SUMMARY

Portfolio management is a process of encompassing many activities of

investment assets and securities. It is a dynamic and flexible concept and involves
regular and systematic analysis, judgment, and action. 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 main objective of the Portfolio management is to help the investors to
make wise choice between alternate investments without a post trading shares. Any
portfolio management must specify the objectives like aximum returns, !ptimum
"eturns, #apital appreciation, $afety etc., in the same prospectus.
This service renders optimum returns to the investors by proper selection and
continuous shifting of portfolio from one scheme to another scheme of from one plan
to another plan within the same scheme.
The study gives the returns offered by the companies of various securities are
compared and conclusions are brought out which produces large and better portfolio
combinations for the investors.
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CONTENTS
Chapter No. Name of the concept Page No.
I
Introduction
(eed of the study
!bjectives of the study
$cope of the study
ethodology of the study
)imitations of the study
II "eview of )iterature
III Industry Profile
I* #ompany Profile
* +ata analysis and interpretation
*I ,indings, $uggestions and #onclusion
*II -ibliography
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CHAPTER I - INTRODUCTION
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INTRODUCTION
Portfolios are combinations of assets held by the investors. These
combinations may be of various asset classes like e0uity and debt and of different
issuers like 1overnment bond and corporate debt or of various instruments like
discount bonds, warrants, debentures and -lue chip e0uity or scrip2s 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 maximi3ation of return and or minimi3ation of risk
will yield optimal returns and choice and attitudes of investors are only a starting
point for investment decision and that vigorous risk4return analysis is necessary for
optimi3ation of returns. The return on portfolio is weighted average of returns of
individual stocks and the weights are proportional to each stock2s percentages in the
total portfolio.
Portfolio analysis includes portfolio construction, and performance of
portfolio. All these are part of the subject of portfolio anagement which is a
dynamic concept, subject to daily and hourly changes based on information flows,
money flows and economic and non4economic forces operating in the country on the
markets and securities
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NEED OF THE STUDY
5mergence of institutional investing on behalf of individuals. A number of financial
institutions, mutual funds and other agencies are undertaking the task of investing money
of small investors, on their behalf.
1rowth in the number and si3e of ingestible funds 6 a large part of household savings is
being directed towards financial assets.
Increased market volatility 6 risk and return parameters of financial assets are
continuously changing because of fre0uent changes in government7s industrial and fiscal
policies, economic uncertainty and instability.
1reater use of computers for processing mass of data.
O!ECTI"ES OF THE STUDY
To understand how Portfolio anagement is done.
To analy3e the risk return characteristics of sample scripts.
To calculate the correlation between different stocks.
Ascertain portfolio weights.
To compute the portfolio returns and portfolio risks.
To construct an effective portfolio which offers maximum return for
minimum risks
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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. Also the study includes the calculation of individual $tandard +eviation of
securities and ends at the calculation of weights of individual securities involved in the
portfolio. These percentages help in allocating the funds available for investment based on
risky portfolios.
METHODO#O$Y
"esearch design or research methodology is the procedure of collecting, analy3ing
and interpreting the data to diagnose the problem and react to the opportunity in such
a way where the costs can be minimi3ed and the desired level of accuracy can be
achieved to arrive at a particular conclusion.
$!9"#5$ !, +ATA #!))5#TI!(: The methodology adopted or
employed in this study was ostly on secondary data collection i.e..,
#ompanies Annual "eports
Information from Internet
Publications
Information provided by Inter #onnected $tock 5xchange.
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Period of study:

,or different companies, financial data has been collected from the year .<<=4.<%..
$election of #ompanies:
#ompanies selected for analysis are
$AI#
HU#
CIP#A
AIRTE#
D#F
#IMITATIONS
#onstruction of Portfolio is restricted to two companies based on arkowit3 model.
*ery few and randomly selected scripts > companies are analy3ed from -$5 )istings.
+ata collection was strictly confined to secondary source. (o primary data is
associated with the project.
+etailed study of the topic was not possible due to limited si3e of the project.
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CHAPTER II - RE"IE% OF #ITERATURE
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PORTFO#IO MANA$EMENT & ITS PHASES

P!"T,!)I! A(A155(T I$ a process encompassing many
activities aimed at optimi3ing 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 identified:4
%. $ecurity analysis
.. Portfolio analysis
/. Portfolio selection
'. Portfolio revision
8. Portfolio evaluation
SECURITY ANA#YSIS: It refers to the analysis of trading securities from the point
of view of their prices, return, and risk. All investment is risky and the expected 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 ?<<< are listed in stock
exchanges of the country. $ecurities classified into ownership securities such as e0uity
shares and preference shares and debentures and bonds. "ecently ,a number of new
securities such as convertible debentures and deep discount bonds, 3ero coupon
bonds, ,lexi bonds, ,loating rate bonds 1+"s 5uro currency bonds etc@, are issued
to raise funds for their projects 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. It examines the risk return characteristics of individual securities. A basic
strategy in securities investment is to buy under priced securities and sell over priced
securities. -ut 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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PORTFO#IO RE"ISION
The portfolio which is once selected has to be continuously reviewed over a period of
time and then revised depending on the objectives of the investor. The care taken in
construction of portfolio should be extended to the review and revision of the portfolio.
,luctuations that occur in the e0uity 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 fre0uent changes in the composition of stocks and
bonds. In securities, the type of securities to be held should be revised according to the
portfolio policy.
An investor purchases stock according to his objectives 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.

If 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 exploiting the fluctuations in prices

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E"A#UATION OF PORTFO#IO
Portfolio manager evaluates his portfolio performance and identifies the sources of
strengths and weakness. The evaluation of the portfolio provides a feed back about the
performance to evolve better management strategy. 5ven though evaluation of portfolio
performance is considered to be the last stage of investment process, it is a continuous
process. There are number of situations in which an evaluation becomes necessary and
important.
'. Se(f "a()at'on: An individual may want to evaluate how well he has done. This is a
part of the process of refining his skills and improving his performance over a period
of time.
''. E*a()at'on of Manager+: A mutual fund or similar organi3ation might want to
evaluate its managers. A mutual fund may have several managers each running a
separate fund or sub4fund. It is often necessary to compare the performance of these
managers.
'''. E*a()at'on of M)t)a( F)n,+: An investor may want to evaluate the various mutual
funds operating in the country to decide which, if any, of these should be chosen for
investment. A similar need arises in the case of individuals or organi3ations who
engage external agencies for portfolio advisory services.
'*. E*a()at'on of $ro)p+: have different skills or access to different information.
Academics or researchers may want to evaluate the performance of a whole group of
investors and compare it with another group of investors who use different techni0ues
.
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NEED FOR E"A#UATION OF PORTFO#IO-

Ae can try to evaluate every transaction. Ahenever a security is brought or sold, we
can attempt to assess whether the decision was correct and profitable.
Ae can try to evaluate the performance of a specific security in the portfolio to
determine whether it has been worthwhile to include it in our portfolio.
Ae can try to evaluate the performance of portfolio as a whole during the period
without examining the performance of individual securities within the portfolio.
PORTFO#IO THEORIES
MAR.O%IT/ MODE#-
arkowit3 model is a theoretical framework for analysis of risk and return and
their relationships. Be used statistical analysis for the measurement of risk and
mathematical programming for selection of assets in a portfolio in an efficient
manner. arkowit3 apporach determines for the investor the efficient set of portfolio
through three important variables i.e.
"eturn
$tandard deviation
#o4efficient of correlation
arkowit3 model is also called as a C,ull #ovariance odelC. 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 3ero and infinity. According to this
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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 example,
holding stocks from textile, banking and electronic companies is better than investing
all the money on the textile company7s stock.

arkowit3 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 expectation of highest return would turn out to be real. In the
world of uncertainty, most of the risk adverse investors would like to join arkowit3
rather than keeping a single stock, because diversification reduces the risk.
ASSUMPTIONS-
All investors would like to earn the maximum rate of return that they can
achieve
from their investments.
All investors have the same expected single period investment hori3on.
All investors before making any investments have a common goal. This is the
avoidance of risk because Investors are risk4averse.
Investors base their investment decisions on the expected return and standard
deviation of returns from a possible investment.
Perfect markets are assumed De.g. no taxes and no transaction costsE
The investor assumes that greater or larger the return that he achieves on his
investments, the higher the risk factor surrounds him. !n the contrary when
risks are low the return can also be expected to be low.
The investor can reduce his risk if he adds investments to his portfolio.
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An investor should be able to get higher return for each level of risk Cby
determining the efficient set of securitiesC.
An individual seller or buyer cannot affect the price of a stock. This
assumption is the basic assumption of the perfectly competitive market.
Investors make their decisions only on the basis of the expected returns,
standard deviation and covariance2s of all pairs of securities.
Investors are assumed to have homogenous expectations during the decision4
making period.
The investor can lend or borrow any amount of funds at the risk less rate of
interest. The risk less rate of interest is the rate of interest offered for the
treasury bills or 1overnment securities.
Investors are risk4averse, so when given a choice between two otherwise
identical portfolios, they will choose the one with the lower standard
deviation.
Individual assets are infinitely divisible, meaning that an investor can buy a
fraction of a share if he or she so desires.
There is a risk free rate at which an investor may either lend Di.e. investE
money or borrow money.
There is no transaction cost i.e. no cost involved in buying and selling of
stocks.
There is no personal income tax. Bence, the investor is indifferent to the form
of return either capital gain or dividend.
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THE EFFECT OF COMININ$ T%O SECURITIES-

It is believed that holding two securities is less risky than by having only one
investment in a person7s portfolio. Ahen two stocks are taken on a portfolio and if
they have negative correlation then risk can be completely reduced because the gain
on one can offset the loss on the other. This can be shown with the help of following
example:
INTER- ACTI"E RIS. THROU$H CO"ARIANCE-
#ovariance of the securities will help in finding out the inter4active risk. Ahen
the covariance will be positive then the rates of return of securities move together
either upwards or downwards. Alternatively it can also be said that the inter4active
risk is positive. $econdly, covariance will be 3ero on two investments if the rates of
return are independent. Bolding two securities may reduce the portfolio risk too. The
portfolio risk can be calculated with the help of the following formula:
CAPITA# ASSET PRICIN$ MODE# 0CAPM1-
arkowit3, Ailliam $harpe, Fohn )intner and Fan ossin provided the basic
structure of #apital Asset Pricing odel. It is a model of linear general e0uilibrium
return. In the #AP theory, the re0uired rate return of an asset is having a linear
relationship with asset7s beta value i.e. undiversifiable or systematic risk Di.e. market
related riskE 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 expressed by the #AP, which is also called the
$ecurity arket )ine.
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"p G "f HfI "mD%4 HfE
"p G Portfolio return
Hf G The proportion of funds invested in risk free assets
%4 Hf G The proportion of funds invested in risky assets
"f G "isk free rate of return
"m G "eturn on risky assets
,ormula can be used to calculate the expected returns for different situations, like
mixing risk less assets with risky assets, investing only in the risky asset and mixing
the borrowing with risky assets.
THE CONCEPT
According to #AP, all investors hold only the market portfolio and risk less
securities. The market portfolio is a portfolio comprised of all stocks in the market.
5ach asset is held in proportion to its market value to the total value of all risky assets.
THE SHARPE2S INDE3 MODE#-
The investor always like to purchase a combination of stock that provides the
highest return and has lowest risk. Be wants to maintain a satisfactory reward to risk
ratio traditionally analysis paid more attention to the return aspects of the stocks. (ow
a day2s risk has received increased attention and analysts are providing estimates of
risk as well as return. $harp has developed a simplified model to analy3e the portfolio.
Be assumed that the return of a security is linearly related to a single index like to
market index. $trictly speaking the market index should consist of all the securities
trading on the exchange.In the absence of it, a popular index can be treated as a
surrogate for the market index.$harpe has provided a model for the selection of
appropriate securities in a portfolio.
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The selection of any stock is directly related to its excess return 6 beta ratio
"i 6"f>ai
Ahere "i G the expected return on stock i
"f G the return on a risk less asset
Ai G the expected change in the rate of return on stock I associatd
with one unit change in the market return

SIN$#E INDE3 MODE#-
#ausal observation of the stock prices over a period of time reveals that most
of the stock process move with the market index. Ahen sensex increases, stock prices
also tend to increase and vice versa. This indicates that some underlying factor affect
the market index as well as the stock prices. $tock prices are related to the market
index and this relationship could be used to estimate the return on stock. Towards the
purpose, the following e0uation can be used:
"i G aIa i"mIei
Ahere "Gexpected return on security i
a G intercept of the straight line or alpha co4efficient
ai G slope of straight line or beta co4efficient
"m G the rate of return on market index
ei G error term with a mean of 3ero J a std.dev. Ahich is a constantK
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ARITRA$E PRICIN$ THEORY
According 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 low4grade and high grade bonds.
The )aw of !ne Price:
The foundation for Apt is the law of one price. The law of one price states that
two identical goods should sell at the same price. If 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. Arbitrage also applies to financial assets.
If two financial assets have the same risk, they should have the same expected return.
If they do not have the same expected return, a riskless profit could be earned by
simultaneously issuingDor selling shortE at the low return and buying the high4return
asset. Arbitrage causes prices to be revised as suggested by the law of one price.
The arbitrage pricing line for one risk factor can be written as:
rG L<I LIMi
Ahere N is the expected return on the security i
L< is the return on the 3ero beta portfolio
LI is the factor risk premium
Mi is the sensitivity of the ith asset to the risk factor
Two factor Arbitrage pricing:
The Two4factor model describes the return of i
th
security as follows
NG L<I LIM%iI L.Mi.
Ahere L. is the risk premium associated with risk factor.
Mi. is the factor beta coefficient for factor
. and the factor % J. are uncorrelated
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RESEARCH
D5.g. $ecurity
AnalysisE
PORTFO#IO
MANA$ERS
OPERATIONS
D5.g. buying and
$elling of
$ecuritiesE
C#IENTS
PORTFO#IO MANA$EMENT
A portfolio is a collection of assets. The assets may be physical or financial like
$hares, -onds, +ebentures, 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. Be would therefore, follow the age old maxim that one should not put all the eggs into
one basket. -y doing so, he can achieve objective to maximi3e portfolio return and at the
same time minimi3ing the portfolio risk by diversification.
Portfolio management is the management of various financial assets which comprise the
portfolio.
Portfolio management is a decision 6 support system that is designed with a view to
meet the multi4faced needs of investors.
According to $ecurities and 5xchange -oard of India Portfolio anager is defined
as: CPortfolio means the total holdings of securities belonging to any personO.
STRUCTURE 4 PROCESS OF TYPICA# PORTFO#IO MANA$EMENT
In the small firm, the portfolio manager performs the job of security analyst.
In the case of medium and large si3ed organi3ations, job function of portfolio manager and
security analyst are separate.
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CHARACTERISTICS OF PORTFO#IO MANA$EMENT-
Individuals will benefit immensely by taking portfolio management services for the
following reasons:
Ahatever may be the status of the capital market, over the long period capital markets
have given an excellent return when compared to other forms of investment. The
return from bank deposits, units, etc., is much less than from the stock market.
The Indian $tock arkets are very complicated. Though there are thousands of
companies that are listed only a few hundred which have the necessary li0uidity. 5ven
among these, only some have the growth prospects which are conducive for
investment. It is impossible for any individual wishing to invest and sit down and
analy3e all these intricacies of the market unless he does nothing else.
5ven if an investor is able to understand the intricacies of the market and separate
from the grain the trading practices in India are so complicated that it is really a
difficult task for an investor to trade in all the major exchanges of India, look after his
deliveries and payments
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Proce++ of Portfo('o Management-

The Portfolio Program and Asset anagement Program both follow a
disciplined process to establish and monitor an optimal investment mix. This six4
stage process helps ensure that the investments match investor2s uni0ue needs, both
now and in the future.


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5. IDENTIFY $OA#S AND O!ECTI"ES-
Ahen will you need the money from your investmentsK Ahat are you saving your
money forK Aith the assistance of financial advisor, the Investment Profile
Puestionnaire will guide through a series of 0uestions to help identify the goals
and objectives for the investments.
6. DETERMINE OPTIMA# IN"ESTMENT MI3-
!nce the Investment Profile Puestionnaire is completed, investor2s optimal
investment mix or asset allocation will be determined. An asset allocation
represents the mix of investments Dcash, fixed income and e0uitiesE that match
individual risk and return needs. This step represents one of the most important
decisions in your portfolio construction, as asset allocation has been found to be
the major determinant of long4term portfolio performance.
7. CREATE A CUSTOMI/ED IN"ESTMENT PO#ICY STATEMENT-
Ahen the optimal investment mix is determined, the next step is to formali3e our
goals and objectives in order to utili3e them as a benchmark to monitor progress
and future updates.
8. SE#ECT IN"ESTMENTS-
The customi3ed portfolio is created using an allocation of select P, ,unds.
5ach P, ,und is designed to satisfy the re0uirements of a specific asset class,
and is selected in the necessary proportion to match the optimal investment mix.
9 MONITOR PRO$RESS-
-uilding an optimal investment mix is only part of the process. It is e0ually
important to maintain the optimal mix when varying market conditions cause
investment mix to drift away from its target. To ensure that mix of asset classes
stays in line with investor2s uni0ue needs, the portfolio will be monitored and
rebalanced back to the optimal investment mix
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:. REASSESS NEEDS AND $OA#S-
Fust as markets shift, so do the goals and objectives of investors. Aith the
flexibility of the Portfolio Program and Asset anagement Program, when the
investor2s needs or other life circumstances change, the portfolio has the
flexibility to accommodate such changes.
F)nct'on+ of Portfo('o Manger+-
A,*'+or; ro(e-
Advice new investments, review the existing ones, identification of objectives,
recommending high yield securities etc.
Con,)ct'ng mar<et an, econom'c +er*'ce-
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
exchange possible change in corporate law2s etc.
F'nanc'a( ana(;+'+-
Be should evaluate the financial statement of company in order to understand,
their net worth future earnings, prospectus and strength.
St),; of +toc< mar<et-
Be should observe the trends at various stock exchange and analysis scripts so
that he is able to identify the right securities for investment.
St),; of 'n,)+tr;-
Be should study industry to know its future prospects, technical changes etc,
re0uired for investment proposal he should also see the problem2s of the industry.
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Dec',e the t;pe of portfo('o-
Reeping in mind the objectives of portfolio a portfolio manager has to decide
weather the portfolio should comprise e0uity preference shares, debenture,
convertibles, non4convertibles or partly convertibles, money market, securities etc or
a mix of more than one type of proper mix ensures higher safety, yield and li0uidity
coupled with balanced risk techni0ues of portfolio management.
A portfolio manager in the Indian context has been -rokers D-ig brokersE who
on the basis of their experience, market trends, insider trader, helps the limited
knowledge persons.
"egistered merchant bankers can acts2 as portfolio managers. Investor2s must
look forward, for 0ualification and performance and ability and research base of the
portfolio manager2s
RIS.
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"isk is uncertainty of the income>capital appreciation or loss or both. All
investment is risky. The higher the risk taken, the higher is the return. -ut 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 IN"ESTMENT RIS.S-
)+'ne++ r'+<-
As a holder of corporate securities De0uity shares or debenturesE, you are
exposed to the risk of poor business performance. This may be caused by a variety of
factors like heightened competition. 5mergence of new technologies, development of
substitute product, shifts in consumer preferences, inade0uate supply of essential
inputs, changes in government al policies, and so on.
Intere+t rate r'+<-
The changes in interest rate have a bearing on the welfare on investors. As the
interest rate goes up, the market price of existing firmed income securities falls, and
vice versa. This happens because the buyer of a fixed income security would not buy
it at its par values of face values its fixed interest rate is lower than the prevailing
interest rate on a similar security. ,or example, a debenture that has face value of
"$.%<< and a fixed rate of %.S will sell a discount if the interest rate moves up from,
say %. S to %'S .Ahile the chances in interest rate have a direct bearing on the prices
of fixed income securities, they affect e0uity prices. Too, albeit some what indirectly.
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F'nanc'a( R'+<-
It refers to the variability of the income to the e0uity capital due to the debt capital.
,inancial risk in a company is associated with the capital structure of the company.
#apital structure of the company consists of e0uity funds and borrowed funds.
The t=o ma>or t;pe+ of r'+<+ are-
T $ystematic or market related risk.
T 9nsystematic or company related risks.
$ystematic risk affected from the entire market is Dthe problems, raw material
availability, tax policy or government policy, inflation risk, interest risk and financial
riskE.It is managed by the use of -eta of different company shares.
9nsystematic 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 extent by
investing in large portfolio of securities. The unsystematic risk stems from
inefficiency magnitude of those factors different form one company
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-ased on the below pyramid diagram the type of risks will be described
5. S;+temat'c R'+<-
$ystematic risk is caused by factors external 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 sub4divided into three
types. They are
arket "isk
Interest "ate "isk
Purchasing Power "isk
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a1 Mar<et R'+<-
!ne would notice that when the stock market surges up, most stocks post higher
price. !n the other hand, when the market falls sharply, most common stocks will
drop. It is not uncommon to find stock prices falling from time to time while a
company7s earnings are rising and vice4versa. The price of stock may fluctuate widely
within a short time even though earnings remain unchanged or relatively stable.
b). Intere+t Rate R'+<-
Interest rate risk is the risk of loss of principal brought about the changes in the
interest rate paid on new securities currently being issued.
c). P)rcha+'ng Po=er R'+<-
The typical investor seeks an investment which will give him current income and > or
capital appreciation in addition to his original investment.
2. Un-+;+temat'c R'+<-
9n4systematic risk is uni0ue 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 debt4e0uity portion of the companies differs from
each other. All these factors affect the un4systematic risk and contribute a portion in
the total variability of the return.
anagerial inefficiently
Technological change in the production process
Availability of raw materials
#hanges in the consumer preference
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)abour problems
The nature and magnitude of the above mentioned factors differ from industry
to industry and company to company. They have to be analy3ed separately for each
industry and firm. 9n4systematic risk can be broadly classified into:
-usiness "isk
,inancial "isk
USINESS RIS.-
-usiness risk is that portion of the unsystematic risk caused by the operating
environment of the business. -usiness 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 -usiness risk.
-usiness risk is concerned with the difference between revenue and earnings before
interest and tax. -usiness risk can be divided into.
'1 Interna( )+'ne++ R'+<
Internal 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 company7s achievement of its pre4set goals and the fulfilment of
the promises to its investors.
''1 E?terna( )+'ne++ R'+<
5xternal business risk is the result of operating conditions imposed on the firm by
circumstances beyond its control. The external environments in which it operates
exert some pressure on the firm. The external 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.
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FINANCIA# RIS.-
It refers to the variability of the income to the e0uity capital due to the debt
capital. ,inancial risk in a company is associated with the capital structure of the
company. #apital structure of the company consists of e0uity funds and borrowed
funds.
RETURN ON PORTFO#IO-

5ach security in a portfolio contributes return in the proportion of its
investment in security. Thus the portfolio expected returns is the weighted average of
the expected return, from each of securities, with weights representing the proportions
share of the security in the total investment. Ahy does an investor have so many
securities in his total investmentK Ahy does an investor have so many securities in
this portfolioK If the security A-# gives the maximum return why not he invests in
that security all his funds and thus maximi3e returnK The answer to these 0uestions
lies in the investor2s perception of risk attached in investments. !bjectives of income,
safety, appreciation, li0uidity 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 non4systematic risks and achieve the specific objectives of investors.
RIS. ON PORTFO#IO-
The expected returns from individual securities carry some degree of risk.
"isk on the portfolio is different from the risk on the individual securities. The risk is
reflected in the variability of the returns from 3ero to infinity. "isk of the individual
assets or a portfolio is measured by the variance of its return. The expected return
depends on the probability of the returns and their weighted contribution to the risk of
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the portfolio. These are two measures of risk in this context 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. Bence, 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. "isk is
mainly reduced by +iversification.
RIS. RETURN ANA#YSIS-
All investment has some risk. Investment 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 li0uidity etc. The risk over
time can be represented by the variance of the returns. Ahile the returns over time is
capital appreciation plus payout, divided by the purchase price of the share.
(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 ".-.I or long term, yielded on government securities at round %/S to
%'S. This risk less return refers to lack of variability of return and no uncertainty in
the repayment or capital. -ut other risks such as loss of li0uidity due to parting with
money etc., may however remain, but are rewarded by the total return on the capital,
"isk4return is subject to variation and the objectives 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 0uantity that should be related to the
0uality of scripts which leads to 0uality of portfolio.
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RIS. AND E3PECTED RETURN-
There is a positive relationship between the amount of risk and the amount of
expected return i.e., the greater the risk, the larger the expected return and larger the
chances of substantial loss. !ne of the most difficult problems for an investor is to
estimate the highest level of risk he is able to assume.
"isk is measured along the hori3ontal axis and increases from the left to right.
5xpected rate of return is measured on the vertical axis and rises from bottom to
top.
The line from < to " DfE is called the rate of return or risk less investments
commonly associated with the yield on government securities.
The diagonal line form " DfE to 5DrE illustrates the concept of expected rate of
return increasing as level of risk increases.
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5xperience has shown that beyond the certain securities by adding more securities
expensive.
S'mp(e ,'*er+'f'cat'on re,)ce+-
An asset2s total risk can be divided into systematic plus unsystematic risk, as
shown below
$ystematic risk Dundiversifiable riskE I unsystematic risk Ddiversified riskE
GTotal risk
G*arDrE.
9nsystematic risk is that portion of the risk that is uni0ue to the firm
Dfor example, risk due to strikes and management errors.E 9nsystematic risk can be
reduced to 3ero by simple diversification.
$imple diversification is the random selection of securities that are to be added
to a portfolio. As the number of randomly selected securities added to a portfolio is
increased, the level of unsystematic risk approaches 3ero. Bowever market related
systematic risk cannot be reduced by simple diversification. This risk is common to
all securities.
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CHAPTER III - INDUSTRY PROFI#E
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FINANCIA# MAR.ETS
,inance is the pre4re0uisite for modern business and financial institutions play a vital
role in the economic system. It is through financial markets and institutions that the
financial system of an economy works. ,inancial markets refer to the institutional
arrangements for dealing in financial assets and credit instruments of different types
such as currency, che0ues, bank deposits, bills, bonds, e0uities, etc.
,inancial market is a broad term describing any marketplace where buyers and sellers
participate in the trade of assets such as e0uities, bonds, currencies and derivatives.
They are typically defined by having transparent pricing, basic regulations on trading,
costs and fees and market forces determining the prices of securities that trade.
1enerally, there is no specific place or location to indicate a financial market.
Aherever a financial transaction takes place, it is deemed to have taken place in the
financial market. Bence financial markets are pervasive in nature since financial
transactions are themselves very pervasive throughout the economic system. ,or
instance, issue of e0uity shares, granting of loan by term lending institutions, deposit
of money into a bank, purchase of debentures, sale of shares and so on.
In a nutshell, financial markets are the credit markets catering to the various needs of
the individuals, firms and institutions by facilitating buying and selling of financial
assets, claims and services.
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C#ASSIFICATION OF FINANCIA# MAR.ETS
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F'nanc'a( mar<et+
Organ'@e, mar<et+ Unorgan'@e, mar<et+
Cap'ta( Mar<et+ Mone; Mar<et+
In,)+tr'a( Sec)r't'e+
Mar<et
$o*ernment
Sec)r't'e+ Mar<et
#ong-term (oan
mar<et
Pr'mar; Mar<et
Secon,ar; mar<et
Ca(( Mone; Mar<et
Commerc'a( '((
Mar<et
Trea+)r; '(( Mar<et
Mone; #en,er+A
In,'gen)o+ an<er+
Cap'ta( Mar<et
The capital market is a market for financial assets which have a long or indefinite
maturity. 1enerally, it deals with long term securities which have a period of above
one year. In the widest sense, it consists of a series of channels through which the
savings of the community are made available for industrial and commercial
enterprises and public authorities. As a whole, capital market facilitates raising of
capital.
The major functions performed by a capital market are:
%. obili3ation of financial resources on a nation4wide scale.
.. $ecuring the foreign capital and know4how to fill up deficit in the re0uired
resources for economic growth at a faster rate.
/. 5ffective allocation of the mobili3ed financial resources, by directing the same
to projects yielding highest yield or to the projects needed to promote
balanced economic development.

#apital market consists of primary market and secondary market.
Primary market- Primary market is a market for new issues or new financial claims.
Bence it is also called as (ew Issue arket. It basically deals with those securities
which are issued to the public for the first time. The market, therefore, makes
available a new block of securities for public subscription. In other words, it deals
with raising of fresh capital by companies either for cash or for consideration other
than cash. The best example could be Initial Public !ffering DIP!E where a firm
offers shares to the public for the first time.
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Secondary market: $econdary market is a market where existing securities are
traded. In other words, securities which have already passed through new issue
market are traded in this market. 1enerally, such securities are 0uoted in the stock
exchange and it provides a continuous and regular market for buying and selling of
securities. This market consists of all stock exchanges recogni3ed by the government
of India.
Mone; Mar<et
oney markets are the markets for short4termA highly li0uid debt securities. oney
market securities are generally very safe investments which return relatively low
interest rate that is most appropriate for temporary cash storage or short term time
needs. It consists of a number of sub4markets which collectively constitute the money
market namely call money market, commercial bills market, acceptance market, and
Treasury bill market.
Der'*at'*e+ Mar<et
The derivatives market is the financial market for derivatives, financial instruments
like futures contracts or options, which are derived from other forms of assets. A
derivative is a security whose price is dependent upon or derived from one or more
underlying assets. The derivative itself is merely a contract between two or more
parties. Its value is determined by fluctuations in the underlying asset. The most
common underlying assets include stocks, bonds, commodities, currencies, interest
rates and market indexes. The important financial derivatives are the following:
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Forwards: ,orwards are the oldest of all the derivatives. A forward contract
refers to an agreement between two parties to exchange an agreed 0uantity of
an asset for cash at a certain date in future at a predetermined price specified
in that agreement. The promised asset may be currency, commodity,
instrument etc.
Futures: ,uture contract is very similar to a forward contract in all respects
excepting the fact that it is completely a standardi3ed one. It is nothing but a
standardi3ed forward contract which is legally enforceable and always traded
on an organi3ed exchange.
Options: A financial derivative that represents a contract sold by one party
Doption writerE to another party Doption holderE. The contract offers the buyer
the right, but not the obligation, to buy DcallE or sell DputE a security or other
financial asset at an agreed4upon price Dthe strike priceE during a certain
period of time or on a specific date Dexercise dateE. #all options give the
option to buy at certain price, so the buyer would want the stock to go up. Put
options give the option to sell at a certain price, so the buyer would want the
stock to go down.
Swaps: It is yet another exciting trading instrument. Infact, it is the
combination of forwards by two counterparties. It is arranged to reap the
benefits arising from the fluctuations in the market 6 either currency market or
interest rate market or any other market for that matter.
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Fore'gn E?change Mar<et
It is a market in which participants are able to buy, sell, exchange and speculate on
currencies. ,oreign exchange markets are made up of banks, commercial companies,
central banks, investment management firms, hedge funds, and retail forex brokers
and investors. The forex market is considered to be the largest financial market in the
world. It is a worldwide decentrali3ed over4the4counter financial market for the
trading of currencies. -ecause the currency markets are large and li0uid, they are
believed to be the most efficient financial markets. It is important to reali3e that the
foreign exchange market is not a single exchange, but is constructed of a global
network of computers that connects participants from all parts of the world.
Commo,'t'e+ Mar<et
It is a physical or virtual marketplace for buying, selling and trading raw or primary
products. ,or investorsU purposes there are currently about 8< major commodity
markets worldwide that facilitate investment trade in nearly %<< primary
commodities. #ommodities are split into two types: hard and soft commodities. Bard
commodities are typically natural resources that must be mined or extracted Dgold,
rubber, oil, etc.E, whereas soft commodities are agricultural products or livestock
Dcorn, wheat, coffee, sugar, soybeans, pork, etc.E
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INDIAN FINANCIA# MAR.ETS
India ,inancial market is one of the oldest in the world and is considered to be the
fastest growing and best among all the markets of the emerging economies.
The history of Indian capital markets dates back .<< years toward the end of
the %=th century when India was under the rule of the 5ast India #ompany.
The development of the capital market in India concentrated around umbai
where no less than .<< to .8< securities brokers were active during the second
half of the %&th century.
The financial market in India today is more developed than many other sectors
because it was organi3ed long before with the securities exchanges of
umbai, Ahmadabad and Rolkata were established as early as the %&th
century.
-y the early %&;<s the total number of securities exchanges in India rose to eight,
including umbai, Ahmadabad and Rolkata apart from adras, Ranpur,
+elhi, -angalore and Pune. Today there are .% regional securities exchanges
in India in addition to the centrali3ed ($5 D(ational $tock 5xchangeE and
!T#5I D!ver the #ounter 5xchange of IndiaE.
Bowever the stock markets in India remained stagnant due to stringent controls on the
market economy that allowed only a handful of monopolies to dominate their
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respective sectors. The corporate sector wasnUt allowed into many industry segments,
which were dominated by the state controlled public sector resulting in stagnation of
the economy right up to the early %&&<s. Thereafter when the Indian economy began
liberali3ing and the controls began to be dismantled or eased outQ the securities
markets witnessed a flurry of IP!2s that were launched. This resulted in many new
companies across different industry segments to come up with newer products and
services.
A remarkable feature of the growth of the Indian economy in recent years has been
the role played by its securities markets in assisting and fuelling that growth with
money rose within the economy. This was in marked contrast to the initial phase of
growth in many of the fast growing economies of 5ast Asia that witnessed huge doses
of ,+I D,oreign +irect InvestmentE spurring growth in their initial days of market
decontrol. +uring this phase in India much of the organi3ed sector has been affected
by high growth as the financial markets played an all4inclusive role in sustaining
financial resource mobili3ation. any P$9s DPublic $ector 9ndertakingsE that
decided to offload part of their e0uity were also helped by the well4organi3ed
securities market in India.
The launch of the ($5 D(ational $tock 5xchangeE and the !T#5I D!ver the #ounter
5xchange of IndiaE during the mid %&&<s by the government of India was meant to
usher in an easier and more transparent form of trading in securities. The ($5 was
conceived as the market for trading in the securities of companies from the large4scale
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sector and the !T#5I for those from the small4scale sector. Ahile the ($5 has not
just done well to grow and evolve into the virtual backbone of capital markets in
India the !T#5I struggled and is yet to show any sign of growth and development.
The integration of IT into the capital market infrastructure has been particularly
smooth in India due to the country2s world class IT industry. This has pushed up the
operational efficiency of the Indian stock market to global standards and as a result
the country has been able to capitali3e on its high growth and attract foreign capital
like never before.
The regulating authority for capital markets in India is the $5-I D$ecurities and
5xchange -oard of IndiaE. $5-I came into prominence in the %&&<s after the capital
markets experienced some turbulence. It had to take drastic measures to plug many
loopholes that were exploited by certain market forces to advance their vested
interests. After this initial phase of struggle $5-I has grown in strength as the
regulator of India2s capital markets and as one of the country2s most important
institutions.
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CHAPTER I" - COMPANY PROFI#E
Page '8 of &'
IIFL Ltd
The II,) DIndia InfolineE group, comprising the holding company, India Infoline )td
and its subsidiaries, is one of the leading players in the Indian financial services
space. II,) offers advice and execution platform for the entire range of financial
services covering products ranging from 50uities and derivatives, #ommodities,
Aealth management, Asset management, Insurance, ,ixed deposits, )oans,
Investment -anking, 1old bonds and other small savings instruments. II,) recently
received an in4principle approval for $ecurities Trading and #learing memberships
from $ingapore 5xchange D$1HE paving the way for II,) to become the first Indian
brokerage to get a membership of the $1H. II,) also received membership of the
#olombo $tock 5xchange becoming the first foreign broker to enter $ri )anka. II,)
owns and manages the website, www.indiainfoline.com, which is one of India2s
leading online destinations for personal finance, stock markets, economy and
business.
II,) has been awarded the 7-est -roker, India2 by ,inance Asia and the 7ost
improved brokerage, India2 in the Asia oney polls. India Infoline was also adjudged
as 7,astest 1rowing 50uity -roking Bouse 4 )arge firms2 by +un J -radstreet. A
forerunner in the field of e0uity research, II,)2s research is acknowledged by none
other than ,orbes as 7-est of the Aeb2 and 7@a must read for investors in Asia2.
Page '; of &'
The company2s research is available not just over the Internet but also on
international wire services like -loomberg, Thomson ,irst #all and Internet
$ecurities where it is amongst one of the most read Indian brokers.
A network of over .,8<< business locations spread over more than 8<< cities and
towns across India facilitates the smooth ac0uisition and servicing of a large customer
base. All our offices are connected with the corporate office in umbai with cutting
edge networking technology. The group caters to a customer base of about a million
customers, over a variety of mediums vi3. online, over the phone and at our branches.
"ISION
The company2s vision is to be the most respected company in the financial services
space.
COMPANY STRUCTURE
Page '? of &'
In,'a Info('ne #'m'te,
India Infoline )imited is listed on both the leading stock exchanges in India, vi3. the
$tock 5xchange, umbai D-$5E and the (ational $tock 5xchange D($5E and is also
a member of both the exchanges. It is engaged in the businesses of 50uities broking,
Aealth Advisory $ervices and Portfolio anagement $ervices. It offers broking
services in the #ash and +erivatives segments of the ($5 as well as the #ash
segment of the -$5. It is registered with ($+) as well as #+$) as a depository
participant, providing a one4stop solution for clients trading in the e0uities market. It
has recently launched its Investment banking and Institutional -roking business.
Page '= of &'
A $5-I authori3ed Portfolio anagerQ it offers Portfolio anagement $ervices to
clients. These services are offered to clients as different schemes, which are based on
differing investment strategies made to reflect the varied risk4return preferences of
clients.
In,'a Info('ne Me,'a an, Re+earch Ser*'ce+ #'m'te,
The services represent a strong support that drives the broking, commodities, mutual
fund and portfolio management services businesses. It undertakes e0uities research
which is acknowledged by none other than ,orbes as U-est of the AebU and U@a must
read for investors in AsiaU. India InfolineUs research is available not just over the
internet but also on international wire services like -loomberg D#ode: II))E,
Thomson ,irst #all and Internet $ecurities where India Infoline is amongst the most
read Indian brokers.
In,'a Info('ne Commo,'t'e+ #'m'te,.
India Infoline #ommodities Pvt )imited is engaged in the business of commodities
broking. Their experience in securities broking empowered them with the re0uisite
skills and technologies to allow them to offer commodities broking as a contra4
cyclical alternative to e0uities broking. It enjoys memberships with the #H and
(#+5H, two leading Indian commodities exchanges, and recently ac0uired
Page '& of &'
membership of +1#H. It has a multi4channel delivery model, making it among the
select few to offer online as well as offline trading facilities.
In,'a Info('ne Mar<et'ng & Ser*'ce+
India Infoline arketing and $ervices )imited is the holding company of India
Infoline Insurance $ervices )imited and India Infoline Insurance -rokers )imited.
India Infoline Insurance $ervices )imited is a registered #orporate Agent with
the Insurance "egulatory and +evelopment Authority DI"+AE. It is the largest
#orporate Agent for I#I#I Prudential )ife Insurance #o )imited, which is
IndiaUs largest private )ife Insurance #ompany. India Infoline was the first
corporate agent to get licensed by I"+A in early .<<%.
India Infoline Insurance -rokers )imited India Infoline Insurance -rokers
)imited is a newly formed subsidiary which will carry out the business of
Insurance broking.
In,'a Info('ne In*e+tment Ser*'ce+ #'m'te,
#onsolidated shareholdings of all the subsidiary companies engaged in loans and
financing activities under one subsidiary. "ecently, !rient 1lobal, a $ingapore4based
investment institution invested 9$+ ?;.? million for a ...8S stake in India Infoline
Investment $ervices. This will help focused expansion and capital raising in the said
Page 8< of &'
subsidiaries for various lending businesses like loans against securities, $5
financing, distribution of retail loan products, consumer finance business and housing
finance business. India Infoline Investment $ervices Private )imited consists of the
following step4down subsidiaries.
India Infoline +istribution #ompany )imited Ddistribution of retail loan
productsE
oneyline #redit )imited Dconsumer financeE
India Infoline Bousing ,inance )imited Dhousing financeE
IIF# 0A+'a1 Pr'*ate #'m'te,
II,) DAsiaE Private )imited is wholly owned subsidiary which has been incorporated
in $ingapore to pursue financial sector activities in other Asian markets. ,urther to
obtaining the necessary regulatory approvals, the company has been initially
capitali3ed at % million $ingapore dollars.
Page 8% of &'
IIF# MANA$EMENT
THE MANA$EMENT TEAM
Mr. N'rma( !a'nA Cha'rman & Manag'ng D'rector
(irmal Fain, -A DII, AhmadabadE and a #hartered and #ost Accountant, founded
India2s leading financial services company India Infoline )td. in %&&8,
providing globally acclaimed financial services in e0uities and
commodities broking, life insurance and mutual funds distribution, among others.
Mr. R "en<ataramanA E?ec)t'*e D'rector
" *enkataraman, co4promoter and 5xecutive +irector of India Infoline
)td., is a -. Tech D5lectronics and 5lectrical #ommunications
5ngineering, IIT RharagpurE and an -A DII -angaloreE. Be joined
the India Infoline board in Fuly %&&&.
Page 8. of &'
THE OARD OF DIRECTORS
Apart from (irmal Fain and " *enkataraman, the -oard of +irectors of India Infoline
)td. comprises:
Mr. N'(e+h "'<am+e;A In,epen,ent D'rector
r. *ikamsey, -oard member since ,ebruary .<<8 4 a practicing #hartered
Accountant and partner DRhimji Runverji J #o., #hartered
AccountantsE, a member firm of B)- International, headed the audit
department till %&&< and thereafter also handles financial services, consultancy,
investigations, mergers and ac0uisitions, valuations etc
Mr .rant' S'nhaA In,epen,ent D'rector
r. Rranti $inha V -oard member since Fanuary .<<8 V completed
his masters from the Agra 9niversity and started his career as a #lass I
officer with )ife Insurance #orporation of India.
Mr Ar)n .. P)r*arA In,epen,ent D'rector
r. A.R. Purvar 6 -oard member since arch .<<= 6 completed his
asters degree in commerce from Allahabad 9niversity in %&;; and a
diploma in -usiness Administration in %&;?.
Page 8/ of &'
PRODUCTS & SER"ICES
EB)'t'e+
India Infoline provided the prospect of researched investing to its clients, which was
hitherto restricted only to the institutions. "esearch for the retail investor did not exist
prior to India Infoline. India Infoline leveraged technology to bring the convenience
of trading to the investor2s location of preference Dresidence or officeE through
computeri3ed access. India Infoline made it possible for clients to view transaction
costs and ledger updates in real time. The #ompany is among the few financial
intermediaries in India to offer a complement of online and offline broking. The
#ompanies network of branches also allows customers to place orders on phone or
visit our branches for trading.
Commo,'t'e+
India Infoline2s extension into commodities trading reconciles its strategic intent to
emerge as a one stop solutions financial intermediary. Its experience in securities
broking has empowered it with re0uisite skills and technologies. The #ompanies
commodities business provides a contra4cyclical alternative to e0uities broking. The
#ompany was among the first to offer the facility of commodities trading in India2s
young commodities market Dthe #H commenced operations in .<</E. Average
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monthly turnover on the commodity exchanges increased from "s <./' bn to "s
.<.<. bn.
In+)rance
An entry into this segment helped complete the clientUs product basketQ concurrently,
it graduated the #ompany into a one stop retail financial solutions provider. To ensure
maximum reach to customers across India, it has employed a multi pronged approach
and reaches out to customers via our (etwork, +irect and Affiliate channels. India
Infoline was the first corporate in India to get the agency license in early .<<%.
In*e+t On('ne
India Infoline has made investing in utual funds and primary market so effortless.
!nly registration is needed. (o paperwork no 0ueues and (o registration
charges. India Infoline offers a host of mutual fund choices under one roof,
backed by in4depth research and advice from research house and tools configured
as investor friendly.
%ea(th Management
The key to achieving a successful Investment Portfolio is to have a carefully planned
financial strategy based on a thorough understanding of the clientUs investment
Page 88 of &'
needs and risk appetite. The II,) Private Aealth anagement Team of financial
experts will recommend an appropriate financial strategy to effectively meet
customer2s investment re0uirements.
A++et Management
India Infoline is a leading pan4India mutual fund distribution house associated with
leading asset management companies. It operates primarily in the retail segment
leveraging its existing distribution network to reach prospective clients. It has
received the in4principle approval to set up a mutual fund.
Portfo('o Management
II,) Portfolio anagement $ervice is a product wherein an e0uity investment
portfolio is created to suit the investment objectives of a client. India Infoline
invests the client2s resources into stocks from different sectors, depending on
client2s risk4return profile. This service is particularly advisable for investors who
cannot afford to give time or donUt have that expertise for day4to4day
management of their e0uity portfolio.
Ne=+(etter+
Page 8; of &'
As a subscriber to the +aily arket $trategy, client2s get research reports of India
Infoline research team on a priority basis. The Indiainfoline Aeekly (ewsletter is
the flashback for the week gone by. A weekly outlook coupled with the best of
the web stories from Indiainfoline and links to important investment ideas,
)eader $peak and features is delivered in the client2s inbox every ,riday evening.
H'+tor; & M'(e+tone+
5CC9 - #ommenced operations as an 50uity "esearch firm
5CCD - )aunched research products of leading Indian companies, key sectors and the
economy #lient included leading ,IIs, banks and companies.
5CCC - )aunched www.indiainfoline.com
6EEE - )aunched online trading through www.8paisa.com $tarted distribution of life
insurance and mutual fund
6EE7 - )aunched proprietary trading platform Trader Terminal for retail customers
6EE8 - Ac0uired commodities broking license J )aunched Portfolio anagement
$ervice
6EE9 - aiden IP! and listed on ($5, -$5
6EE: 4 Ac0uired membership of +1#H J #ommenced the lending business
6EED - #ommenced institutional e0uities business under II,) J ,ormed $ingapore
subsidiary, II,) DAsiaE Pte )td
6EEF - )aunched II,) Aealth J Transitioned to insurance broking model
6EEC - Ac0uired registration for Bousing ,inance, got $5-I in4principle approval for
utual ,und J !btained *enture #apital license
Page 8? of &'
6E5E - "eceived in4principle approval for membership of the $ingapore $tock
5xchange and membership of the #olombo $tock 5xchange
CHAPTER "
DATA ANA#YSIS & INTERPRETATIONS
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CA#CU#ATION OF A"ERA$E RETURNS:
$AI#-
Year (P0) (P1) D (P1-P0)
D+(P1-P0)/
P0*100
2009 198 415 7 217 113.13
2010 415 524 7.5 109 28.07
2011 524 383 7.5 -141 -25.48
2012 383 363 8.7 -20 -2.95
2013 363 341 9.6 -22 -3.42
AVERAGE RETURN 21.87
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HU#-
Year (P0) (P1) D (P1-P0)
D+(P1-P0)/
P0*100
2009 251 264 7.5 13 8.17
2010 264 320 6.5 56 23.67
2011 320 392 6.5 72 24.53
2012 392 521 7.5 129 34.82
2013 521 571 18.5 50 13.15
AVERAGE RETURN 20.87
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CIP#A-
Year (P0) (P1) D (P1-P0)
D+(P1-P0)/
P0*100
2009 185 341 2 156 85.41
2010 341 363 2 22 7.04
2011 363 335 2.8 -28 -6.94
2012 335 425 2 90 27.46
2013 425 400 2 -25 -5.41
AVERAGE RETURN 21.51
Page ;% of &'
hart' A'rte(-
Year (P0) (P1) D (P1-P0)
D+(P1-P0)/
P0*100
2009 324 325 1 1 0.62
2010 325 353 1 28 8.92
2011 353 330 1 -23 -6.23
2012 330 328 1 -2 -0.30
2013 328 330 2 2 1.22
AVERAGE RETURN 0.84
Page ;. of &'
D#F-
Year (P0) (P1) D (P1-P0)
D+(P1-P0)/
P0*100
2009 234 390 2 156 67.52
2010 390 268 2 -122 -30.77
2011 268 176 2 -92 -33.58
2012 176 234 2 58 34.09
2013 234 167 2 -67 -27.78
AVERAGE RETURN 1.90
Page ;/ of &'
Comparat'*e Ret)rn+ on Se(ecte, Scr'p+-
Scrip Rate of Return (%)
$AI# 21.87
HU# 20.87
C'p(a 21.51
hart' A'rte( 0.84
D#F 1.90
Page ;' of &'
CA#CU#ATION OF STANDARD DE"IATION:
Standard Deviation = Variance
__
Variance = 1/n (R-R
2

$AI#-
Year Retr! (R)
A"#. Retr!
(R) (R-R) (R-R)
2
2009 113.13 21.87 91.26 8328.26
2010 28.07 21.87 6.20 38.44
2011 -25.48 21.87 -47.35 2241.94
2012 -2.95 21.87 -24.82 616.15
2013 -3.42 21.87 -25.29 639.48

T$TA%
11864.28

__
Variance = 1/n (R-R
2
= 1/5 (11864.28 = 2372.855195
Standard Deviation = Variance
= 2372.855

= 48.71
HU#-
Page ;8 of &'
Year Retr! (R)
A"#. Retr!
(R) (R-R) (R-R)
2
2009 8.17 20.87 -12.70 161.32
2010 23.67 20.87 2.81 7.87
2011 24.53 20.87 3.66 13.42
2012 34.82 20.87 13.95 194.69
2013 13.15 20.87 -7.72 59.61
T$TA
%
436.9
__
Variance = 1/n (R-R
2
= 1/5 (436.9 = 87.38

$tandard +eviation G *ariance G =?./=
G &./'
CIP#A-
Year Retr! (R)
A"#. Retr!
(R) (R-R) (R-R)
2
2009 85.41 21.51 63.89 4082.56
2010 7.04 21.51 -14.47 209.45
2011 -6.94 21.51 -28.45 809.55
2012 27.46 21.51 5.95 35.43
2013 -5.41 21.51 -26.92 724.81
T$TA%
5861.80
__
Variance = 1/n (R-R
2
= 1/5 (5861.80 = 1172.36
Standard Deviation = Variance = 1172.36 = 34.23
HARTI AIRTE#-
Year Retr! (R) A"#. Retr!
Page ;; of &'
(R) (R-R) (R-R)
2
2009 0.62 0.84 -0.23 0.05
2010 8.92 0.84 8.08 65.26
2011 -6.23 0.84 -7.08 50.09
2012 -0.30 0.84 -1.15 1.32
2013 1.22 0.84 0.37 0.14

T$TA% 116.85
__
Variance = 1/n.(R-R
2
= 1/5 (116.85 = 23.37
Standard Deviation = Variance = 23.37 = 4.834
D#F-
Year
Retr!
(R)
A"#. Retr!
(R) (R-R) (R-R)
2
2009 67.52 1.90 65.62 4306.61
2010 -30.77 1.90 -32.67 1067.06
2011 -33.58 1.90 -35.48 1258.74
2012 34.09 1.90 32.19 1036.47
2013 -27.78 1.90 -29.67 880.57
T$TA% 8549.45
__
Variance = 1/n-1 (R-R
2
= 1/5 (8549.45 = 1709.889
Standard Deviation = Variance = 1709.889 = 41.35
DIA$RAMATIC PRESENTATION OF COMPANIES RIS.
Page ;? of &'
CA#CU#ATION OF CORRE#ATION-

#ovariance D#!* abE G %>n D"A4"AED"-4"-E
Page ;= of &'
Scrip Risk (%)
$AI# 48.71
HU# 9.34
C'p(a 34.23
hart' A'rte( 4.83
D#F 41.35
#orrelation #oefficient G #!* ab>aT b
$AI# %ITH OTHER COMPANIES
$AI# 0RA1 & HU# 0R1
YEAR 0RA-RA1 0R-R1 0RA-RA1 0R-R1
2009 91.26 -12.70 -1159.09
2010 6.20 2.81 17.3969
2011 -47.35 3.66 -173.432
2012 -24.82 13.95 -346.348
2013 -25.29 -7.72 195.239
-1466.24
#ovariance D#!* abE G %>8 D4%';;..'E G 4.&/..8
#orrelation #oefficient G #!* ab>aT b
a G '=.?% Q b G &./'
G 4.&/..8>D'=.?%ED&./'E G 4<.;''
$AI# 0RA1 & CIP#A 0R1
YEAR 0RA-RA1 0R-R1 0RA-RA1 0R-R1
2009 91.26 63.89 5831.007
2010 6.20 -14.47 -89.7323
Page ;& of &'
2011 -47.35 -28.45 1347.206
2012 -24.82 5.95 -147.749
2013 -25.29 -26.92 680.8094
7621.54
#ovariance D#!* abE G %>8 D7621.54E G 1524.31

#orrelation #oefficient G #!* ab>aTb
a G '=.?%%Q b G /'../&
G %8.'./%> D'=.?%%E D/'../&E G <.&%
$AI# 0RA1 & AIRTE# 0R1
YEAR 0RA-RA1 0R-R1 0RA-RA1 0R-R1
2009 91.26 -0.23 -20.773
2010 6.20 8.08 50.08676
2011 -47.35 -7.08 335.0994
2012 -24.82 -1.15 28.49465
2013 -25.29 0.37 -9.47295
383.4349
#ovariance D#!* abE G %>8 D383.4349E G 76.69
#orrelation #oefficient G #!* ab>aT b
a G'=.?%%Q b G '.=/
G ?;.;&> D'=.?%%E D'.=/E G <./.8;
$AI# 0RA1 & D#F 0R1
YEAR 0RA-RA1 0R-R1 0RA-RA1 0R-R1
2009 91.26 65.62 5988.866
2010 6.20 -32.67 -202.537
Page ?< of &'
2011 -47.35 -35.48 1679.887
2012 -24.82 32.19 -799.14
2013 -25.29 -29.67 750.4067
7417.483

#ovariance D#!* abE G %>8 D7417.48E G 1483.5
#orrelation #oefficient G #!* ab>aT b
a G '=.?%Q b G '%./8
G %'=/.8> D'=.?%E D'%./8E G <.?/;
HU# %ITH OTHER COMPANIES
HU# 0RA1 & CIP#A 0R1
YEAR 0RA-RA1 0R-R1 0RA-RA1 0R-R1
2009 -12.70 63.89 -811.535
2010 2.81 -14.47 -40.607
Page ?% of &'
2011 3.66 -28.45 -104.217
2012 13.95 5.95 83.05153
2013 -7.72 -26.92 207.8562
-665.451
#ovariance D#!* abE G %>8 D-665.451E G -133.09

#orrelation #oefficient G #!* ab>aTb
a G &./'Q b G /'../&
G 4%//.<&> D&./'E D/'../&E G4<.'%8=
HU# 0RA1 & AIRTE# 0R1
YEAR 0RA-RA1 0R-R1 0RA-RA1 0R-R1
2009 -12.70 -0.23 2.891092
2010 2.81 8.08 22.66599
2011 3.66 -7.08 -25.9227
2012 13.95 -1.15 -16.0172
2013 -7.72 0.37 -2.89216
-19.275
#ovariance D#!* abE G %>8 D-19.275E G -3.85
#orrelation #oefficient G #!* ab>aT b
a G &./'Q b G '.=/'
G 4/.=8 > D&./'ED'.=/'E G 4<.<=8/
HU# 0RA1 & D#F 0R1
YEAR 0RA-RA1 0R-R1 0RA-RA1 0R-R1
2009 -12.70 65.62 -833.505
2010 2.81 -32.67 -91.655
2011 3.66 -35.48 -129.953
2012 13.95 32.19 449.2073
Page ?. of &'
2013 -7.72 -29.67 229.1048
-376.801

#ovariance D#!* abE G %>8 D4376.801E G 475.36
#orrelation #oefficient G #!* ab>aT b
a G &./'Q b G '%./8
G 4?8./;>D&./'ED'%./8E G 4<.%&'&;
CIP#A %ITH OTHER COMPANIES
CIP#A 0RA1 & AIRTE# 0R1
YEAR 0RA-RA1 0R-R1 0RA-RA1 0R-R1
2009 63.89 -0.23 -14.5441
2010 -14.47 8.08 -116.91
2011 -28.45 -7.08 201.3649
2012 5.95 -1.15 -6.8328
2013 -26.92 0.37 -10.0851
52.99
#ovariance D#!* abE G %>8 D52.99E G 10.60
#orrelation #oefficient G #!* ab>aT b
a G /'../&Q b G '.=/'
G 8..&&> D/'../&ED'.=/'E G <.<;'</
CIP#A 0RA1 & D#F 0R1
YEAR 0RA-RA1 0R-R1 0RA-RA1 0R-R1
2009 63.89 65.62 4193.089
2010 -14.47 -32.67 472.7514
2011 -28.45 -35.48 1009.462
2012 5.95 32.19 191.6276
Page ?/ of &'
2013 -26.92 -29.67 798.9012
6665.831

#ovariance D#!* abE G %>8 D6665.831E G 1333.17
#orrelation #oefficient G #!* ab>aT b
a G /'../Q b G '%./8
G %///.%?> D/'../ED'%./8E G <.&'%;
AIRTE# %ITH OTHER COMPANIES
AIRTE# 0RA1 & D#F 0R1
YEAR 0RA-RA1 0R-R1 0RA-RA1 0R-R1
2009 -0.23 65.62 -14.9379
2010 8.08 -32.67 -263.88
2011 -7.08 -35.48 251.0902
2012 -1.15 32.19 -36.9571
2013 0.37 -29.67 -11.1161
-75.80

#ovariance D#!* abE G %>8 D-75.80E G 415.16
#orrelation #oefficient G #!* ab>aT b
a G '.=/'Q b G '%./8
G 4%8.%;>D'.=/'ED'%./8E G 4<.<?8='
CA#CU#ATION OF PORTFO#IO %EI$HTS
Aa G b Wb4DnabTaEX
a
.
I b
.
4 .nabTaTb
Ab G % 6 Aa
Page ?' of &'
%EI$HTS OF $AI# & OTHER COMPANIES-
$AI# & HU#
a G '=.?%%
b G &./'?
nab G 4<.;''
Aa G &./'? W&./'?4D4<.;''T'=.?%%EX
('=.?%%)
.
I (&./'?)
.
6 .D4<.;''ET('=.?%%)T( &./'?)
Aa G /=<.;.?
/<';.?.&
Aa G <.%.'
Ab G % 6 Aa
Ab G %4 D<.%.'E G <.=?8
$AI# 0a1 & CIP#A 0G1
a G '=.?%%
b G /'../&
nab G <.&%/&
Aa G /'../& W/'../&4 D<.&%/&T'=.?%%EX
('=.?%%)
.
I (/'../&)
.
6 .D<.&%/&ET( '=.?%%)T(/'../&)
Aa G 4/8%.&'=
'&;.&8=
Aa G 4<.?<
Ab G % 6 Aa
Ab G %4 D4<.?<E G %.?<
$AI# 0a1 & AIRTE# 0G1
a G '=.?%%
b G '.=/'
nab G <./.8
Aa G '.=/' W'.=/'4 D<./.8T'=.?%%EX
Page ?8 of &'
('=.?%%)
.
I ('.=/')
.
6 .D<./.8ET( '=.?%)T('.=/')
Aa G 48/./%;
..'..=8
Aa G 4<.<./
Ab G % 6 Aa
Ab G %V<.<../ G%.<./
$AI# 0a1 & D#F 0G1
a G '=.?%%
b G '%./8<
nab G <.?/;'
Aa G '%./8 W'%./84D<.?/;'T'=.?%%EX
('=.?%%)
.
I ('%./8<)
.
6 .D<.?/;'ET('=.?%)T('%./8)
Aa G ..;./&.
%%%8.?%
Aa G <..<.
Ab G % 6 Aa
G %4<..<. G <.?&?
CA#CU#ATION OF %EI$HTS OF HU# & OTHER
COMPANIES-
HU# 0a1 & CIP#A 0G1
Page ?; of &'
a G &./'?
b G /'../&
nab G 4<.'%8
Aa G /'../& W/'../&4D4<.'%8T&./'?EX
(&./'?)
.
I (/'../&)
.
6 .D4<.'%8ET( &./'?)T(/'../&)
Aa G %/<8.'8
%8.8.&.
Aa G <.=88
Ab G % 6 Aa
G %4 <.=88G <.%''
HU# 0a1 & AIRTE# 0G1
a G &./'?
b G '.=/'
nab G 4<.<=8
Aa G '.=/' W'.=/'4 D4<.<=8T&./'?EX
(&./'?)
.
I ('.=/')
.
6 .D<.<=8ET( &./'?)T('.=/')
Aa G .?...8
%%=.';<
Aa G<...&
Ab G % 6 Aa G %4 <...&G<.??<
HU# 0a1 & D#F 0G1
a G &./'?
Page ?? of &'
b G '%./8
nab G 4<.%&'
Aa G '%./8 W'%./84D4<.%&'T&./'?EX
(&./'?)
.
I ('%./8)
.
6 .D4<.%&'ET( &./'?)T('%./8)
Aa G %?=8..'&
%&'?.&=&
Aa G <.&%;
Ab G % 6 Aa G %4 <.&%; G <.<=/
%EI$HTS OF CIP#A & OTHER COMPANIES-
CIP#A 0a1 & AIRTE# 0G1
a G /'../&
b G '.=/'
nab G <.<;'
Aa G '.=/' W'.=/'4D<.<;'T/'../&EX
(/'../&)
.
I ('.=/')
.
6 .D<.<;'ET( /'../& )T('.=/')
Aa G %..??.
%%?'.8//
Aa G <.<%<
Ab G % 6 Aa G %4 D<.<%<E G 0.989
CIP#A 0a1 & D#F 0G1
a G /'../&
b G '%./8
Page ?= of &'
nab G <.&'%
Aa G '%./8W'%./84D<.&'%T/'../&EX
(/'../&)
.
I ('%./8)
.
6 .D<.&'%ET( /'../)T('%./8)
Aa G /?;.?./
.%8.&%;
Aa G %.?''
Ab G % 6 Aa G %4%.?''G 4<.?''
%EI$HTS OF AIRTE# & OTHER COMPANIES
AIRTE# 0a1 & D#F 0G1
a G '.=/'
b G '%./8
nab G 4<.<?8
Aa G '%./8 W'%./84D4<.<?8T'.=/'EX
('.=/')
.
I ('%./8)
.
6 .D4<.<?8ET( '.=/')T('%./8)
Aa G %?.8.<'&8
%?;/.8=<
Aa G <.&?=
Ab G % 6 Aa
G %4 <.&?= G <.<.%
CA#CU#ATION OF PORTFO#IO RIS.-
R
P
G DaTAaE
.
I DbTAbE
.
I .TaTbTAaTAbTnab
Page ?& of &'
$AI# & OTHER COMPANIES-
$AI# 0a1 & HU# 0G1-
a G '=.?%
b G &./'
Aa G <.%.'
Ab G <.=?8
nab G 4<.;''
"P G D'=.?%T<.%.'EE
.
I D9.340.875E
.
I.(48.71)TD&./'ETD<.%.'ETD<.=?8ETD4<.;''E
H :.75
$AI# 0a1 & CIP#A 0G1-
a G '=.?%%
b G /'../&
Aa G 4<.?<=
Ab G %.?<=
nab G <.&%/
"P G D'=.?%T4<.?<=E
.
ID/'../T%.?<E
.
I.D'=.?%E(34.23)T(0.70)TD%.?<ETD<.&%/E
G /<./?&
$AI# 0a1 & AIRTE# 0G1-
a G '=.?%
b G &./'
Page =< of &'
Aa G 4<.<./
Ab G %.<./
nab G <./.8
"P G D'=.?%T4<.<./E
.
ID&./'T%.<./E
.
I.D'=.?%E( &./')T(4<.<./)TD%.<./ETD<./.8E
G '.?<
$AI# 0a1 & D#F 0G1-
a G '=.?%
b G '%./8
Aa G <..<
Ab G <.?&
nab G <.?/;
"P G D'=.?%T<..E
.
ID'%./8<.?&E
.
I.D'=.?%ET( '%./8)T(<..<)TD<.?&ETD<.?/;E
G '<.?&S
HU# & OTHER COMPANIES
HU# 0a1 & CIP#A 0G1-
a G &./'
Page =% of &'
b G /'../
Aa G <.=8
Ab G <.%'
nab G 4<.'%8
"P G D&./'T<.=8E
.
I D/'../T<.%'E
.
I.D&./'E(/'../)(<.=8)TD<.%'ETD4<.'%8E

G ?.'8
HU# 0a1 & AIRTE# 0G1-
a G &./'
b G '.=/
AaG <...
AbG <.??
nab G 4<.<=8
"P G D&./'T<...E
.
ID'.=/T<.??E
.
I.D&./')('.=/)T(<...)TD<.??ETD 4<.<=8E
= '.%/
HU# 0a1 & D#F 0G1-
a G &./'
b G '%./8
AaG <.&%
AbG <.<=
nab G 4<.%&'
"P G D&./'T<.&%E
.
ID'%./8T<.<=E
.
I.D&./'E(41.35)T(0.91)TD<.<=ETD4<.%&'E
= =.8=
CIP#A & OTHER COMPANIES
CIP#A 0a1 & AIRTE# 0G1-
Page =. of &'
a G /'../
b G '.=/
Aa G <.<%
Ab G <.&=
nab G <.<;'
"P G D/'../T<.<%E
.
ID'.=/T<.&=E
.
I.D/'../E(4.83)T(0.01 )TD<.&=ETD<.<;'E
G '.=%
CIP#A 0a1 & D#F 0G1-
a G /'../
b G '%./8
Aa G %.?'
Ab G 4<.?'
nab G <.&'
"P G D/'../T%.?'E
.
I D'%./8T4<.?'E
.
I .D/'../E ('%./8) TD %.?') TD 4<.?'ETD<.&'E
G /..''S
AIRTE# & OTHER COMPANIES
Page =/ of &'
AIRTE# 0a1 & D#F 0G1-
a G '.=/
b G '%./8
Aa G <.&?
Ab G <.<.
nab G 4<.<?8
"P G D'.=/T<.&?E
.
ID'%./8T <.<.E
.
I.D'.=/E(41.35)T(0.97)TD <.<.ETD4<.<?8E
G '.?'
CA#CU#ATION OF PORTFO#IO RETURNS
Page =' of &'
"pGD"ATAAE I D"-TA-E
Ahere "p G portfolio return
"AG return of A AAG weight of A
"-G return of - A-G weight of -
CA#CU#ATION OF PORTFO#IO RETURN OF $AI# & OTHER
COMPANIES-
$AI# 0A1 & HU# 01-
"AG .%.=? AAG<.%.
"-G .<.=? A-G<.=?
"p G D.%.=?T<.%.E I D.<.=?T<.=?E
"p G .<.&&S
$AI# 0A1 & CIP#A 01-
"AG .%.=? AAG44<.?<
"-G .%.8% A-G%.?<
"p G D.%.=?T4<.?<E I D.%.8%T%.?<E
"p G .%..8S
$AI# 0A1 & AIRTE# 01-
Page =8 of &'
"AG .%.=? AAG4<.<./
"-G <.=' A-G%.<./
"p G D.%.=?T4<.<./E I D<.='T%.<./E
"p G <.8<
$AI# 0A1 & D#F 01-
"AG .%.=? AAG<..<
"-G %.&< A-G <.?&
"p G D.%.=?T<..<E I D%.&<T<.?&E
"p G 8.&'
CA#CU#ATION OF PORTFO#IO RETURN OF HU# & OTHER
COMPANIES
HU# 0A1 & CIP#A 01-
"AG .<.=? AAG<.=8
"-G .%.8% A-G <.%'
"p G D.<.=?T<.=8E I D.%.8%T<.%'E
"p G .<.&;
HU# 0A1 & AIRTE# 01-
"AG .<.=? AAG<...
"-G <.=' A-G<.??
"p G D.<.=?T<...E I D<.='T<.??E
"p G 8.''
HU# 0A1 & D#F 01-
Page =; of &'
"AG .<.=? AAG<.&%
"-G %.&< A-G <.<=
"p G D.<.=?T<.&%E I D%.&<T<.<=E
"p G %&..=
CA#CU#ATION OF PORTFO#IO RETURN OF CIP#A & OTHER
COMPANIES
CIP#A 0A1 & AIRTE# 01-
"AG .%.8% AAG4<.<%
"-G<.=' A-G<.&=
"p G D.%.8%T<.<%E I D<.='T<.&=E
"p G %.<;
CIP#A 0A1 & D#F 01-
"AG .%.8% AAG%.?'
"-G4%.&< A-G 4<.?'
"p G D.%.8%T%.?'E I D%.&<T4<.?'E
"p G /;.%%
CA#CU#ATION OF PORTFO#IO RETURN OF AIRTE# &
OTHER COMPANIES
AIRTE# 0A1 & D#F 01-
"AG <.=' AAG<.&?
"-G4%.&< A-G4<.<.
"p G D<.='T<.&?E I D%.&T<.<.E
"p G <.=;
Page =? of &'
PORTFOLIO RETURNS & RISKS
OF THE SELECTED STOCKS
Scrip A Scrip !ortfo"io Return !ortfo"io Ri#$
1AI) B9) .<.&& ;./%
1AI) #IP)A .%..8 /<./?
1AI) AI"T5) <.8< '.?<
1AI) +), 8.&' '<.?&
B9) #IP)A .<.&; ?.'8
B9) AI"T5) 8.'' '.%/
B9) +), %&..= =.8=
#IP)A AI"T5) %.<; '.=%
#IP)A +), /;.%% /..''
AI"T5) +), <.=; '.?'
Page == of &'
CHAPTER "I
FINDIN$SA SU$$ESTIONS & CONC#USION
Page =& of &'
FINDIN$S
Investors would be able to achieve when the returns of shares and debentures
"esultant would be known as diversified portfolio. Thus portfolio construction would
address itself to three major via, selectivity, timing and diversification. In case of
portfolio management, negatively correlated assets are most profitable. A rational
investor would constantly examine his chosen portfolio both for average return and
risk.
Individual returns on the selected stocks including 1AI), B9), #ipla, -harati
Airtel J +), are .%.=?S, .<.=?S, .%.8%S, <.='S and %.&<S respectively.
Individual risks on the selected stocks including 1AI), B9), #ipla, -harati
Airtel J +), are '=.?%S, &./'S, /'../S, '.=/S and '%./8S respectively.
#orrelation between all the companies is positive except B9) J All !ther
$tocks and Airtel J +), which means most of the combinations of portfolios
are at good position to gain in future.
Portfolios "eturns of +), J #ipla D/;.%%SE followed by 1ail J #ipla
D.%..8SE and 1AI) J B9) D20.99SE stood on the top while Portfolio
"eturns of 1AI) J Airtel D<.8<SE, +), J Airtel D<.=;SE and Airtel J #ipla
D%.<;SE stood at the bottom with minimum profits.
Portfolios "isk of 1AI) J +), D'<.?&SE and +), J #ipla D/..''SE are
very high while Portfolio "isks of Airtel with !ther #ompanies Daround 'SE
and stood at the bottom.

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SUGGESTIOS
!f the five stocks selected, all the stocks have given positive returns. ,#1
#ompany B9), Bealthcare #ompany #ipla and 9tilities #ompany 1AI)
have been giving good profits while Telecom #ompany Airtel and "eal 5state
#ompany +), have given profits between %4.S. Investors should put caution
while investing in Telecom and "eal 5state #ompanies.
#omparing the individual risks, 1AI), +), and #ipla are high risky
compared to the other securities like B9) and Airtel and it is suggested that
the investors should be careful while investing in high risk securities.
The investors who re0uire average returns with low risk can invest in B9).
All the investors who invest in the securities are ultimately benefited by
investing in selected scripts of Industries.
Investors are advised to invest in Portfolios of +), J #ipla D/;.%%SE
followed by 1AI) J#ipla D.%..8SE, 1AI) J B9) D.<.&&SE and #ipla J
B9) D.<.&;SE which have given the maximum returns.

)ow "isk investors are advised to keep away from 1AI) J +), Drisk of '<.
?&SE, 1AI) J #ipla D/<./?SE and prefer the Portfolios of #ipla J B9)
D&.<%;SE, Airtel J B9) D&.=..SE which have the least risk.
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$ome general rules to follow while investing in securities include:
(ever invest on the basis of an insider trader tip in a company which is not
sound Dinsider trader is person who gives tip for trading in securities based on
prices sensitive up price sensitive un published information relating to such
securityE.
(ever invest in the so called promoter 0uota of lesser known company.
(ever invest in a company about which you do not have appropriate
knowledge.
(ever at all invest in a company which doesn2t have a stringer
financial record your portfolio should not stagnate.
$huffle the portfolio and replace the slow moving sector with active
ones, investors were shatter when the technology, media, software, stops, have taken
a down slight.
(ever fall to magic of the scripts don2t confine to the blue chip
company2s look out for other portfolio that ensure regular dividends.
In the same way never react to sudden raise or fall in stock market index such
fluctuations in movement minor correction2s in stock market held in consolidation of
market their by reading out a weak player often taste on wait for the dust and dim to
settle to make your moveO.
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!O!"USIOS
Portfolio management is a process of encompassing many activities of
investment assets and securities. It is a dynamic and flexible concept and involves
regular and systematic analysis, judgment, and action. 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 main objective of the Portfolio management is to help the investors to
make wise choice between alternate investments without a post trading shares. Any
portfolio management must specify the objectives like aximum returns, !ptimum
"eturns, #apital appreciation, $afety etc., in the same prospectus.
This service renders optimum returns to the investors by proper selection and
continuous shifting of portfolio from one scheme to another scheme of from one plan
to another plan within the same scheme.
&Greater P'rt(')*' Retr! +*t, )e-- R*-. *- a)+a/- *- a! attra0t*"e 0'12*!at*'!3
!or t"e #nve$tor$.
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I#IO$RAPHY
oo<+ referre, :
Investment Analysis and Portfolio anagement, written by ."anganathan,
".adhumathi published by +orling Rindersley DIndiaE Pvt.)td., /
rd
5dititon.
Investment Analysis and Portfolio anagement, written by Prasanna #handra
Published by Tata c.1raw4Bill, /
rd
5dition.
$ecurity Analysis and Portfolio anagement, written by *.A.Avadhani,
Published by Bimayala Publishing house Pvt.)td.&
th
"evised 5diton.
$ecurity Analysis and Portfolio anagement, Published by c1raw4Bill,
Aritten by Punithavathi Pandian, =th 5dition.
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