arkowit" apporach determines for the investor the efficient set of portfolio
through three important variables i.e.
4eturn
&tandard deviation
2o#efficient of correlation
arkowit" model is also called as a E>ull 2ovariance odelE. Through this model the
investor can find out the efficient set of portfolio by finding out the trade off between
risk and return, between the limits of "ero and infinity. $ccording to this theory, the
effects of one security purchase over the effects of the other security purchase are
taken into consideration and then the results are evaluated. ost people agree that
holding two stocks is less risky than holding one stock. >or e!ample, holding stocks
from te!tile, banking and electronic companies is better than investing all the money
on the te!tile companyDs stock.
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arkowit" had given up the single stock portfolio and introduced diversification. The
single stock portfolio would be preferable if the investor is perfectly certain that his
e!pectation of highest return would turn out to be real. (n the world of uncertainty,
most of the risk adverse investors would like to %oin arkowit" rather than keeping a
single stock, because diversification reduces the risk.
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ASSUMPTIONS:
$ll investors would like to earn the ma!imum rate of return that they can
achieve from their investments.
$ll investors have the same e!pected single period investment hori"on.
$ll investors before making any investments have a common goal. This is the
avoidance of risk because (nvestors are risk#averse.
(nvestors base their investment decisions on the e!pected return and standard
deviation of returns from a possible investment.
Perfect markets are assumed 3e.g. no ta!es and no transaction costs5
The investor assumes that greater or larger the return that he achieves on his
investments, the higher the risk factor surrounds him. 8n the contrary when
risks are low the return can also be e!pected to be low.
The investor can reduce his risk if he adds investments to his portfolio.
$n investor should be able to get higher return for each level of risk Eby
determining the efficient set of securitiesE.
$n individual seller or buyer cannot affect the price of a stock. This
assumption is the basic assumption of the perfectly competitive market.
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SHARPE`S PERFORMANCE MEASURE
&ince the &harpe ratio was derived in ,011 by @illiam &harpe, it has been one
of the most referenced riskIreturn measures used in finance, and much of this
popularity can be attributed to its simplicity. The ratio6s credibility was boosted
further when Professor &harpe won a *obel emorial Pri"e in 'conomic &ciences in
,00; for his work on the capital asset pricing model 32$P5.
Sp Risk premium
Total risk

r p - r f
o p
@here rp L reali"ed return on the portfolio
rf L risk#free rate of return
o p standard deviation of returns for portfolio
Therefore, &harpe assumes that the portfolio under consideration is the whole
or substantially the whole of the investors total portfolio. This means that, if there are
any unsystematic risks still left in the portfolio and this cannot be eliminated.

TREYNOR`S PERFORMANCE MEASURE
The performance measures developed by %ack Treynor is referred to as
Treynor 4atio or reward to volatility ratio. (t is concerned with systematic risk 3or
beta5 and therefore it is the relationship between rewards or risk premium for
calculating Treynor inde! may be stated as followsG
,B
T p Risk premium
Portfolios

L r
p
- r
f
p
@here r
p
L reali"ed return on the portfolio
r
f L risk#free rate of return
M
p
L &tandard deviation of return for portfolio
Therefore, Treynor assumes that the portfolio under consideration is itself only
a part of the investors total portfolio. The investor can therefore, eliminate any
unsystematic risk by ensuring that his total portfolio is well diversified.
CAPITAL ASSET PRICING MODEL (CAPM):
arkowit", @illiam &harpe, Aohn <intner and Aan ossin provided the basic structure
of 2apital $sset Pricing odel. (t is a model of linear general equilibrium return. (n
the 2$P theory, the required rate return of an asset is having a linear relationship
with assetDs beta value i.e. undiversifiable or systematic risk 3i.e. market related risk5
because non market risk can be eliminated by diversification and systematic risk
measured by beta. Therefore, the relationship between an assets return and its
systematic risk can be e!pressed by the 2$P, which is also called the &ecurity
arket <ine.
Rp Rf Xf+ Rm(1- Xf)
Rp L Portfolio return
Xf L The proportion of funds invested in risk free assets
1- Xf L The proportion of funds invested in risky assets
Rf L 4isk free rate of return
Rm L 4eturn on risky assets
>ormula can be used to calculate the e!pected returns for different situations, like
mi!ing risk less assets with risky assets, investing only in the risky asset and mi!ing
the borrowing with risky assets.
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THE CONCEPT
$ccording to 2$P, all investors hold only the market portfolio and risk less
securities. The market portfolio is a portfolio comprised of all stocks in the market.
'ach asset is held in proportion to its market value to the total value of all risky assets.
The Sharpe`s Index Model:
The investor always like to purchase a combination of stock that provides the
highest return and has lowest risk. =e wants to maintain a satisfactory reward to risk
ratio traditionally analysis paid more attention to the return aspects of the stocks. *ow
a days risk has received increased attention and analysts are providing estimates of
risk as well as return. &harpe has developed a simplified model to analy"e the
portfolio. =e assumed that the return of a security is linearly related to a single inde!
like to market inde!. &trictly speaking the market inde! should consist of all the
securities trading on the e!change. (n the absence of it, a popular inde! can be treated
as a surrogate for the market inde!. &harpe has provided a model for the selection of
appropriate securities in a portfolio.
The selection of any stock is directly related to its e!cess return C beta ratio
Ri Rf/ai

@here Ri L the e!pected return on stocki
Rf L the return on a risk less asset
Ai L the e!pected change in the rate of return on stock ( associated
Single Index Model:
2ausal observation of the stock prices over a period of time reveals that most
of the stock process move with the market inde!. @hen sense! increases, stock prices
also tend to increase and vice versa. This indicates that some underlying factor affect
the market inde! as well as the stock prices. &tock prices are related to the market
inde! and this relationship could be used to estimate the return on stock. Towards the
purpose, the following equation can be usedG
Ri a+aiRm+ei
,1
@here 4Le!pected return on security i
a L intercept of the straight line or alpha co#efficient
ai L slope of straight line or beta co#efficient
Rm L the rate of return on market inde!
ei L error term with a mean of "ero + a std.dev.
Arbitrage Pricing Theory
$ccording to this theory the returns of the securities are influenced by a
number of macroeconomic factors such as growth rate of industrial production rate of
inflation, spread between low#grade and high grade bonds.
The Law of One Price:
The foundation for $pt is the law of one price. The law of one price states that
two identical goods should sell at the same price. (f they sold at different prices
anyone could engage in arbitrage by simultaneously buying at low prices and selling
at the high prices and make a risk less profit. $rbitrage also applies to financial assets.
(f two financial assets have the same risk, they should have the same e!pected return.
(f they do not have the same e!pected return, a riskless profit could be earned by
simultaneously issuing3or selling short5 at the low return and buying the high#return
asset. $rbitrage causes prices to be revised as suggested by the law of one price.
The arbitrage pricing line for one risk factor can be written asG
r 0+ Ii
@here r L is the e!pected return on the security i
0 L is the return on the "ero beta portfolio
I L is the factor risk premium
i L is the sensitivity of the i
th
asset to the risk factor
Two factor Arbitrage pricing:
The Two#factor model describes the return of i
th
security as follows
r 0+ I1i+ 2i2
@here 2 L is the risk premium associated with risk factor:
i2 L is the factor beta coefficient for factor:
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RESEARCH
3'.g. &ecurity
$nalysis5
PORTFOLIO
MANAGERS
OPERATIONS
3'.g. buying and
&elling of
&ecurities5
CLIENTS
and the factor , +: are uncorrelated
PORTFOLIO MANAGEMENT
$ portfolio is a collection of assets. The assets may be physical or financial like
&hares, Bonds, 9ebentures, Preference &hares, etc. The individual investor or a fund manager
would not like to put all his money in the shares of one company that would amount to great
risk. =e would therefore, follow the age old ma!im that one should not put all the eggs into
one basket. By doing so, he can achieve ob%ective to ma!imi"e portfolio return and at the
same time minimi"ing the portfolio risk by diversification.
Portfolio management is the management of various financial assets which comprise the
portfolio.
Portfolio management is a decision C support system that is designed with a view to
meet the multi#faced needs of investors.
$ccording to &ecurities and '!change Board of (ndia Portfolio anager is defined
asG EPortfolio means the total holdings of securities belonging to any personN.
STRUCTURE / PROCESS OF TYPICAL PORTFOLIO MANAGEMENT
(n the small firm, the portfolio manager performs the %ob of security analyst.
(n the case of medium and large si"ed organi"ations, %ob function of portfolio manager and
security analyst are separate.
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Characteristics :
(ndividuals will benefit immensely by taking portfolio management services for the
following reasonsG
@hatever may be the status of the capital market, over the long period capital markets
have given an e!cellent return when compared to other forms of investment. The
return from bank deposits, units, etc., is much less than from the stock market.
The (ndian &tock arkets are very complicated. Though there are thousands of
companies that are listed only a few hundred which have the necessary liquidity. 'ven
among these, only some have the growth prospects which are conducive for
investment. (t is impossible for any individual wishing to invest and sit down and
analy"e all these intricacies of the market unless he does nothing else.
'ven if an investor is able to understand the intricacies of the market and separate
from the grain the trading practices in (ndia are so complicated that it is really a
difficult task for an investor to trade in all the ma%or e!changes of (ndia, look after his
deliveries and payments
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Process of Portfolio Management:
The Portfolio Program and $sset anagement Program both follow a
disciplined process to establish and monitor an optimal investment mi!. This si!#
stage process helps ensure that the investments match investors unique needs, both
now and in the future.

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1. IDENTIFY GOALS AND OB1ECTIVES:
@hen will you need the money from your investmentsO @hat are you saving your
money forO @ith the assistance of financial advisor, the (nvestment Profile
Puestionnaire will guide through a series of questions to help identify the goals
and ob%ectives for the investments.
2. DETERMINE OPTIMAL INVESTMENT MIX:
8nce the (nvestment Profile Puestionnaire is completed, investors optimal
investment mi! or asset allocation will be determined. $n asset allocation
represents the mi! of investments 3cash, fi!ed income and equities5 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 ma%or determinant of long#term portfolio performance.
3. CREATE A CUSTOMIZED INVESTMENT POLICY STATEMENT:
@hen the optimal investment mi! is determined, the ne!t step is to formali"e our
goals and ob%ectives in order to utili"e them as a benchmark to monitor progress
and future updates.
4. SELECT INVESTMENTS:
The customi"ed portfolio is created using an allocation of select P> >unds.
'ach P> >und is designed to satisfy the requirements of a specific asset class,
and is selected in the necessary proportion to match the optimal investment mi!.
5 MONITOR PROGRESS:
Building an optimal investment mi! is only part of the process. (t is equally
important to maintain the optimal mi! when varying market conditions cause
investment mi! to drift away from its target. To ensure that mi! of asset classes
stays in line with investors unique needs, the portfolio will be monitored and
rebalanced back to the optimal investment mi!
6. REASSESS NEEDS AND GOALS:
Aust as markets shift, so do the goals and ob%ectives of investors. @ith the
fle!ibility of the Portfolio Program and $sset anagement Program, when the
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investors needs or other life circumstances change, the portfolio has the
fle!ibility to accommodate such changes.
Functions of Portfolio Mangers:
Advisory role:
$dvice new investments, review the e!isting ones, identification of ob%ectives,
recommending high yield securities etc.
Conducting market and economic service:
This is essential for recommending good yielding securities they have to study
the current fiscal policy, budget proposalQ individual policies etc further portfolio
manager should take in to account the credit policy, industrial growth, foreign
e!change possible change in corporate laws etc.
Financial analysis:
=e should evaluate the financial statement of company in order to understand,
their net worth future earnings, prospectus and strength.
Study of stock market:
=e should observe the trends at various stock e!change and analysis scripts so
that he is able to identify the right securities for investment.
Study of industry:
=e should study industry to know its future prospects, technical changes etc,
required for investment proposal he should also see the problems of the industry.
Decide the type of portfolio:
Reeping in mind the ob%ectives of portfolio a portfolio manager has to decide
weather the portfolio should comprise equity preference shares, debenture,
convertibles, non#convertibles or partly convertibles, money market, securities etc or
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a mi! of more than one type of proper mi! ensures higher safety, yield and liquidity
coupled with balanced risk techniques of portfolio management.
$ portfolio manager in the (ndian conte!t has been Brokers 3Big brokers5 who
on the basis of their e!perience, market trends, insider trader, helps the limited
knowledge persons.
4egistered merchant bankers can acts as portfolio managers. (nvestors must
look forward, for qualification and performance and ability and research base of the
portfolio managers.
RISK
4isk is uncertainty of the incomeIcapital appreciation or loss or both. $ll
investment is risky. The higher the risk taken, the higher is the return. But proper
management of risk involves the right choice of investment whose risks are
compensating. The total risk involves the right choice of investment whose risks are
compensating. The total risks of two of two companies may be different and even
lower than the risk of a group of two companies if their companies are offset by each
other.
SOURCE OF INVESTMENT RISKS:
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Business risk:
$s a holder of corporate securities 3equity shares or debentures5, you are
e!posed to the risk of poor business performance. This may be caused by a variety of
factors like heightened competition. 'mergence of new technologies, development of
substitute product, shifts in consumer preferences, inadequate supply of essential
inputs, changes in government al policies, and so on.
Interest rate risk:
The changes in interest rate have a bearing on the welfare on investors. $s the
interest rate goes up, the market price of e!isting firmed income securities falls, and
vice versa. This happens because the buyer of a fi!ed income security would not buy
it at its par values of face values its fi!ed interest rate is lower than the prevailing
interest rate on a similar security. >or e!ample, a debenture that has face value of
4&.,;; and a fi!ed rate of ,:S will sell a discount if the interest rate moves up from,
say ,: S to ,BS .@hile the chances in interest rate have a direct bearing on the prices
of fi!ed income securities, they affect equity prices. Too, albeit some what indirectly.
Financial Risk:
(t refers to the variability of the income to the equity capital due to the debt capital.
>inancial risk in a company is associated with the capital structure of the company.
2apital structure of the company consists of equity funds and borrowed funds.
The two major types of risks are:
T &ystematic or market related risk.
T Fnsystematic or company related risks.
&ystematic risk affected from the entire market is 3the problems, raw material
availability, ta! policy or government policy, inflation risk, interest risk and financial
risk5.(t is managed by the use of Beta of different company shares.
Fnsystematic risks are mismanagement, increasing inventory, wrong financial
policy, defective marketing etc. this is diversifiable or avoidable because it is possible
to eliminate or diversify away this component of risk to considerable e!tent by
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investing in large portfolio of securities. The unsystematic risk stems from
inefficiency magnitude of those factors different form one company
Based on the below pyramid diagram the type of risks will be described
1. Systematic Risk:
&ystematic risk is caused by factors e!ternal to the particular company and
uncontrollable by the company. The systematic risk affects the market as a whole.
>actors affect the systematic risk are
economic conditions
political conditions
sociological changes
The systematic risk is unavoidable. &ystematic risk is further sub#divided into three
types. They are
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arket 4isk
(nterest 4ate 4isk
Purchasing Power 4isk
a). Market Risk:
8ne would notice that when the stock market surges up, most stocks post higher
price. 8n the other hand, when the market falls sharply, most common stocks will
drop. (t is not uncommon to find stock prices falling from time to time while a
companyDs earnings are rising and vice#versa. The price of stock may fluctuate widely
within a short time even though earnings remain unchanged or relatively stable.
b). Interest Rate Risk:
(nterest rate risk is the risk of loss of principal brought about the changes in the
interest rate paid on new securities currently being issued.
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c). Purchasing Power Risk:
The typical investor seeks an investment which will give him current income and I or
capital appreciation in addition to his original investment.
2. Un-systematic Risk:
Fn#systematic risk is unique and peculiar to a firm or an industry. The nature and
mode of raising finance and paying back the loans, involve the risk element. >inancial
leverage of the companies that is debt#equity portion of the companies differs from
each other. $ll these factors affect the un#systematic risk and contribute a portion in
the total variability of the return.
anagerial inefficiently
Technological change in the production process
$vailability of raw materials
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2hanges in the consumer preference
<abour problems
The nature and magnitude of the above mentioned factors differ from industry
to industry and company to company. They have to be analy"ed separately for each
industry and firm. Fn#systematic risk can be broadly classified intoG
Business 4isk
>inancial 4isk
BUSINESS RISK:
Business risk is that portion of the unsystematic risk caused by the operating
environment of the business. Business risk arises from the inability of a firm to
maintain its competitive edge and growth or stability of the earnings. The volatibility
in stock prices due to factors intrinsic to the company itself is known as Business risk.
Business risk is concerned with the difference between revenue and earnings before
interest and ta!. Business risk can be divided into.
i) Internal Business Risk
(nternal business risk is associated with the operational efficiency of the firm. The
operational efficiency differs from company to company. The efficiency of operation
is reflected on the companyDs achievement of its pre#set goals and the fulfilment of
the promises to its investors.
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ii) External Business Risk
'!ternal business risk is the result of operating conditions imposed on the firm by
circumstances beyond its control. The e!ternal environments in which it operates
e!ert some pressure on the firm. The e!ternal factors are social and regulatory factors,
monetary and fiscal policies of the government, business cycle and the general
economic environment within which a firm or an industry operates.
FINANCIAL RISK:
:.
(t refers to the variability of the income to the equity capital due to the debt capital.
>inancial risk in a company is associated with the capital structure of the company.
2apital structure of the company consists of equity funds and borrowed funds.
RETURN ON PORTFOLIO:
'ach security in a portfolio contributes return in the proportion of its
investment in security. Thus the portfolio e!pected returns is the weighted average of
the e!pected return, from each of securities, with weights representing the proportions
share of the security in the total investment. @hy does an investor have so many
securities in his total investmentO @hy does an investor have so many securities in
this portfolioO (f the security $B2 gives the ma!imum return why not he invests in
that security all his funds and thus ma!imi"e returnO The answer to these questions
lies in the investors perception of risk attached in investments. 8b%ectives of income,
safety, appreciation, liquidity and hedge against loss of values of money etc. this
pattern of investment in different asset categories, types of investment, etc., would all
be described under the caption of diversification, which aims at the reduction or even
elimination of non#systematic risks and achieve the specific ob%ectives of investors.
RISK ON PORTFOLIO:
The e!pected returns from individual securities carry some degree of risk.
4isk on the portfolio is different from the risk on the individual securities. The risk is
reflected in the variability of the returns from "ero to infinity. 4isk of the individual
assets or a portfolio is measured by the variance of its return. The e!pected return
depends on the probability of the returns and their weighted contribution to the risk of
the portfolio. These are two measures of risk in this conte!t one is the absolute
deviation and other standard deviation.
ost investors invest in portfolio of assets, because as to spread risk by not
putting all eggs in one basket. =ence, what really mater to them are not the risk and
return of stocks in isolation, but the risk and return of the portfolio as a whole. 4isk is
mainly reduced by 9iversification.
:-
RISK RETURN ANALYSIS:
$ll investment has some risk. (nvestment in shares of companies has its own
risk or uncertaintyQ these risks arise out of variability of yields and uncertainty of
appreciation or depreciation of shares prices, losses of liquidity etc. The risk over
time can be represented by the variance of the returns. @hile the returns over time is
capital appreciation plus payout, divided by the purchase price of the share.
K
*ormally, the higher the risk that the investor takes, the higher is the return.
There is, how ever, a risk less return on capital of about ,:S which is the bank, rate
charged by the 4.B.( or long term, yielded on government securities at round ,?S to
,BS. This risk less return refers to lack of variability of return and no uncertainty in
the repayment or capital. But other risks such as loss of liquidity due to parting with
money etc., may however remain, but are rewarded by the total return on the capital,
4isk#return is sub%ect to variation and the ob%ectives of the portfolio manager are to
reduce that variability and thus reduce the risky by choosing an appropriate portfolio.
Traditional approach advocates that one security holds the better, it is according to the
modern approach diversification should not be quantity that should be related to the
quality of scripts which leads to quality of portfolio.
RISK AND EXPECTED RETURN:
There is a positive relationship between the amount of risk and the amount of
e!pected return i.e., the greater the risk, the larger the e!pected return and larger the
chances of substantial loss. 8ne of the most difficult problems for an investor is to
estimate the highest level of risk he is able to assume.
:0
4isk is measured along the hori"ontal a!is and increases from the left to right.
'!pected rate of return is measured on the vertical a!is and rises from bottom to
top.
The line from ; to 4 3f5 is called the rate of return or risk less investments
commonly associated with the yield on government securities.
The diagonal line form 4 3f5 to '3r5 illustrates the concept of e!pected rate of
return increasing as level of risk increases.
'!perience has shown that beyond the certain securities by adding more securities
e!pensive.
Simple diversification reduces:
K
$n assets total risk can be divided into systematic plus unsystematic risk, as
shown below
&ystematic risk 3undiversifiable risk5 U unsystematic risk 3diversified risk5 LTotal risk
LHar3r5.
Fnsystematic risk is that portion of the risk that is unique to the firm
3for e!ample, risk due to strikes and management errors.5 Fnsystematic risk can be
reduced to "ero by simple diversification.
&imple diversification is the random selection of securities that are to be added
to a portfolio. $s the number of randomly selected securities added to a portfolio is
increased, the level of unsystematic risk approaches "ero. =owever market related
systematic risk cannot be reduced by simple diversification. This risk is common to
all securities.
?;
28P$*V P48>(<'
COMPANY PROFILE
SMC Group, founded in 1990, is Indias
best Equi ty Broking House and te !argest "istributi on #et$ork,
pro%iding a $i de range of finan&ia' ser%i &es and in%est(ent
so'utions) * b'end of e+tensi %e e+perien&e, di %erse ta' ent and &'ient
fo&us as (ade us a&ie%e tis 'and(ark)
,%er te years, SMC as e+panded its operati ons do(esti&a'' y as
$e' ' as internati ona'' y) E+i sting net$ork in&'udes regi ona' offi &es at
Mu(bai, -o' kata, Cennai , Co&i n, *(edabad, .aipur, Hyderabad,
Banga' ore p'us a gro$i ng net$ork of /0001 offi&es spread a&ross
2/3 &i ties4to$ns in India)
5e offer a di %erse range of fi nan&ia' ser%i &es $i& in&' udes
institutiona' and retai' brokerage of equity , &urren&y, &o((oditi es,
deri%ati %es , on'ine tradi ng , depository ser%i &es , fi+ed "eposi ts, I6,s
and (utua' funds distributi on , dedi &ated desk for #7I and
institutiona' &'i ents , insuran&e broking , &'earing ser%i&es , (argin
funding, in%est(ent banki ng , portfo' io (anage(ent, $ea' t ad%i sory
8 resear& ) 5e a%e a i g' y effi &ient $orkfor&e of o%er 9000
e(p'oyees and o%er :300 fi nan&ia' ad%isors ser%i ng te finan&ia'
needs of (ore tan 9,00,000 satisfied in%estors)
5e are a'so a(ongst te fi rst finan&i a' fir(s in India to e+pand
operati ons in te 'u&rati %e gu' f (arket, by a&quiri ng 'i &ense for
broki ng and &'earing (e(ber $it "ubai Go'd and Co((odi ties
e+&ange ;"GC<)
The SMC Advantage=
!arge a%enues of in%est(ent so' utions and finan&i a' ser%i&es
under one roof
?,
6ersona' i>ed so' ution and attention offered to ea& in%estors
7esear& support and ti(e' y ad%i &e by our ig?te& resear&
$ing
*n e+tensi%e net$ork of bran& offi&es
* perfe&t b'end of 'atest te&no'ogy and ri& e+peri en&e of
o%er /0 years
Honesty, transparen&y and fairness i(bibed in a'' our dea'ings
6ro%i ders of one of te best tradi ng p'atfor(s in ter(s of speed,
&on%enien&e and ri sk (anage(ent to trade in #SE, BSE, @8,,
#C"E<, MC<,, MC<?S<, #MCE, ICE<, *CE 8 "GC<
Founders & Promoters
Subas C) *ggar$a'
Chairman & Managing Director: SMC Global Securities Ltd
Mr) *ggar$a' is &o?founder and pro(oter of SMC Group) He as
%ast e+perien&e, in?dept kno$' edge and strong understanding of
%arious intri&a&i es of te Se&uri ties Market and @inan&i a' Ser%i&es)
He as e+austi%e and ri& e+perien&e of se&uri ti es business of
(ore tan /0 years) His e+&eptiona' 'eadersi p ski''s and
outstandi ng &o((i t(ent a%e (ade tis group one of te 'eadi ng
brokerage and distribution ouses of te &ountry) Ander is
'eadersi p, SMC as di%ersi fi ed i ts busi ness fro( sto&k broking and
arbitrage to Co((odi ties Broking, "i stribution of Mutua' @unds,
I6,s, Insuran&e produ&ts, 5ea't Manage(ent and *d%isory
Ser%i &es) Mr) *ggar$a' is a @e''o$ (e(ber of IC*I)
Mahesh C. Guta
!ice"Chairman & Managing Director: SMC Global Securities Ltd)
Mr) Gupta as &o?founded and pro(oted te SMC Group) He as
ri & e+perien&e of (ore tan /0 years in te se&urities (arket) Hi s
e+&epti ona' 'eadersip ski'' s and outstanding &o((it(ent as (ade
SMC as one of te 'eading in%est(ent so'utions and ser%i&es
pro%ider) He possesses e+pertise in (anagi ng and &ontro''i ng te
finan&e needs, risk (anage(ent and sur%ei'' an&e) His dis&ip'ined
sty' e of $orki ng is an inspiration to te $orkfor&e of SMC) Mr)
Maes C) Gupta is a fe''o$ (e(ber of IC*I
?:
Cororate #thos
$ur !ision
Bo be a g'oba' (aCor in pro%iding &o(p'ete in%est(ent so'uti ons,
$it re'ent' ess fo&us on in%estor &are, troug superior effi &ien&y
and &o(p'ete transparen&y)
Core !alues
#thi cal deal s= Honesty is te on' y po'i&y)
E+peri en&e and t rust = ,%er /0 years of e+perien&e as (ade SMC earn
te trust of (ore tan 9,00,000 In%estors
#%erti se= -no$?o$ and ski ''s to pro%ide in%estors an edge)
6ersona' i sed So' ut i ons= E%ery in%estor is unique) E%ery so'uti on is unique)
$ur Aroach
Da' ue f or i n%est or s t rust = SMC %a' ues te trust reposed in by te &'i ents
and is &o((itted to upo'd it at a'' &ost)
I nt egri t y and onest y= Integri ty, onesty and transparen&y are te
under' yi ng pri n&i p'es in a'' our dea'ings)
6ersona' i s>ed at t ent i on= Be (ost %a' ued asset is our re'ationsi p $it te
&' ients, $i& as been bui't o%er years by gi%ing persona'i >ed
attention)
#et $ork $i & $orks= SMC as a %ast net$ork e+tending to 2/31&i ti es
and to$ns ensuring easy a&&essi bi'i ty, &on%eni en&e and ass'e free
trading e+perien&e)
7esear& based ad%i sory ser%i &es= SMC offers proa&ti%e and ti(e' y $or' d
&' ass resear& based ad%i &e and guidan&e to i ts &'ients to enab'e
te( to take infor(ed de&i sions)
$ur Credentials
Best Equity Broking House ;Sour&e= BSE?"un and Bradstreet,
/010E
!argest distributi on net$ork in te &ountry ;Sour&e= BSE?"un
and Bradstreet, /010E
*$arded te @astest Gro$i ng 7etai ' "istribution #et$ork in
finan&ia' ser%i&es ;Sour&e= Busi ness Spere, /010E
??
7e&ei %ed MaC or Do'u(e "ri %er a$ard fro( BSE for 0 years
&onse&uti %e' y;/002?03, /003?09 and /009?0:E
#o(inated a(ongst te top 0, in te C#BC ,pti(i+ @inan&i a'
Ser%i &es *$ard /00F under G#ationa' !e%e' 7etai' CategoryG
*(ongst te @irst @inan&ia' @i r(s in Indi a to e+pand
operati ons in te 'u&rati %e gu' f (arket, by a&quiri ng 'i &ense for
broki ng and &'earing (e(ber $it "ubai Go'd and
Co((odi ties e+&ange ;"GC<E
,ne of te 'argest proprietary desk for doing near ri sk?free
arbitrage in equi ties and &o((odities
Insti tute of E&ono(i& Studies ;IESE as onored our Cair(an $i t
te H 6ri de of India and HAdyog 7attan a$ards) *' so, II@S as
&onferred i( $i t HG' ory of India a$ard re&ent' y
Membershis & &egistrations
Brading Me(ber of #SE, BSE, #C"E<, MC<, "GC<, #MCE,
ICE<, *CE, MC<?S< ,#ati ona' Spot E+&ange !td);#SE!E 8 #C"E<
Spot E+&ange !td); #S6,BE)
C'eari ng Me(ber in #SE ;@8,, Curren&yE, BSE ;@8,,
Curren&yE,
MC< ;Co((oditiesE, #C"E<, MC<?S<, ICE<, *CE 8 "GC<
"eposi tory 6arti&ipant $it C"S! 8 #S"!
Category 1 Mer&ant banker
Corporate Insuran&e Broker for !ife 8 Genera' Insuran&e
;7egi stered $it I7"*E
"i stributor of I6,s 8 Mutua' @unds ;7egi stered $it *M@IE
6ortfo'i o Manage(ent Ser%i &es ;6MSE regi stered $it SEBI
#on Banking @i nan&ia' Co(pany ;#B@CE registered $i t 7BI
*sso&iati on $it !ondon based IC,# Capi ta',
;7egi stered under @S* 8 #S* ,!ondonE
AC# Derivatives and commodities #%change 'AC#(
&egister
?B
5it (ore tan /000 offi &es a&ross 2/3 &ities and a substantia'
&' ient base of o%er 9,00,000 satisfi ed in%estors, SMC is kno$n for its
'i fe?'ong and steady re' ationsips $it a'' its Business
6artners4*sso&iates) 5e be'ie%e in 'ong?ter( &o((it(ent and
asso&iation tat p'ays a %i ta' ro'e in te gro$t of any business)
SMC be' ie%es in gro$i ng $it i ts Business 6artners4*sso&iates) ,ur
dedi&ated efforts and &ontinuous i(pro%e(ent in our ser%i&es as
(ade us one of te (ost respe&ted and 'argest broki ng ouses $it
a uge net$ork of Business 6artners4*sso&iates a&ross India) SMC
pro%ides its sub?broker $i t te rigt too's and support) *sso&iati on
$it SMC (eans a strong bond $i t one of te 'argest broking fi r(s
of India) SMC in%ites you to be&o(e a Business 6artners4*sso&iates
$))erings
SMC fa&i'itates tradi ng a&ti %i ti es in a' ' te (aCor (arket seg(ents
in&'udingI equity, deri%ati %es, &o((odi ties, interest deri %ati %es and
&urren&y futures) Its robust and user?fri end' y trading p'atfor(
enab'es to e+e&ute trades si(u' taneous' y a&ross a'' Seg(ents) 5e
a' so a%e $o'e bu&ket of oter ser%i &es 'i ke on'ine trading,
deposi tory, I6,, (utua' funds, insuran&e broki ng, insti tuti on broking,
(argin fundi ng, #7I ser%i&es, &'earing ser%i&es, in%est(ent banking,
6MS
* broking ouse a%i ng perfe&t b'end of 'atest te&no'ogy and
ri & e+perien&e of o%er /0 years) Be&no'ogi&a' too' s in&'ude
D6# net$ork of HC! Co(net, HEC!, *ir&e' 8 Bu'ip)
Best Equity Broking House ;Sour&e= BSE?"un and Bradstreet,
/010E
!argest distributi on net$ork in te &ountry ;Sour&e= BSE?"un
and Bradstreet, /010E
7e&ei %ed MaC or Do'u(e "ri %er a$ard fro( BSE for 0years
&onse&uti %e' y
*$arded fastest gro$i ng 7etai' "istributi on #et$ork in
finan&ia' ser%i&es ;sour&e= Busi ness spere, /010E
!arge a%enues of in%est(ent so' utions and finan&i a' ser%i&es
under one roof)
,%era'' support in start?up, training, (arketing, ad%erti si ng,
&' ient a&qui sition and re&ruiting et&)
?/
6erfe&t ba&k offi&e support $i & e'ps you to (ake teir
dea'ing $i t &o(pany as $e'' as &'i ents in %ery effi&i ent
(anner
Strong resear& support ba&ked by ig end te&no'ogy
,ne of te best trading p'atfor(s in ter(s of speed,
&on%enien&e and ri sk (anage(ent
Marketi ng support toug BD, #e$spapers, 5ebsite,
Bro&ures, 6osters, 6ersona'i>ed so'ution and attention
offered to ea& in%estor
Clearing Services
$vervie*
SMC is one of te 'eading &'earing (e(bers, $i& &urrent' y
(anages te &'earing ser%i&es for (ore tan 102 trading (e(bers
in different seg(ents of different e+&anges)
$ur o))erings
5e are C'earing Me(ber of #SE ;@8,, Curren&yE, BSE ;@8,,
Curren&yE, MC< ;Co((oditiesE, MC<?S<, #C"E<, ICE<, *CE 8
"GC<
$ur edge
Brusted na(e in Broking Industry
,ne of te 'eading C'earing (e(ber of #SE
In&redib'e tra&k re&ord of ti(e' y de' i%ery of Co((it(ents
Con&ern about ti(e' y need of Brading Me(bers bei ng, in te
sa(e fraternity
*ttitude to fo''o$ te best pra&ti &es in te Industry
Co((itted approa& to business
Be&no'ogi&a' ' y sound to &ope $i t te gro$ing needs of
Brading Me(bers
Senior 6rofessiona' personne' for e%ery ser%i&e need
?1
Currenc+
$vervie*
Current' y in India, tere are 0 (aCor e+&anges offering Curren&y
future trading J #SE, BSE 8 MC<?S<) SMC G'oba' Se&urities is a
trading &u( &'earing (e(ber of a'' tese e+&anges for te
&urren&y seg(ent) 5e be'ie%e in te tre(endous potentia' of
&urren&y future to be&o(e a do(inant for&e of te Indian fi nan&ia'
(arket $it a turno%er $i & &an outperfor( e%en equi ty and
&o((odity seg(ent) 5e fir(' y be'i e%e tat $i der (arket
parti&i pation $i '' bring (ore strengt to te (arket 8 ti s &an be
a&ie%ed troug disse(inati ng edu&ation 8 infor(ation a(ong
%arious (arket parti&i pants) @or us, &urren&y is not Cust any oter
seg(ent of businessI i t is Gte business of futureG)
$ur $))erings
,ff'i ne trading= Bis is te (ost traditiona' $ay of &arryi ng out
trading in fi nan&ia' (arkets) C'ients &an p'a&e teir orders $i t our
nearest bran& by %isiting te( persona'' y or on te pone)
,n'ine trading= ,n'ine tradi ng offers te &on%enien&e to trade fro(
te &o(fort of your o(e 4 offi&e) 5e pro%ide trading soft$are $i&
&an be do$n' oaded by te &' ient on any syste() Broug tei r user
I" 8 pass$ord, &'ients &an start tradi ng on'i ne) *' ternati%e' y, $e a' so
pro%ide te fa&i'i ty to trade troug our bro$ser based app'i&ation)
Corporate ad%i sory= 5e be'ie%e tat &orporate parti &ipati on is te
key to gro$t of tis seg(ent) 5e understand tat &orporates a%e
a %ery spe&ia' set of requi re(ents for edging as $e' ' as
in%est(ent) E%ery business needs &usto(i>ed so'utions to i ts
requi re(ents and tat is $at $e de' i%er ? edging 4 in%est(ent
so'utions based on $at is best?sui ted to te business dyna(i &s)
?.
,ur dedi &ated tea( of 7e' ationsip Managers ensures tat our
de' i%erab'es e+&eed te e+pe&tations 8 a 'ong?'asting re'ationsi p is
bui 't
Commodities
$vervie*
SMC Co(trade !i(i ted, a key &onstituent of SMC Group of
Co(panies, &a(e into e+i sten&e at te %ery start of Co((odi ty
E+&anges in India) 5it nation$ide presen&e, it enab' es te retai'
8 &orporate in%estors to di%ersi fy tei r portfo' io and enCoy te
benefits of &o((odity trading in MC<, #C"E<, #MCE 8 ICE<) ,ur
ig' y appre&i ated resear& tea( guides te in%estors to (ake $ise
in%est(ent de&i sions for agri ?&o((odity (arket as $e' ' as
internati ona' &o((odities trading)
SMC Co(e+ Internationa' "MCC ;part of SMC GroupE is one of te
ini ti a', 'eading 8 e+perien&ed &'eari ng and broking (e(bers of
"ubai Go'd and Co((odi ties E+&ange ;"GC<E) It offers &o((odi ty
trading in Go'd, Si' %er, Crude ;5BI 8 BrentE, @ore+ ;I#7, Euro,
"o' 'ar 8 Ster'ingE and Stee' 7ebar Contra&ts) @or (ore infor(ation,
%isit $$$)s(&&o(e+)&o(
Deositor+
$vervie*
"eposi tory 6arti&ipants ;"6E offers a safe 8 &on%enient $ay to o'd
se&urities in e'e&troni& for( as &o(pared to paper for() It offers
freedo( fro( de'ays, forgeries, sett'e(ent risk and paper $ork)
SMC pro%ides an integrated sing'e p'atfor( for our &'i ents ensuring
a qui&k, risk free and effi&ient pro&ess) 5e are parti&i pants of
Centra' "epository Ser%i&es !i(i ted ;C"S!E and #ationa' Se&urities
"eposi tory !i(ited ;#S"!E) 5e be'ie%e in effi&ient, &ost?effe&ti%e
and integrated fi +ed deposit ser%i &es support to our brokerage
business India) SMC, as a "epository 6arti&ipant, offers deposi tory
?-
a&&ounts to indi%idua' in%estors as $e'' as &orporate ouses, $i&
enab'es te( to trade in te de(ateria'i >ed en%iron(ent) 5e are
one of te fe$ "eposi tory 6arti &ipants offeri ng deposi tory fa&i'i ti es
for &o((odities) 5e are e(pane''ed $i t #C"E<, MC< and spot
e+&anges)
,nstitutional -ro.ing
$vervie*
Insti tuti ona' Broking Ser%i&es at SMC &ater to te in%est(ent needs
of 'eading do(esti& and foreign insti tutiona' in%estors) Ba&ked by
in&isi%e resear&, ti s di%ision is a one?stop in%est(ent gate$ay and
kno$'edge repository for te &'ients, ser%i&ing tei r unique and
sopi sti&ated needs)
$ur o))erings
,ur effi &ient e+e&uti on, qua'ity resear&, top qua'i ty u(an
resour&es and &o(p' ete &o(p' ian&e $it sto&k e+&ange regu'ations
as $e'' as business standard eti &s 'end to$ards our e+e(p' ary
institutiona' ser%i&es to in%estors troug=
I6,s
Equities
"eri%ati %es
Mutua' @unds
5e a'so fo&us on identifyi ng undis&o%ered %a' ue sto&ks to in%estors)
Broug our ga(ut of institutiona' ser%i&es, tis di%ision is $e' '
suited to te in%est(ent side of a'' &'asses of institutiona' in%estors
in&'uding Mutua' @unds , Insuran&e Co(panies , Banks, and @IIs
$ur edge
* $i de array of produ&ts and ser%i&es, spe&i fi &a'' y ai(ed at
ser%i ng unique needs of unique &' ients)
?0
* resear& di%ision $i t a designated tea( for ea& asset
&' ass and se&tor to e%a'uate (arket trends and (ake unbi ased
and obCe&ti%e reports
Spe&i a'i >ed ser%i &es for internationa' in%estors
Idea Generation and Sto&k 6i&ks
In?dept, detai'ed and insigtfu' &o%erage a&ross different
se&tors $i & &o(pri se =
o Ini tiati ng &o%erage reports
o 7esu' t 6re%i e$s
o 7esu' t Apdates
o Se&tora' 7eports
o Indi a Strategy 7eports
*n internationa' di stribution net$ork ser%i&ing te needs of
institutions 8 &orporate
Clearing Services
$vervie*
SMC is one of te 'eading &'earing (e(bers, $i& &urrent' y
(anages te &'earing ser%i&es for (ore tan 102 trading (e(bers
in different seg(ents of different e+&anges)
$ur o))erings
5e are C'earing Me(ber of #SE ;@8,, Curren&yE, BSE ;@8,,
Curren&yE, MC< ;Co((oditiesE, MC<?S<, #C"E<, ICE<, *CE 8
"GC<
$ur edge
Brusted na(e in Broking Industry
,ne of te 'eading C'earing (e(ber of #SE
In&redib'e tra&k re&ord of ti(e' y de' i%ery of Co((it(ents
B;
Con&ern about ti(e' y need of Brading Me(bers bei ng, in te
sa(e fraternity
*ttitude to fo''o$ te best pra&ti &es in te Industry
Co((itted approa& to business
Be&no'ogi&a' ' y sound to &ope $i t te gro$ing needs of
Brading Me(bers
Senior 6rofessiona' personne' for e%ery ser%i&e need
Distribution
$vervie*
SMC offers di stri buti on ser%i &es of I6,, Mutua' @unds, 6ub' i &
Issues, Co(pany @i +ed "eposi ts, Bonds, *&qui si ti ons and
Mergers troug i ts (a((ot net$ork of bran&es a&ross Indi a)
5e assure you a ass' e free and p' easant transa&ti on
e+peri en&e troug us) ,ur fo&us i s to offer i ntegrated so' uti ons
for your i n%est(ent needs of our i n%estors
$ur o))erings
Mutual )unds: Be range of produ&ts i n&' udes ' i qui d, gi ' t,
debt, equi ty and ba' an&ed funds) Moreo%er, te setup of a
' ega' stru&ture safeguards i n%estors i nterests 8 ensures tat
tey are not &eated out of tei r ard?earned (oney) C' i &k
ere to a&&ess &o(p' ete i nfor(ati on on Mutua' @unds)
Public issues: It i s te fi rst sa' e of a &o(panyK s &o((on
sares to pub' i & i n%estors) Bi s pa%es te $ay for ' i sti ng and
tradi ng of tei r se&uri ti es on te sto&k e+&ange) 5i t e+pert
ana' ysi s and ti (e' y ad%i &e, i t &an pro%e to be a i g' y
profi tab' e i n%est(ent) C' i &k ere to kno$ (ore about pub' i &
i ssues)
Fi%ed deosits: Co(pany @i +ed "eposi t i s an attra&ti %e
opti on for regu' ar i n&o(e $i t opti on to re&ei %e (ont' y,
B,
quarter' y, a' f year' y 8 annua' i nterest i n&o(e) @i +ed
"eposi ts i n &o(pani es earn a fi +ed rate of return for
spe&i fi ed ti (e peri od) "eposi ts (obi ' i sed are go%erned by
te Co(pani es *&t under Se&ti on 3F*) It (ay be noted tat
deposi ts are unse&ured, and en&e i n of any defau' t by of
&o(pany, te i n%estor &annot se' ' te do&u(ents to re&o%er
i s &api ta' , tus (aki ng i t a ri sky i n%est(ent opti on) C' i &k
ere to a&&ess &o(p' ete detai ' s of Co(pany @i +ed "eposi ts

&esearch
$vervie*
5i t te EIC ;E&ono(y, Industry, Co(panyE approa&, our
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Be sa(e i s &o%ered i n our estee(ed $eek' y (aga>i ne L5i se
MoneyM) 5e a%e a tea( of i g' y e+peri en&ed ana' ysts, $o &o%er
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our resear& reports, esti (ates and enan&ed ana' yti &s are
a%ai ' ab' e on our $ebsi te $$$)s(&tradeon' i ne)&o(
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Equi ty 7eports=
Morni ng Mantra
E%eni ng Bu>>er
"eri %ati %es
I6, 7eports
B:
5i se Money equi ty &ontent)
Co((odi ti es 7eports=
Morni ng Mantra? *gri
Morni ng Mantra? (eta' s 8 energy
*fternoon Meta' s 8 Energy
E%eni ng Bu>>er? *gri 8 Meta' s
Spe&i a' Co((odi ti es Apdates
Bradi ng opportuni ty report
"GC< "ai ' y
Curren&y 7eports=
Curren&y "ai ' y
*fternoon Curren&y Bu>>er
Mutua' fund 7eports=
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Mutua' @und Bra&ker
Mutua' @und 5eek' y update
6ortfo' i o Moni tor
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B?
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SMC Bradi ng 6' atfor(s offer i n%estors te ease and &on%eni en&e of
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SMC SE!ECB ? Easy to use si (p' e $eb?based tradi ng
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SMC E<C!ASIDE ? *d%an&ed $eb?based tradi ng p' atfor(
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SMC 67IDI!EGE ? Soft$are?based tradi ng p' atfor( for a&ti %e
traders)
SMC Mobi trade ? state?of?art (obi ' e tradi ng app' i &ati on)
C' i ents opti ng for abo%e (enti oned produ&ts get fa&i ' i ty to i n%est i n
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BB
Con%eni en&e of i ntegrati ng te Bank, Bradi ng and "e(at
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Aser fri end' y p' atfor(s
/2 < : on' i ne ba&k offi &e a&&ess
6an?Indi a presen&e
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* range of tradi ng opti ons
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&usto(i >ed so' uti ons) SMC 5ea' t Manage(ent Ser%i &es !td) i s a
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Sout *fri &a) ,ur dedi &ated 5ea' t Managers de%e' op
persona' i >ed $ea' t (anage(ent strategi es for our &' i ents by
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goa' s) ,ur i n%est(ent so' uti ons &ater to te fi nan&i a' needs of i g
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i nsti tuti ons)
$ur o))erings
,ur $ea' t (anage(ent ser%i &es i n&' ude=
6ortfo' i o Manage(ent Ser%i &es
Mu' ti Manager In%est(ent So' uti ons
6ortfo' i o *d%i sory
Bradi ng i n Equi ty, Curren&y, Interest 7ate @utures
"eposi tory Ser%i &es
B/
Mutua' @unds 8 I6,s
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#ear 7i sk?free *rbi trage 6rodu&ts
Stru&tured 6rodu&ts
,nvestment -an.ing
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SMC Capi ta' s !i (i ted i s te In%est(ent Banki ng ar( of SMC group
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e' p &orporate &' i ents and H#Is a&i e%e tei r fi nan&i a' and
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Capi ta' 7estru&turi ng, 6ri %ate Equi ty and "ebt Syndi &ati on, Merger
8 *&qui si ti on *d%i sory, Da' uati on Ser%i &es and ES,6)
SMC Capi ta' s i s asso&i ated $i t !ondon?based IC,# Capi ta' )
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*utori ty ;@S*E, A- and i s a (e(ber of te !ondon Sto&k
E+&ange ;!SEE $i & e' ps &o(pani es to rai se (oney fro(
forei gn (arkets by i ssui ng *"7, G"7 and I"7) IC,# i s a' so an
appro%ed broker for te *IM seg(ent of te !SE)
$ur o))erings
SMC &api ta' s offers a $i de spe&tru( of ser%i &es &o%eri ng=
Corporate *d%i sory
6ub' i & Issue Manage(ent
Capi ta' 7estru&turi ng
6ri %ate Equi ty and "ebt Syndi &ati on
Buyba&ks
"e' i sti ng
ES,6
B1
OI6s
@CCBs
,nsurance
$vervie*
SMC offers ri sk (anage(ent ser%i &es and a &o(p' ete range of
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' i &ense fro( Insuran&e 7egu' atory and "e%e' op(ent *utori ty
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s(a' ' and (edi u( enterpri ses as $e' ' as to te ' eadi ng &orporate
ouses and i nsti tuti ons a&ross te &ountry)
$ur edge
6an Indi a presen&e $i t o$n bran&es i n o%er 2F ' o&ati ons
and /0001 offi &es of group &o(pani es
00001 strong tea( of e(p' oyees
1,00,0001 &usto(ers
13001 (an years of Genera' Insuran&e e+peri en&e
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kno$' edge and e+perti se
@' e+i bi ' i ty to &oose produ&t of any i nsuran&e &o(pany
B.
(*9F&T4V P48>(<'
NATIONAL STOCK EXCHANGE
The *ational &tock '!change of (ndia 3*&'5 situated in umbai # is the
largest and most advanced e!change with ,;,1 companies listed and .:1 trading
members. 2apital market reforms in (ndia and the launch of the &ecurities and
'!change Board of (ndia 3&'B(5 accelerated the incorporation of the second (ndian
stock e!change called the *ational &tock '!change 3*&'5 in ,00:. $fter a few years
of operations, the *&' has become the largest stock e!change in (ndia.
Three segments of the *&' trading platform were established one after another. The
@holesale 9ebt arket 3@95 commenced operations in Aune ,00B and the 2apital
arket 325 segment was opened at the end of ,00B. >inally, the >utures and
8ptions segment began operating in :;;;. Today the *&' takes the ,Bth position in
the top B; futures e!changes in the world.
B-
(n ,001, the *ational &tock '!change of (ndia launched &+P 2*7 *ifty and 2*7
Aunior (ndices that make up ,;; most liquid stocks in (ndia. 2*7 *ifty is a
diversified inde! of /; stocks from :/ different economy sectors. The (ndices are
owned and managed by (ndia (nde! &ervices and Products <td 3((&<5 that has a
consulting and licensing agreement with &tandard + Poor6s.
(n ,00-, the *ational &tock '!change of (ndia launched its website and was the first
e!change in (ndia that started trading stock on the (nternet in :;;;. The *&' has also
proved its leadership in the (ndian financial market by gaining many awards such as
6Best (T Fsage $ward6 by 2omputer &ociety in (ndia 3in ,001 and ,00.5 and 2=(P
@eb $ward by 2=(P maga"ine 3,0005.
The *&' is owned by the group of leading financial institutions such as (ndian Bank
or <ife (nsurance 2orporation of (ndia. =owever, in the totally de#mutualised
'!change, the ownership as well as the management does not have a right to trade on
the '!change. 8nly qualified traders can be involved in the securities trading.
The *&' is one of the few e!changes in the world trading all types of securities on a
single platform, which is divided into three segmentsG @holesale 9ebt arket
3@95, 2apital arket 325, and >utures + 8ptions 3>+85 arket.
'ach segment has e!perienced a significant growth throughout a few years of their
launch. @hile the @9 segment has accumulated the annual growth of over ?1S
since its opening in ,00B, the 2 segment has increased by even 1,S during the
same period. The *ational &tock '!change of (ndia has stringent requirements and
criteria for the companies listed on the '!change. inimum capital requirements,
pro%ect appraisal, and company6s track record are %ust a few of the criteria. (n addition,
listed companies pay variable listing fees based on their corporate capital si"e.
The *ational &tock '!change of (ndia <td. provides its clients with a single, fully
electronic trading platform that is operated through a H&$T network. Fnlike most
world e!changes, the *&' uses the satellite communication system that connects
B0
traders from ?B/ (ndian cities. The advanced technologies enable up to 1 million
trades to be operated daily on the *&' trading platform.
NSE Nifty:
The &+P 2*7 *ifty 3nicknamed *ifty /; or simply *ifty5, is the leading inde! for
large companies on the *ational &tock '!change of (ndia. &+P 2*7 *ifty is a well
diversified /; stock inde! accounting for :: sectors of the economy. (t is used for a
variety of purposes such as benchmarking fund portfolios, inde! based derivatives
and inde! funds.
*ifty was developed by the economists $%ay &hah and &usan Thomas, then at (G(94.
<ater on, it came to be owned and managed by (ndia (nde! &ervices and Products
<td. 3((&<5, which is a %oint venture between *&' and 24(&(<. ((&< is (ndia6s first
specialised company focused upon the inde! as a core product. ((&< have a consulting
and licensing agreement with &tandard + Poor6s 3&+P5, who are world leaders in
inde! services.
2*7 stands for 24(&(< *&' (ndices. 2*7 ensures common branding of indices, to
reflect the identities of both the promoters, i.e. *&' and 24(&(<. Thus, 626 stands for
24(&(<, 6*6 stands for *&' and 7 stands for '!change or (nde!. The &+P prefi!
belongs to the F&#based &tandard + Poor6s >inancial (nformation &ervices.
NSE other indices:
&+P 2*7 *ifty
2*7 *ifty Aunior
2*7 ,;;
&+P 2*7 /;;
2*7 idcap
&+P 2*7 9efty
2*7 idcap :;;
/;

BOMBAY STOCK EXCHANGE:
The Bombay &tock '!change <imited 3formerly, The &tock '!change, umbaiQ
popularly called The Bombay &tock '!change, or B&'5 is the oldest stock e!change
in $sia. (t is located at 9alal &treet, umbai, (ndia.
Bombay &tock '!change was established in ,-./. There are around /,1;; (ndian
companies listed with the stock e!change, and has a significant trading volume. $s of
8ctober:;;1, the market capitali"ation of the B&' was about 4s. ??.B trillion 3F& W
.?; billion5. The B&' &'*&'7 3&ensitive inde!5, also called the B&' ?;, is a widely
used market inde! in (ndia and $sia. $s of :;;/, it is among the / biggest stock
e!changes in the world in terms of transactions volume.
$n informal group of :: stockbrokers began trading under a banyan tree
opposite the Town =all of Bombay from the mid#,-/;s, ,-./, was formally
organi"ed as the Bombay &tock '!change 3B&'5.(n Aanuary ,-00, the stock e!change
moved into the Brokers =all after it was inaugurated by Aames ac<ean. $fter the
>irst @orld @ar, the B&' was shifted to an old building near the Town =all. (n ,0/1,
the Government of (ndia recogni"ed the Bombay &tock '!change as the first stock
e!change in the country under the &ecurities 2ontracts 34egulation5 $ct.,00/, when
/,
it was replaced by an electronic 3eTrading5 system named B8<T, or the B&' 8nline
Trading system. (n :;;/, the status of the e!change changed from an $ssociation of
Persons 3$oP5 to a full fledged corporation under the B&' 32orporati"ation and
9emutuali"ation5 &cheme, :;;/ 3and its name was changed to The Bombay &tock
'!change <imited5.
BSE Sensex:
The B&' &'*&'7 3also known as the B&' ?;5 is a value#weighted inde! composed
of ?; scrips, with the base $pril ,0.0 L ,;;. The set of companies which make up the
inde! has been changed only a few times in the last :; years. These companies
account for around one#fifth of the market capitali"ation of the B&'.
&'*&'7, first compiled in ,0-1 was calculated on a )arket 2apitali"ation#
@eighted) methodology of ?; component stocks representing a sample of large, well#
established and financially sound companies. The base year of &'*&'7 is ,0.-#.0.
The inde! is widely reported in both domestic and international markets through print
as well as electronic media. &'*&'7 is not only scientifically designed but also
based on globally accepted construction and review methodology. >rom &eptember
:;;?, the &'*&'7 is calculated on a free#float market capitali"ation methodology.
The "free-float Market Capitalization-Weighted" methodology is a widely followed
inde! construction methodology on which ma%ority of global equity benchmarks are
based.
The growth of equity markets in (ndia has been phenomenal in the decade gone by.
4ight from early nineties the stock market witnessed heightened activity in terms of
various bull and bear runs. ore recently, the bourses in (ndia witnessed a similar
fren"y in the 6TT6 sectors. The &'*&'7 captured all these happenings in the most
/:
%udicial manner. 8ne can identify the booms and bust of the (ndian equity market
through &'*&'7.
The values of all B&' indices are updated every ,/ seconds during the market hours
and displayed through the B8<T system, B&' website and news wire agencies.
SENSEXcalculation:
&'*&'7 is calculated using a )arket 2apitali"ation#@eighted) methodology. $s
per this methodology, the level of inde! at any point of time reflects the total market
value of ?; component stocks relative to a base period. 3The market capitali"ation of
a company is determined by multiplying the price of its stock by the number of shares
issued by the company5. $n inde! of a set of combined variables 3such as price and
number of shares5 is commonly referred as a 62omposite (nde!6 by statisticians. $
single inde!ed number is used to represent the results of this calculation in order to
make the value easier to work with and track over time. (t is much easier to graph a
chart based on inde!ed values than one based on actual values.
The base period of &'*&'7 is ,0.-#.0. The actual total market value of the
stocks in the (nde! during the base period has been set equal to an inde!ed value of
,;;. This is often indicated by the notation ,0.-#.0L,;;. The formula used to
calculate the (nde! is fairly straightforward. =owever, the calculation of the
ad%ustments to the (nde! 3commonly called (nde! maintenance5is more comple!.
The calculation of &'*&'7 involves dividing the total market capitali"ation of ?;
companies in the (nde! by a number called the (nde! 9ivisor. The 9ivisor is the only
link to the original base period value of the &'*&'7. (t keeps the (nde! comparable
over time and is the ad%ustment point for all (nde! maintenance ad%ustments. 9uring
market hours, prices of the inde! scrips, at which latest trades are e!ecuted, are used
by the trading system to calculate &'*&'7 every ,/ seconds and disseminated in
real time. 9uring market hours, prices of the inde! scrips, at which trades are
e!ecuted, are automatically used by the trading computer to calculate the &'*&'7
every ,/ seconds and continuously updated on all trading workstations connected to
the B&' trading computer in real time.
/?
BSE - other Indices:
$part from B&' &'*&'7, which is the most popular stock inde! in (ndia, B&' uses
other stock indices as wellG
B&' /;;
B&' P&F
B&' (92$P
B&' &<2$P
DATA ANALYSIS AND INTERPRETITIONS
/B
CALCULATION OF AVERAGE RETURNS OF COMPANIES
$H'4$G' 4'TF4* 345 L X345I*
1. MARUTI SUZIKI : TABLE NO. : 1
Year
Opening
share
(P0)
Closing
share
(P1)
Dividend
D (P1-P0)
D+(P1-P0)/
P0`100
:;;- 0:B 00: B./ 1- ,,.-1
:;;0 00: /:; / #B.: #B:./-
:;,; /:; ,/1; ?./ ,,;B; :;?./;
:;,, ,/1; ,B:, 1 #,?0 #:.0,
:;,: ,B:, 0?/ ../ #B-1 #:1..;
TOTAL RETURN 143.17
$verage 4eturnL,B?.,.I/L:-.1?
2. ACC CEMENTS: TABLE NO.: 2

Year Opening Closing Dividend (P1-P0) D+(P1-P0)/
//
share
(P0)
share
(P1) D P0`100
:;;- ,;.B ,;:- :; #B1 ,/..:
:;;0 ,;:- B.- :; #//; #??./;
:;,; B.- -.: :? ?0B ,;/.B?
:;,, -.: ,;.1 ?;./ :;B /?.-0
:;,: ,;.1 ,,?1 ,, 1; ,1./-
TOTAL RETURN 158.12
$verage 4eturnL,/-.,:I/L?,.1:
3. ICICI BANK: TABLE NO.: 3
Year
Opening
share
(P0)
Closing
share
(P1)
Dividend
D (P1-P0)
D+(P1-P0)/
P0`100
:;;- -00 ,:?, ,; ??: B1.0?
:;;0 ,:?, BB- ,, #.-? #/:.1,
:;,; BB- -.1 ,, B:- ,;1./B
:;,, -.1 ,,B/ ,: :10 B:..,
:;,: ,,B/ 1-B ,B #B1, #:1.:1
TOTAL RETURN 117.31
$verage 4eturnL,,..?,I/L:?.B1
4.RELIANCE: TABLE NO.: 4

Year Opening Closing Dividend (P1-P0) D+(P1-P0)/
/1
share
(P0)
share
(P1) D P0`100
:;;- 1?- ,B:B ,, .-1 ,?B.:;
:;;0 ,B:B 1,/ ,? #-;0 #B?.-,
:;,; 1,/ ,;-0 ,? B.B 0;.;.
:;,, ,;-0 ,;/- . #?, B.,/
:;,: ,;/- 10: - #?11 #:1./0
TOTAL RETURN 158.02
$verage 4eturnL,/-.;:I/L?,.1;
5.TCS: TABLE NO.: 5
Year
Opening
share
(P0)
Closing
share
(P1)
Dividend
D (P1-P0)
D+(P1-P0)/
P0`100
:;;- 1;B /:. ,,./ #.. #,.:/
:;;0 /:. :?0 ,B #:-- #B;.1/
:;,; :?0 ./; ,B /,, ::..-,
:;,, ./; ,,1/ :; B,/ ./.??
:;,: ,,1/ ,,1, ,B #B ,?.11
AVERAGE RETURN 274.9
$verage 4eturnL:.B.0I/L/B.0-
Formula:
/.
$H'4$G' 4'TF4*345 L X345I*
@here X345 L Total 4eturn
* L *o. of years
GRAPH NO.:1
/-
S.NO
NAME OF THE
COMPANY
AVERAGE
RETURN
1 $4FT=( :-.1?
2 $22 ?,.1:
3 (2(2( :?.B-
4 4'<($*2' ?,.1;
5 T2& /B.0-
INTERPRETATION:>rom the above graph clearly states the average returns of all
the companies considered. The graph states about the rate of returns of the companies.
The average return of T2& is high at /B.0- and (2(2( is low at :?.B-.
CALCULATION OF STANDARD DEVIATIONG
&tandard 9eviation = Hariance
Hariance = ,In#, 34#45
:

MARUTI: TABLE NO.:6
Year Return (R)
Avg. Return
(R) (R-R) (R-R)
2
:;;- ,,.-1 :-.1? #,1... :-,.?.
:;;0 #B:./- :-.1? #.,.:, /;.,.BB
:;,; :;?./; :-.1? ,.B.-. ?;/.-.?:
:;,, #:.0, :-.1? #?,./B 00/.;;
:;,: #:1..; :-.1? #//.?? ?;1,.0?
TOTAL RETURNS 39988.07

/0
Hariance = ,In#, 34#45
:
= ,I/ (099FF)0:) = :99:)91019/
= :99:)91019/

= F9)20
ACC CEMENTS: TABLE NO.:7
Year Return (R) Avg. Return (R) (R-R) (R-R)
2
:;;- ,/..: ?,.1: #,/.0, :/:.00
:;;0 #??./; ?,.1: #1/.,: B:B,.,0
:;,; ,;/.B? ?,.1: .?.-; /BB..;.
:;,, /?.-0 ?,.1: ::.:. B01.;B
:;,: ,1./- ?,.1: #,/.;/ ::1.?0
TOTAL RETURN
10663.68

Hariance L ,In#, 34#45
:
L ,I/ 3,;11?.1-5 L :,?:..?
&tandard 9eviation L Hariance
1;

L :,?:..?
L B1.,-
ICICI BANK: TABLE NO.:8
Year Return (R) Avg. Return (R) (R-R) (R-R)
2
:;;- B1.0? :?.B1 :?.B. //;..0
:;;0 #/:.1, :?.B1 #.1.;. /.-1.?;
:;,; ,;1./B :?.B1 -?.;. 10;,.B:
:;,, B:.., :?.B1 ,0.:/ ?.;.BB
:;,: #:1.:1 :?.B1 #B0..: :B.:.?.
TOTAL RETURN 16081.33

:
L ,I/ 3,1;-,.??5 L ?:,1.:1

= 0/19)/9

= 39):1/
RELIANCE: TABLE NO.:9
Year Return (R)
Avg. Return
(R) (R-R) (R-R)
2
:;;- ,?B.:; ?,.1; 10/)39 103/3)2F
:;;0 #B?.-, ?,.1; ?:3)2/ 39F:)30
:;,; 0;.;. ?,.1; 3F)2: 021F)9F
:;,, B.,/ ?,.1; ?/:)23 :30)3/
:;,: #:1./0 ?,.1; ?3F)/0 00F9)90

Hariance L ,In#,34#45
:
L ,I/ 3:?..:.,,5 L B./B.B:
1,
= 2:32)2/
= 9F)93
TCS: TABLE NO.:10
Year Return (R)
Avg. Return
(R) (R-R) (R-R)
2
:;;- #,.:/ /B.0- #/1.:? ?,1,.1?
:;;0 #B;.1/ /B.0- #0/.1? 0,BB.0,
:;,; ::..-, /B.0- ,.:.-? :0-10.?B
:;,, ./.?? /B.0- :;.?/ B,B.:1
:;,: ,?.11 /B.0- #B,.?: ,.;..1:

Hariance = 1/n-1 (4-4)
2
= 1/5 (BB:0...1) = FF39)33
= FF39)33
= 92)1/3
STANDARD DEVIATION OF COMPANIES:
>ormulaG
&tandard deviation L Hariance
:

1:
S./$ NAME OF THE COMPANY STANDARD DEVIATION
0 M*7ABHI F9)20
1 *CC 29)1F
2 ICICI 39):1
3 7E!I*#CE 9F)93
4 BCS 92)10
Based on the above calculations standard deviation of T2& is high and $22 is a low
+ other company having medium standard deviation.
GRAPH NO.:2
INTERPRETATION: &tanderd deviation is the indication at risk associated with a
security it shows uncertainty of return from a security from above analysis T2& have
high standard deviation and it has practical to get good return $22 has B1.,- is low
risky.
CALCULATION OF CORRELATION:
2ovariance 328H ab5 L ,In 34$#4$534B#4B5
2orrelation 2oefficient L 28H abIaT b
1.MARUTI WITH OTHER COMPANIES
i. MARUTI (RA) & ACC (RB) TABLE NO.:11
YEAR (RA-RA) (RB-RB) (RA-RA) (RB-RB)
1?
:;;- #,1... #,/.0, :11.-;,1
:;;0 #.,.:, #1/.,: B1?.....
:;,; ,.B.-. .?.-; ,:0;/.0
:;,, #?,./B ::.:. #.;:./B,
:;,: #//.?? #,/.;/ -?:./-,-
Total 4eturns 17940.52
2ovariance 328H ab5 L ,I/ 31:920)3/5 L ?/--.,
a L -0.B? Q b L B1.,-
L ?/--I3-0.B?53B1.,-5
L ;.-1-
ii. MARUTI (RA) & ICICI (RB) TABLE NO.:12
:;;- #,1... :?.B. #?0?.1.:
:;;0 #.,.:, #.1.;. /B,..;0?
:;,; ,.B.-. -?.;. ,B/:..;,
:;,, #?,./B ,0.:/ #1;..,,.
:;,: #//.?? #B0..: :./,.B;?
1B
2ovariance 328H ab5 L ,I/ 3:,10/5 L B??0
2orrelation 2oefficient L 28H abIaTb
a L -0.B?Q b L /1..,
L B??0I 3-0.B?5 3/1..,5
L ;.-//
iii. MARUTI (RA) & RELIANCE (RB) TABLE NO.:13
:;;- #,1... ,;:./0 #,.:;.0:
:;;0 #.,.:, #./.B: /?.;.1B.
:;,; ,.B.-. /-.B. ,;::B.?/
:;,, #?,./B #:..B/ -1/.--1
:;,: #//.?? #/-.:; ?::;.??
17960.29
2ovariance 328H ab5 L ,I/ 3,.01;5 L ?/0:
a L -0.B?Q b L 1-.0/
L ?/0:I 3-0.B?5 31-.0/5
L ;./-:
iv. MARUTI (RA) & TCS (RB) TABLE NO.:14
:;;- #,1... #/1.:? 0B?.,-,.
:;;0 #.,.:, #0/.1? 1-,;.,?,
:;,; ,.B.-. ,.:.-? ?;::,../
:;,, #?,./B :;.?/ #1B:.;,-
:;,: #//.?? #B,.?: ::-1.1,.

1/
2ovariance 328H ab5 L ,I/ 3?01,05 L .0:B
a L -0.B?Q b L 0B.,?
L .0:BI 3-0.B?5 30B.,?5
L ;.0B,
2.ACC WITH OTHER COMPANIES
i.ACC (RA) & ICICI (RB) TABLE NO.:15
:;;- #,/.0, :?.B. #?.?.:--
:;;0 #1/.,: #.1.;. B0/?.-10
:;,; .?.-; -?.;. 1,?,.:.1
:;,, ::.:. ,0.:/ B:-.11/-
:;,: #,/.;/ #B0..: .B-.,B/B

2ovariance 328H ab5 L ,I/ 3,,--05 L :?.-
2orrelation 2oefficient L 28H abIaTb
a L B1.,-Q b L /1..,
L :?.-I 3B1.,-5 3/1..,5
L ;.0;-
ii.ACC (RA) & RELIANCE (RB) TABLE NO.:16
:;;- #,/.0, ,;:./0 #,1?,.-,
:;;0 #1/.,: #./.B: B0,,.?0B
:;,; .?.-; /-.B. B?,/.:0/
:;,, ::.:. #:..B/ #1,,.?./
:;,: #,/.;/ #/-.:; -./.1/?B
2ovariance 328H ab5 L ,I/ 3.-/05 L ,/.,
11
a L B1.,-Q b L 1-.0/
L ,1;- I 3B1.,-531-.0/5
L ;./;/
iii.ACC (RA) & TCS (RB) TABLE NO.:17
:;;- #,/.0, #/1.:? -0B.?B?/
:;;0 #1/.,: #0/.1? 1::...-/
:;,; .?.-; ,.:.-? ,:.//.B,
:;,, ::.:. :;.?/ B/?.?;-/
:;,: #,/.;/ #B,.?: 1:,..1?.

2ovariance 328H ab5 L ,I/ 3:;0/?5 L B,0,
a L B1.,-Q b L 0B.,?
L B,0,I3B1.,-530B.,?5
L ;.01B
3.ICICI WITH OTHER COMPANIES
i.ICICI (RA) & RELIANCE (RB) TABLE NO.:18
:;;- :?.B. ,;:./0 :B;....B
:;;0 #.1.;. #./.B: /.?1.1--
:;,; -?.;. /-.B. B-/..??.
:;,, ,0.:/ #:..B/ #/:-.???
:;,: #B0..: #/-.:; :-0?..B
2ovariance 328H ab5 L ,I/ 3,/?1.5 L ?;.?
1.
a L /1..,Q b L 1-.0/
L ?;.?I 3/1..,531-.0/5
L ;..-/
ii.ICICI (RA) & TCS (RB) TABLE NO.:19
/00F /0)2: ?39)/0 ?1019)9/
/009 ?:9)0: ?93)90 :/:2)/F/
/010 F0)0: 1:/)F0 1203:)91
/011 19)/3 /0)03 091):09:
/01/ ?29):/ ?21)0/ /032):/
Bota' 7eturns //:3F):/

2ovariance 328H ab5 L ,I/ 3::./05 L B//:
a L /1..,Q b L 0B.,?
L B//:I 3/1..,530B.,?5
L ;.-/:
4.RELIANCE WITH OTHER COMPANIES
RELIANCE (RA) & TCS (RB) TABLE NO.:20
:;;- ,;:./0 #/1.:? #/.1-.1-
:;;0 #./.B: #0/.1? .:,,.0,,
:;,; /-.B. ,.:.-? ,;,;/.,?
:;,, #:..B/ :;.?/ #//-..;/
:;,: #/-.:; #B,.?: :B;B.0,
TOTAL RETURNS ,??0B./1

2ovariance 328H ab5 L ,I/ 3,??0/5 L :1.0
a L 1-.0/Q b L 0B.,?
1-
L :1.0I31-.0/530B.,?5
L ;.B,?
&.*8 28B(*$T(8* T8T$< 4'TF4*&
, $4FT=(+$22 ,.0B;./:
: $4FT=(+(2(2( :,10B..,
? $4FT=(+4'<($*2' ,.01;.:0
B $4FT=(+T2& ?01,0.11
/ $22+(2(2( ,,---.1.
1 $22+4'<($*2' .-/0.,/-
. $22+T2& :;0/:.1,
- (2(2(+4'<($*2' ,/?1..:,
0 (2(2(+T2& ::./-..:
,; 4'<($*2'+T2& ,??0B./1
10
GRAPH NO.:3
INTERPRETATION: (t is proved fact that portfolio is lower than individual risks at
assets of portfolio we absurd from the calculations in that risk of portfolio.
CALCULATION OF PORTFOLIO WEIGHTS
@a L b Kb#3nabTa5Y
a
:
U b
:
# :nabTaTb
@b L , C @a
WEIGHTS OF MARUTI & OTHER COMPANIES:
TABLE NO.:21
MARUTI&OTHER
COMPANY
a b nab Wa Wb
$4FT(+$22 -0.B? B1.,- ;.-1- #;.B0 ,.B0
$4FT(3a5+(2(2(3b5 -0.B? /1.., ;.-// #;.BB ,.BB
$4FT(3a5+4'<($*2'3b5 -0.B? 1-.0/ ;./-: ;.:, ;..0
$4FT(3a5+T2&3b5 -0.B? 0B.,? ;.0B, ;.0:B ;.;./
.;
WEIGHTS OF ACC & OTHER COMPANIES:
TABLE NO.:22
ACC&OTHER
COMPANIES
a b nab Wa Wb
$223a5+(2(2(3b5 B1.,- /1.., ;.0;- ,.B,? #;.B,?
$223a5+4'<($*2'3b5 B1.,- 1-.0/ ;./;/ ;.-/ ;.,/
$223a5+T2&3b5 B1.,- 0B.,? ;.01B ,..- #;..-
WEIGHTS OF ICICI & OTHER COMPANIES:
TABLE NO.:23
ICICI&OTHER
COMPANIES
a b nab Wa Wb
(2(2(3a5+4'<($*2'3b5 /1.., 1-.0/ ;..-/ ;.0,0 ;.;-
(2(2(3a5+T2&3b5 /1.., 0B.,? ;.-/: ;.,BB1 #;.BB1
WEIGHTS OF RELIANCE & OTHER COMPANIES:
TABLE NO.:24
RELIANCE&OTHER
COMPANIES
a b nab Wa Wb
4'<($*2'3a5+T2&3b5 1-.0/ 0B.,? ;.B,? ;..B- ;.:/,
CALCULATION OF PORTFOLIO RISK :
RP L 3aT@a5
:
U 3bT@b5
:
U :TaTbT@aT@bTnab
Where,
Za L &tandard 9eviation of &ecurity a
Zb L &tandard 9eviation of &ecurity b
.,
@a L @eight of &ecurity a
@b L @eight of &ecurity b
nab L 2orrelation 2oefficient between &ecurity a + b
MARUTI & OTHER COMPANIES:
TABLE NO.:25
MARUTHI&OTHER
COMPANIES
a b nab Wa Wb Rp
$4FT=(3a5+$223b5 -0.B? B1.,- ;.-1- #;.B0 ,.B0 ?..1-S
$4FT=(3a5+(2(2(3b5 -0.B? /1.., ;.-// #;.BB ,.BB /:.,.S
$4FT=(3a5+4'<($*2'3b5 -0.B? 1-.0/ ;./-: ;.:, ;..0 1..,1S
$4FT=(3a5+T2&3b5 -0.B? 0B.,? ;.0B, ;.0:B ;.;./ -0.?;-S
ACC & OTHER COMPANIES

TABLE NO.:26
ACC&OTHER
COMPANIES
a b nab Wa Wb Rp
$223a5+(2(2(3b5 B1.,- /1.., ;.0;- ,.B,? #;.B,? B/.;1.S
$223a5+4'<($*2'3b5 B1.,- 1-.0/ ;./;/ ;.-/ ;.,/ B/.?1:S
$223a5+T2&3b5 B1.,- 0B.,? ;.01B ,..- #;..- ::.1,S
ICICI & OTHER COMPANIES

TABLE NO.:27
.:
ICICI&OTHER
COMPANIES
a b nab Wa Wb Rp
(2(2(3a5+4'<($*2'3b5 /1.., 1-.0/ ;..-/ ;.0,0 ;.;-, /1.1;S
(2(2(3a5+T2&3b5 /1.., 0B.,? ;.-/: ;.,BB1 #;.BB1 /,.,0S
RELIANCE & OTHER COMPANIES
TABLE NO.:28
RELIANCE&OTHER
COMPANIES
a b nab Wa Wb Rp
4'<($*2'3a5+T2&3b5 1-.0/ 0B.,? ;.B,? ;..B- ;.:/, 1/S
PORTFOLIO RISK
S.NO COMBINATION PORTFOLIO RISK
, $4FT=(+$22 ?..1-S
: $4FT=(+(2(2( /:.,.S
? $4FT=(+4'<($*2' 1..,1S
B $4FT=(+T2& -0.?;-S
/ $22+(2(2( B/.;1.S
1 $22+4'<($*2' B/.?1:S
. $22+T2& ::.1,S
- (2(2(+4'<($*2' /1.1;S
0 (2(2(+T2& /,.,0S
,; 4'<($*2'+T2& 1/S
.?
GRAPH NO.:4
INTERPRETATION:(t is proved fact that portfolio is lower than individual risks at
assets of portfolio we absurd from the calculation in that risk of portfolio.
CALCULATION OF PORTFOLIO RETURNS
Rp(RA`WA) + (RB`WB)
@here,
4p L portfolio return
4$L return of $
@$L weight of $
4BL return of B
@BL weight of B
CALCULATION OF PORTFOLIO RETURN OF MARUTI &
OTHER COMPANIES:
TABLE NO.:29
.B
C$M-,/A,T$/S &a 5a &b 5b
'&a65a(
7
'&b65b(
$4FT=(+$22 :-.1? ;.B0 ?,.1: ,.B0 ??.;-
$4FT=(+(2(2( :-.1? #;.BB :?.B1 ,.BB :,.:
$4FT=(+4'<($*2' :-.1? ;.:, ?,.1; ;..0 ?;.0.
$4FT=(+T2& :-.1? ;.0:B /B.0- ;.;./ ?;./.
$22+(2(2( ?,.1: ,.B,? :?.B1 #;.B,? ?/
$22+4'<($*2' ?,.1: ;.-/ ?,.1; ;.,/ ?,.1,
$22+T2& ?,.1: ,..- /B.0- #;..- ,?.?0
(2(2(+4'<($*2' :?.B1 ;.0,0 ?,.1; ;.;-, :B.,;
(2(2(+T2& :?.B1 ,.BB1 /B.0- #;.BB1 0.B
4'<($*2' ?,.1; ;..B- /B.0- #;.:/, ?..B?
PORTFOLIO RETURNS & RISKS OF THE SELECTED STOCKS:
Scri A Scri - Port)olio &eturn Port)olio &is.
aruti $22 ??.;- ?..1-
aruti (2(2( :,.: /:.,.
aruti 4eliance ?;.0. 1..,1
aruti T2& ?;./. -0.?
$22 (2(2( ?/ B/.;1
$22 4eliance ?,.1, B/.?1
$22 T2& ,?.?0 ::.1,
(2(2( 4eliance :B.,; /1.1;
(2(2( T2& 0.B /,.,0
4eliance T2& ?..B? 1/
GRAPH NO.:5
./
(*T'4P4'T$T(8*G The study evidences $4FT=(+T2& has the return level of ?;./.and
risk from that security is -0.?.&o by analysis correlation between the assets we should put our
money into securities.
.1
>(*9(*G& $*9 &FGG'&T(8*& $*9
28*2<F&(8*&
FINDINGS
(nvestors would be able to achieve when the returns of shares and debentures
4esultant would be known as diversified portfolio. Thus portfolio construction would
address itself to three ma%or via, selectivity, timing and diversification. (n case of
portfolio management, negatively correlated assets are most profitable. $ rational
investor would constantly e!amine his chosen portfolio both for average return and
risk.
..
$s far as the average returns of the selected companies are concerned,
T2& is performing well in isolation where as (2(2( is performing very
poor.
$s far the standerd 9eviation of the selected companies are concerned, T2& is
very high, where as $22 is giving less risk than other companies. This means
that the higher the risk the higher the return.
$s far as the correlation co#efficient is concerned the study selects only
negatively correlated scrips as suggested by arkowit". The combination of
securities with (T2 is negatively correlated.
$s far as Portfolio 4isk+4eturn are concerned the combination of securities
of $4FT=(+T2& is giving more than and mean while the risk involved in
that security is also more.
.-
SUGGESTIONS

( suggest to investors to go for portfolio investment. (nstead at having
single asset investment.
$mong the analyses combinations at portfolio $4FT=(+T2& is
suitable for investment
2hoose negatively correlated assets reduce the risk by diversification
complete and diversity investment by different sector.
2hoose portfolio by having concern a but your investment ob%ectives
and risk tolerance.

.0
CONCLUSIONS
Before investing in shares you should look at the type of shares you want to buy and
the way in which you want to deal on the stock market. The main routes for investing
in shares areQ
(nvest your capital in a number of different companies3 a portfolio of
shares5
(nvest indirectly and spread your risk through collectively investments
BIBLIOGRAPHY
-;
TEXT BOOKS:
,. H. R. Bhalla G &ecurity $nalysis + Portfolio anagement
:. H. $vadhani G (nvestment anagement
?. &. Revin G Portfolio anagement
B. Prasanna 2handra G(nvestment$nalysis+Portfolioanagement
ARTICLES:
['* >(*$*2($< P8<(2('&
MAGAZINES
Business @orld
WEBSITES:
,. httpGIIwww.nseindia.comI
:. httpGIIwww.bseindia.comI
?. httpGIIwww.google.comI
B. httpGIIwww.valueresearchonline.comI
/. httpGIIwww.moneycontrol.comI
1. httpGIIwww.wikipedia.comI
.. httpGIIwww.investropedia.comI
$ll the above sites were referred in the month of Aanuary and >ebruary :;,:.
-,

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INTRODUCTION

Portfolios are combinations of assets held by the investors. These

2. ACC CEMENTS: TABLE NO.: 2

4.RELIANCE: TABLE NO.: 4

ACC & OTHER COMPANIES

ICICI & OTHER COMPANIES

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