A

Project Study Report

On
Training Undertaken at
SHAREKHAN LIMITED

Titled
“PORTFOLIO MANAGEMENT SERVICES -AN INVESTMENT OPTION”

Submitted in partial fulfillment for the

Award of degree of
MASTER OF BUSINESS ADMINISTRATION

Submitted by Submitted To
Ashish Kumar Goyal Dr. Jyotsna Mehta
MBA Part – II (3rd sem.)
(2010-2011)

SUBODH INSTITUTE OF MANAGEMENT & CAREER STUDIES

 BR Shah MBA Block, Rambagh Circle,Jaipur- 302004

August 07,2010

To Whomsoever It May Concern

This is to certify that Mr. Ashish Kumar Goyal, student of MBA,“Subodh

Institute of Management & Career Studies (SIMCS), Jaipur” has undergone his 45
days of summer Training program in Finance with our organization starting from June
21st 2010 to 05th August 2010 as a requirement of his curriculum.

He took keen interest in all the responsibilities assigned to him, he has worked on a
project titled “PORTFOLIO MANAGEMENT SERVICES (PMS)” and his
performance during the course of project was good.

He also participated in different activities like marketing & research.

We wish good luck for his future endeavors.

Sharekhan Limited

Rohan Sharma

(Branch Manager)

Page 2
 CERTIFICATE OF FACULTY GUIDE

This is to certify that the Project entitled “PORTFOLIO MANAGEMENT

SERVICES – AN INVESTMENT OPTION” in Jaipur City (conducted during the
Summer Training Undertaken at Sharekhan Limited, Jaipur) submitted in partial
fulfillment for the award of degree of “MASTER OF BUSINESS
ADMINISTRATION” to “Subodh Institute of Management & Career Studies
(SIMCS), Jaipur” is a record of bonafide research work carried out by Ashish
Kumar Goyal under my supervision and guidance.

Date………………

Place………….. Dr. Jyotsna Mehta

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 Student Declaration

I hereby declare that this Summer Internship Project Report entitled “PORTFOLIO
MANAGEMENT SERVICES –AN INVESTEMNET OPTION” in ShareKhan
Limited (Sharma Agencies, Jaipur) submitted in partial fulfillment of requirement of
Master of Business Administration(MBA) to the Subodh Institute of Management
& Career Studies (SIMCS),Jaipur is based on primary and secondary data founded by
me in various department ,books ,magazines and websites .

Place:- Jaipur Ashish Kumar Goyal

Date:………………..

Page 4
 PREFACE

MBA is the one of the most reputed professional coures in the field of
Management.It include theory as well as its practical knowledge. Summer Training
is an integral part of MBA programe, as through this students acquire knowledge
of real happenings of the surroundings. So in Third semester each student at
Subodh Institute of Management & Career Studies (SIMCS), Jaipur” need to
submit a Summer Training Project report .

This knowledge serves the purposes of acquainting the student with economic
environment of an organisation in which student have to work hard in future .Only
theoretical knowledge is not enough but its practical knowledge is also required to
be learned.

I was fortunate enough to have an opportunity of submitting report on the topic

“PORTFOLIO MANAGEMENT SERVICES – AN INVESTMENT OPTION”
Training Undertaken at sharekhan Limited.It contain introduction of stock
exchange and company profile of sharekhan & product and services offered by
sharekhan and Research methodology used during the summer training and also
include intro of pms, Benefits of pms & Detailed information about the pms
provided by Sharekhan Limited.

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 ACKNOWLEDGEMENT

“Expression of feelings by words makes them less significant when it comes to make
statement of gratitude”

With regard to my Project with Share Khan, Jaipur, I would like to thank each and every one
who offered help, guidelines and support whenever required.
I express my sincere thanks to my project guide, Mr. Rohan Sharma (Branch Manager)
Sharekhan Ltd. for guiding me right from the inception till the successful completion of the
project. I sincerely acknowledge them for extending their valuable guidance, support for
literature, critical reviews of project and the report and above all the moral support he had
provided to me with all stages of this project.
I would also like to thank the faculty guide Dr. Jyotsna Mehta, for their help and cooperation
throughout our project.
Last, but not the least, my heartfelt love for my parents and my friends, whose constant
support and blessings kept me enthusiastic throughout this project.

Ashish Kumar Goyal

Page 6
 EXECUTIVE SUMMARY

Investing is both Arts and Science. Every Individual has their own specific financial need
and expectation based on their risk taking capabilities, whereas some needs and expectation
are universal. Therefore, we find that the scenario of the Stock Market is changing day by day
hours by hours and minute by minute. The evaluation of financial planning has been
increased through decades, which can be best seen in customers. Now a day’s investments
have become very important part of income saving.

In order to keep the Investor safe from market fluctuation and make them profitable,
Portfolio Management Services (PMS) is fast gaining Investment Option for the High Net
worth Individual (HNI).There is growing competition between brokerage firms in post reform
India. For investor it is always difficult to decide which brokerage firm to choose.

The research design is analytical in nature. A questionnaire was prepared and distributed
to Investors. The investor’s profile is based on the results of a questionnaire that the
Investors completed. The Sample consists of 100 investors from various broker’s premises.
The target customers were Investors who are trading in the stock market.

In order to identify the effectiveness of Sharekhan PMS services this Research is carried
throughout the area of Jaipur. At the time of investing money everyone look for the Risk
factor involve in the Investment option. The Report is prepared on the basis of Research work
done through the different Research Mythology the data is collected from both the source
Primary sources which consist of Questionnaire and secondary data is collected from
different sources such as Company website, Magazine and other sources.

As the PMS services of Sharekhan Limited have the best result in its field .It has given
43.50% return in Trailing stops, 94.30%return in Nifty and 38.10% in Beta Portfolio which is
the result when the Market was not doing well from last one year.

In this project I have shown the details of financial planning as well as wealth
management so as to understand about the customer’s needs and wants with respect to
market and how a client’s portfolio can be designed and what factors a portfolio manager
must consider for designing a portfolio.

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 CHAPTE
R TABLE OF CONTENTS PAGE NO.
CHAPTER- INTRODUCTION OF THE
9-19
1 INDUSTRY
Introduction to stock exchange 10-15
Introduction to Study 16-19
CHAPTER- NTRODUCTION TO
20-32
2 ORGANIZATION
Work structure of Sharekhan 23-24
Reasons to Choose Sharekhan 25-26
Product & services offered by
27-32
Sharekhan
CHAPTER- RESEARCH METHODOLOGY
3 33-40
3.1 Title of the project 34
3.2 Duration of the study 34
3.3 Objective of the Project 34
3.4 Type of Research 35
3.5 Data Collection & Sample
Design 36
3.6 Scope of the study 37
3.7 Observations and findings 38-39
3.8 Limitation of the project 40
CHAPTER- PORTFOLIO MANAGEMENT
4 SERVICES 41-76
Need of PMS 43
Objective of PMS 44
Portfolio Construction 45-50
Risk and Risk Aversion 51-53
Risk versus Return 54-55
Portfolio Diversification 56-59
Techniques of PMS 60-64
Sharekhan PMS 65-76
CHAPTER- DATA ANALYSIS &
5 INTERPRETATION 77-88
CHAPTER- SWOT ANALYSIS OF
6 SHAREKHAN 89-90

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 CHAPTER- CONCLUSION
7 91-92
CHAPTER- RECOMMENDATIONS &
8 SUGGESTIONS 93-94
ANNEXURE 95-96
BIBLIOGRAPHY 97

CHAPTER-1

INTRODUCTION
OF THE
INDUSTRY

Page 9
 INTRODUCTION TO STOCK EXCHANGE

The emergence of stock market can be traced back to 1830. In Bombay, business passed
in the shares of banks like the commercial bank, the chartered mercantile bank, the chartered
bank, the oriental bank and the old bank of Bombay and shares of cotton presses. In
Calcutta, Englishman reported the quotations of 4%, 5%, and 6% loans of East India
Company as well as the shares of the bank of Bengal in 1836. This list was a further
broadened in 1839 when the Calcutta newspaper printed the quotations of banks like union
bank and Agra bank. It also quoted the prices of business ventures like the Bengal bonded
warehouse, the Docking Company and the storm tug company.

Between 1840 and 1850, only half a dozen brokers existed for the limited business. But
during the share mania of 1860-65, the number of brokers increased considerably. By 1860,
the number of brokers was about 60 and during the exciting period of the American Civil war,
their number increased to about 200 to 250. The end of American Civil war brought
disillusionment and many

Failures and the brokers decreased in number and prosperity. It was in those troublesome
times between 1868 and 1875 that brokers organized an informal association and finally as
recited in the Indenture constituting the “Articles of Association of the Exchange”.

On or about 9th day of July,1875, a few native brokers doing brokerage business in
shares and stocks resolved upon forming in Bombay an association for protecting the
character, status and interest of native share and stock brokers and providing a hall or
building for the use of theMembers of such association.

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 As a meeting held in the broker’ Hall on the 5th day of February, 1887, it was resolved to
execute a formal deal of association and to constitute the first managing committee and to
appoint the first trustees. Accordingly, the Articles of Association of the Exchange and the
Stock Exchange was formally established in Bombay on 3rd day of December, 1887. The
Association is now known as “The Stock Exchange”
The entrance fee for new member was Re.1 and there were 318 members on the list,
when the exchange was constituted. The numbers of members increased to 333 in 1896, 362
in 1916and 478 in 1920 and the entrance fee was raised to Rs.5 in 1877, Rs.1000 in 1896,
Rs.2500 in 1916 and Rs. 48,000 in 1920. At present there are 23 recognized stock
exchanges with about 6000 stockbrokers. Organization structure of stock exchange
varies.

14 stock exchanges are organized as public limited companies, 6 as companies limited by

guarantee and 3 are non-profit voluntary organization. Of the total of 23, only 9 stock
exchanges have been permanent recognition. Others have to seek recognition on annual
basis.
These exchange do not work of its own, rather, these are run by some persons and with
the help of some persons and institution. All these are down as functionaries on stock
exchange. These are:

i. Stockbrokers
ii. Sub-broker
iii. Market makers
iv. Portfolio consultants etc.

1.Stockbrokers: Stock brokers are the members of stockexchanges. These are the persons
who buy, sell or deal insecurities. A certificate of registration from SEBI ismandatory to act as
a broker. SEBI can impose certainconditions while granting the certificate of registrations. It’s
obligatory for the person to abide by the rules,regulations and the buy-law. Stock brokers are
commission broker, floor broker, arbitrageur etc.

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2. Sub-broker: A sub-broker acts as agent of stock broker.He is not a member of a stock
exchange. He assists the investors in buying, selling or dealing in securities through
stockbroker. The broker and sub-broker should enter into an agreement in which obligations
of both should be specified. Sub-broker must be registered SEBI for a dealing in securities.
For getting registered with SEBI, he must fulfill certain rules and regulation.
3. Market Makers: Market maker is a designated specialist in the specified securities. They
make both bid and offer at the same time. A market maker has to abide by bye-laws, rules
regulations of the concerned stock exchange. He is exempt from the margin requirements. As
per the listing requirements, a company where the paid-up capital is Rs. 3 Crore but not more
than Rs. 5 Crore and having a commercial operation for less than 2 years should appoint a
market maker at the time of issue of securities.

4. Portfolio Consultants: A combination of securities such as stocks, bonds and money

market instruments is collectively called as portfolio. Whereas the portfolio consultants are
the persons, firms or companies who advise, direct or undertake the management or
administration of securities or funds on behalf of their clients.
Traditionally stock trading is done through stock brokers, personally or through
telephones.
As number of people trading in stock market increase enormously in last few years, some
issues like location constrains, busy phone lines, miss communication etc start growing in
stock broker offices. Information technology (Stock Market Software) helps stock brokers in
solving these problems with Online Stock Trading.
Online Stock Market Trading is an internet based stock trading facility. Investor can trade
shares through a website without any manual intervention from Stock Broker.

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 Various Stock Exchanges in India

At present there are 23 stock exchange recognized under the securities contract
(regulation),Act 1956. Those are………..

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1.Ahmadabad Stock Exchange Association Ltd.

2.Bangalore Stock Exchange (BgSE)

3.Bhubaneswar Stock Exchange Association(BhSE)

4. Bombay Stock Exchange (BSE)

5.Calcutta Stock Exchange(CSE)

6.Cochin Stock Exchange Ltd (CSE)

7.Coimbatore Stock Exchange (CSX)

8.Delhi Stock Exchange Association (DSE)

9.Guwahati Stock Exchange Ltd (GSE)

10.Hyderabad Stock Exchange Ltd.

11.Jaipur Stock Exchange Ltd (JSE)

12.Ludhiana Stock Exchange Association Ltd

13.Madras Stock Exchange

14.Madhya Pradesh Stock Exchange Ltd.

15.Magadh Stock Exchange Limited

16.Manglore Stock Exchange

17.Meerut Stock Exchange Ltd.

18.National Stock Exchange of India (NSE)

19.OTC Exchange of India

20.Pune Stock Exchange Ltd.

21.Saurashtra Kutch Stock Exchange Ltd.

22.Uttar Pradesh Stock Exchange Association

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23. Vadodara Stock Exchange Ltd.

Advantages of Stocks Trading

 Better returns: Actively trading stocks can produce better overall returns than simply
buying and holding.
 Huge Choice: There are thousands of stocks listed on markets around the world.
There is always a stock whose price is moving - it’s just a matter of finding them.
 Familiarity: The most traded stocks are in the largest companies that most of us have
heard of and understand - Microsoft, IBM, and Cisco etc.

Disadvantages of Stocks Trading

 Leverage: With a margined account the maximum amount of leverage

available for stock trading is usually 4:1. Meaning a $25,000 could trade up to
$100,000 of stock. This is pretty low compared to Forex trading or futures trading.
 Pattern Day Trader Rules: It requires at least $25,000 to be held in a trading account
if the trader completes more than 4 trades in a 5 day period. No such rule applies to
Forex trading or futures trading.
 Uptick Rule on Short Selling: A trader must wait until a stock price ticks up before
they can short sell it. Again there are no such rules in Forex trading or futures trading
where going short are as easy as going long.
 Need to Borrow Stock to Short: Stocks are physical commodities and if a
trader wishes to go short then the broker must have arrangements in place to borrow
that stock from a shareholder until the trader closes their position. This limits the
opportunities available for short selling. Contrast this to futures trading where selling is
as easy as buying.

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  Costs: Although online trading costs for stock trading are low they still add
considerably to the costs of day trading. Online futures trading are about 1/4 of the
cost for the equivalent value. In the UK 0.5% stamp duty is also levied on all share
purchases making trading virtually impossible, hence the popularity of spread betting.

INTRODUCTION TO STUDY

The field of investment traditionally divided into security analysis and portfolio
management. The heart of security analysis is valuation of financial assets. Value in turn is
the function of risk and return. These two concepts are in the study of investment .Investment
can be defined the commitment of funds to one or more assets that will be held over for some
future time period.
In today fast growing world many opportunities are available, so in order to move with
changes and grab the best opportunities in the field of investments a professional fund
manager is necessary.
Therefore, in the present scenario the Portfolio Management Services (PMS) is fast
gaining importance as an investment alternative for the High Net worth Investors.
Portfolio Management Services (PMS) is an investment portfolio in stocks, fixed income,
debt, cash, structured products and other individual securities, managed by a professional
money manager that can potentially be tailored to meet specific investment objectives.
When you invest in PMS, you own individual securities unlike a mutual fund investor, who
owns units of the entire fund. You have the freedom and flexibility to tailor your portfolio to
address personal preferences and financial goals. Although portfolio managers may oversee
hundreds of portfolio, your account may be unique.
Investment Management Solution in PMS can be provided in the following ways:
i. Discretionary
ii. Non Discretionary
iii. Advisory
Discretionary: Under these services, the choice as well as the timings of the investment
decisions rest solely with the Portfolio Manager.

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Non-Discretionary: Under these services, the portfolio manager only suggests the
investment ideas. The choice as well as the timings of the investment decisions rest solely
with the Investor.However the execution of trade is done by the portfolio manager.

Advisory: Under these services, the portfolio manager only suggests the investment
ideas.The choice as well as the execution of the investment decisions rest solely with the
Investor.
Rule 2, clause (d) of the SEBI (portfolio managers) Rules, 1993 defines the term
“Portfolio” as “total holding of securities belonging to any person”.
As a matter of fact, portfolio is combination of assets the outcomes of which cannot be
defined with certainty new assets could be physical assets, real estates, land, building, gold
etc. or financial assets like stocks, equity, debenture, deposits etc.
Portfolio management refers to managing efficiently the investment in the securities held
by professional for others.
Merchant banker and the portfolio management with a view to ensure maximum return by
such investment with minimum risk of loss of return on the money invested in securities held
by them for their clients. The aim Portfolio management is to achieve the maximum return
from a portfolio, which has been delegated to be managed by manger or financial institution.
There are lots of organization in the market on the lookout for the people like you who
need their portfolios managed for them .They have trained and skilled talent will work on your
money to make it do more for you.
Therefore, if any investors still insist on managing their own portfolio, then ensure you
build discipline into their investment. Work out their strategy and stand by it.

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 MYTHS ABOUT PMS

There are two most common myths found about Portfolio Management Services
(PMS) which we found among most of the Investors. They are as follows.
Myth No. 1:“PMS and Mutual Fund are Similar as the
investment option”
As in the Finance Basket both the PMS and Mutual Fund are used for minimizing risk and
maximize the profit of the Investors. The objectives are similar as in both the product but they
are different from each other in certain aspects. They are as follows.

 Management Side: In PMS, it’s ongoing personalized access to professional

money management services. Whereas, in Mutual fund gives personalize access to
money.

 Customization: In PMS, Portfolio can be tailored to address each investor's

specific needs. Whereas in Mutual Fund Portfolio structured to meet the fund's stated
investment objectives.

 Ownership: In PMS, Investors directly own the individual securities in their

portfolio, allowing for tax management flexibility, whereas in Mutual Fund Shareholders
own shares of the fund and cannot influence buy and sell decisions or control their
exposure to incurring tax liabilities.

 Liquidity: In PMS, managers may hold cash; they are not required to hold cash
to meet redemptions, whereas, Mutual funds generally hold some cash to meet
redemptions.

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  Minimums: PMS generally gives higher minimum investments than mutual
funds. Generally, minimum ranges from: Rs. 1 Crore + for Equity Options Rs. 5 Crore +
for Fixed Income Options Rs. 20 Lacs + for Structured Products, whereas in Mutual Fund
Provide ongoing, personalized access to professional money management services.

 Flexibility: PMS is generally more flexible than mutual funds. The Portfolio
Manager may move to 100% cash if it required. The Portfolio Manager may take his own
time in building up the portfolio. The Portfolio Manager can also manage a portfolio with
disproportionate allocation to select compelling opportunities whereas, in Mutual Fund
comparatively less flexible.

Myth No. 2: “PMS is more Risk free than other Financial

Instrument”

In Financial Market Risk factor is common in all the financial products, but yes it is true that
Risk Factor vary from each other due to its nature.All investments involve a certain amount of
risk, including the possible erosion of the principal amount invested, which varies depending
on the security selected. For example, investments in small and mid-sized companies tend to
involve more risk than investments in larger companies.

Page 19
 CHAPTER- 2

INTRODUCTION
TO THE
ORGANIZATION

Page 20
 Sharekhan is one of the leading retail brokerage of Citi Venture which is running
successfully since 1922 in the country. Earlier it was the retail broking arm of the Mumbai-
based SSKI Group, which has over eight decades of experience in the stock broking
business. Share khan offers its customers a wide range of equity related services including
trade execution on BSE, NSE, Derivatives, depository services, online trading, investment
advice etc.
Earlier with a legacy of more than 80 years in the stock markets, the SSKI group ventured
into institutional broking and corporate finance 18 years ago. SSKI is one of the leading
players in institutional broking and corporate finance activities. SSKI holds a sizeable portion
of the market in each of these segments. SSKI’s institutional broking arm accounts for 7% of
the market for Foreign Institutional portfolio investment and 5% of all Domestic Institutional
portfolio investment in the country.
It has 60 institutional clients spread over India, Far East, UK and US. Foreign Institutional
Investors generate about 65% of the organization’s revenue, with a daily turnover of over
US$ 2 million. The content-rich and research oriented portal has stood out among its
contemporaries because of its steadfast dedication to offering customers best-of-breed
technology and superior market information. The objective has been to let customers make
informed decisions and to simplify the process of investing in stocks

Mission of the Sharekhan is

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 “To educate and empower the individual investor to make better investment
decisions through
 QUALITY ADVICE
 INNOVATIVE PRODUCTS
 SUPERIOR SERVICES

PROFILE OF THE COMPANY

Name of the company : Sharekhan ltd.

Year of Establishment : 1925
Headquarter : Sharekhan SSKI
A-206 Phoenix House
Phoenix Mills Compound
Lower Parel
Mumbai - Maharashtra, INDIA- 400013
Nature of Business : Service Provider
Services : Depository Services, Online Services and
Technical Research.
Number of Employees : Over 5500
Revenue : Data Not Available
Website : www.sharekhan.com
Slogan : Your Guide to The Financial Jungle.

Vision
To be the best retail brokering Brand in the retail business of stock market.

Mission
To educate and empower the individual investor to make better investment
decisions through quality advice and superior service.

Sharekhan is infact-
• Among the top 3 branded retail service providers
• No. 1 player in online business

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• Largest network of branded broking outlets in the country serving more
Than 13,00,000 clients.

WORK STRUCUTRE OF SHAREKHAN

Sharekhan has always believed in investing in technology to build its business. The
company has used some of the best-known names in the IT industry, like Sun Microsystems,
Oracle, Microsoft, Cambridge Technologies, Nexgenix, Vignette, Verisign Financial
Technologies India Ltd, Spider Software Pvt. Ltd. to build its trading engine and content. The
Citi Venture holds a majority stake in the company. HSBC, Intel & Carlyle are the other
investors.

On April 17, 2002 Sharekhan launched Speed Trade and Trade Tiger, are net-based
executable application stimulates the broker terminals along with host of other information
relevant to the Day Traders. This was for the first time that a net-based trading station of this
caliber was offered to the traders. In the last six months Speed Trade has become a de facto
standard for the Day Trading community over the net. Sharekhan’s ground network includes
over 700+Shareshops in 130+ cities in India.

The firm’s online trading and investment site www.sharekhan.com - was launched on Feb
8, 2000. The site gives access to superior content and transaction facility to retail customers
across the country. Known for it’s jargon-free, investor friendly language and high quality
research, the site has a registered base of over 3 Lacs customers. The number of trading
members currently stands at over 7 Lacs. While online trading currently accounts for just over
5 per cent of the daily trading in stocks in India, Sharekhan alone accounts for 27 percent of
the volumes traded online.

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 The Corporate Finance section has a list of very prestigious clients and has many ‘firsts’
to its credit, in terms of the size of deal, sector tapped etc. The group has placed over US$ 5
billion in private equity deals.Some of the clients include BPL Cellular Holding, Gujarat
Pipavav, Essar, Hutchison, Planetasia, and Shopper’s Stop.Finally, Sharekhan shifted hands
and Citi venture get holds on it.

MANAGEMENT TEAM OF SHAREKHAN

DINESH MURIKYA : OWNER OF THE COMPANY

TARUN SHAH : CEO OF THE COMPANY
SHANKAR VAILAYA : DIRECTOR (OPERATIONS)
JAIDEEP ARORA : DIRECTOR (PRODUCTS & TECHNOLOGY)
PATHIK GANDOTRA : HEAD OF RESEARCH
RISHI KOHLI : VICE PRESIDENT OF EQUITY DERIVATIVE
NIKHIL VORA : VICE PRESIDENT OF RESEARCH

ACHIEVEMENTS OF SHAREKHAN

 Rated among the top 20 wired companies along with Reliance, HUJl,
Infosys, etc by ‘Business Today’, January 2004 edition
.
 Awarded ‘Top Domestic Brokerage House’ four times by Euro money and
Asia money.

 Pioneers of online trading in India amongst the top 3 online trading

websites from India. Most preferred financial destination amongst online
broking customers.

 Winners of “Best Financial Website” award.

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  India’s most preferred brokers within 5 years. “Awaaz customers Award
2005”.

REASON TO CHOOSE SHAREKHAN LIMITED

 Experience
SSKI has more than eight decades of trust and credibility in the Indian stock market. In
the Asia Money broker's poll held recently, SSKI won the 'India's best broking house for 2004'
award. Ever since it launched Sharekhan as its retail broking division in February 2000, it has
been providing institutional-level research and broking services to individual investors.

 Technology
With their online trading account one can buy and sell shares in an instant from any PC
with an internet connection. Customers get access to the powerful online trading tools that

will help them to take complete control over their investment in shares.

 Accessibility
Sharekhan provides ADVICE, EDUCATION, TOOLS AND EXECUTION services for
investors. These services are accessible through many centers across the country (Over 650
locations in 150 cities), over the Internet (through the website www.sharekhan.com) as well
as over the Voice Tool.

 Knowledge
In a business where the right information at the right time can translate into direct profits,
investors get access to a wide range of information on the content-rich portal,

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www.sharekhan.com. Investors will also get a useful set of knowledge-based tools that will

empower them to take informed decisions.

 Convenience
One can call Sharekhan’s Dial-N-Trade number to get investment advice and execute
his/her transactions. They have a dedicated call-center to provide this service via a Toll Free
Number 1800 22-7500 & 39707500 from anywhere in India.

 Customer Service
Its customer service team assist their customer for any help that they need relating to
transactions, billing, demat and other queries. Their customer service can be contacted via a
toll-free number, email or live chat on www.sharekhan.com.

 Investment Advice
Sharekhan has dedicated research teams of more than 30 people for fundamental and
technical research. Their analysts constantly track the pulse of the market and provide timely
investment advice to customer in the form of daily research emails, online chat, printed
reports etc.

BENEFITS FROM SHAREKHAN LIMITED

 Free Depository A/c

 Instant Cash Transfer
 Multiple Bank Option.
 Secure Order by Voice Tool Dial-n-Trade.
 Automated Portfolio to keep track of the value of your actual purchases.
 24x7 Voice Tool access to your trading account.
 Personalized Price and Account Alerts delivered instantly to your Mobile Phone
& E-mail address.
 Live Chat facility with Relationship Manager on Yahoo Messenger

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  Special Personal Inbox for order and trade confirmations.
 On-line Customer Service via Web Chat.
 Enjoy Automated Portfolio.
 Buy or sell even single share
 Anytime Ordering.

PRODUCT AND SERVICES OFFERD BY SHAREKHAN

1- Equity Trading Platform (Online/Offline).

2- Commodities Trading Platform (Online/Offline).

3- Portfolio Management Service.

4- Mutual Fund Advisory and Distribution.

5- Insurance Distribution.

6-Forex

6. Forex.

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 Sharekhan offers the following products

CLASSIC ACCOUNT
This is a User Friendly Product which allows the client to trade through website
www.sharekhan.com and issuitable for the retail investors who is risk-averse and hence
prefers to invest in stocks or who does not trade too frequently.

Features
 Online trading account for investing in Equity and Derivatives via www.sharekhan.com
 Live Terminal and Single terminal for NSE Cash, NSE, F&O & BSE.
 Integration of On-line trading, Saving Bank and Demat Account.
 Instant cash transfer facility against purchase & sale of shares.
 Competitive transaction charges.
 Instant order and trade confirmation by E-mail.
 Streaming Quotes (Cash & Derivatives).
 Personalized market watch.
 Single screen interface for Cash and derivatives and more.
 Provision to enter price trigger and view the same online in market watch.

SPEEDTRADE

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 SPEEDTRADE is an internet-based software application that enables you to buy and sell
in an instant.It is ideal for active traders and jobbers who transact frequently during day’s
session to capitalize on intra-day price movement.

Features
 Instant order Execution and Confirmation.
 Single screen trading terminal for NSE Cash, NSE F&O& BSE.
 Technical Studies.
 Multiple Charting.
 Real-time streaming quotes, tic-by-tic charts.
 Market summary (Cost traded scrip, highest clue etc.)
 Hot keys similar to broker’s terminal.
 Alerts and reminders.
 Back-up facility to place trades on Direct Phone lines.
 Live market debts.

DIAL-N-TRADE
Along with enabling access for trade online, the CLASSIC and SPEEDTRADE ACCOUNT
also gives Dial-n-trade services. With this service, one can dial Sharekhan’s dedicated phone
lines 1800-22-7500, 3970-7500.Beside this, Relationship Managers are always available on
Office Phone and Mobile to resolve customer queries.

SHARE MOBILE
Sharekhan had introduced Share Mobile, mobile based software where one can watch
Stock Prices, Intraday Charts, Research & Advice and Trading Calls live on the Mobile.(As
per SEBI regulations, buying-selling shares through a mobile phone are not yet permitted.)

PREPAID ACCOUNT

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 Customers pay Advance Brokerage on trading Account and enjoy uninterrupted trading in
their Account Beside this, great discount are also available (up to 50%)on brokerage.
Prepaid Classic Account: - Rs. 2000
Prepaid Speed trade Account: - Rs. 6000

IPO ON-LINE
Customers can apply to all the forthcoming IPOs online. This is quite hassle-free,
paperless and time saving. Simply allocate fund to IPO Account, Apply for the IPO and Sit
Back & Relax.

Mutual Fund Online

Investors can apply to Mutual Funds of Reliance, Franklin Templeton Investments, ICICI
Prudential, SBI, Birla, Sundaram, HDFC, DSP Merrill Lynch, PRINCIPAL and TATA with

Sharekhan.

Zero Balance ICICI Saving Account

Sharekhan had tied-up with ICICI bank for Zero Balance Account for Sharekhan’s Clients.
Now their customers can have a Zero Balance Saving Account with ICICI Bank after your
demat account creation with Sharekhan.

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HOW TO OPEN AN ACCOUNT WITH SHAREKHAN LIMITED?

For online trading with Sharekhan Ltd., investor has to open an account. Following are
the ways to open an account with Sharekhan Ltd.:
 One need to call them at phone number provided below and asks that he want
to open an account with them.
a. One can call on the Toll Free Number: 1-800-22-7500 to speak to a Customer Service
executive
b. Or If one stays in Mumbai, he can call on 022-66621111
 One can visit any one of Sharekhan Limited’s nearest branches. Sharekhan has
a huge network all over India (640 centers in 280 cities). One can also log on to
“http://sharekhan.com/Locateus.aspx” link to find out the nearest branch.
 One can send them an email at info@sharekhan.com to know about their

Page 31
products and services.
 One can also visit the site www.sharekhan.com and click on the option “Open an
Account” to fill a small query form which will ask the individual to give details regarding his
name, city he lives in, his email address, phone number, pin code of the city, his nearest
Sharekhan Ltd. shop and his preferences regarding the type of account he wants.
These information are compiled in the headquarter of the company that is in Mumbai
from where it is distributed through out the country’s branches in the form of leads on the
basis of cities and nearest share shops. After that the executives of the respective branches
contact the prospective clients over phone or through email and give them information
regarding the various types of accounts and the documents they need to open an account
and then fix appointment with the prospective clients to give them demonstration and making
them undergo the formalities to open the account. After that the forms that has collected from
the clients, is scrutinized in the branch and then it is sent to Mumbai for further processing
where after a few days the clients’ account are generated and activated. After the accounts
are activated, a Welcome Kit is dispatched from Mumbai to the clients’ address mentioned in
the documents provided by them.
As soon as the clients receive the Welcome Kit, which contains the clients’ Trading ID and
Trading Password, they can start trading and investing in shares.
DOCUMENTS REQUIREDFOR ACCOUNT OPENING

Apart from two passport size photographs, one needs to provide with the following
documents in order to open an account with Sharekhan Limited.:
 Photocopy of the clients’ PAN Card which should be duly attached
 Photo copy of any of the following documents duly attached which will serve as
Correspondence address proof:
a. Passport (valid)
b. Voter’s ID Card
c. Ration Card
d. Driving License (valid)
e. Electricity Bill (should be latest and should be in the name of the client)

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 f. Telephone Bill (should be latest and should be in the name of the client)
g. Flat Maintenance Bill (should be latest and should be in the name of the
client)
h. Insurance Policy (should be latest and should be in the name of the client)
i. Lease or Rent Agreement.
j. Saving Bank Statement** (should be latest)
 Two cheques drawn in favour of Sharkhan Limited, one for the Account Opening Fees
and the other for the Margin Money (the minimum margin money is Rs. 5000).
** A cancelled cheque should be given by the client if he provides Saving Bank
Statement as a proof for correspondence address.
NOTE: Only Saving Bank Account cheques are accepted for the purpose of
Opening an Account

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 CHAPTER-3

RESEARCH
METHODOLOGY

3.1 Title of the project

Portfolio Management Services- An Investment option

3.2 Duration of the study

The Study was carried out for the period of one and half months from 21 th june to
5th August 2010.

3.3 Objective of the project

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 Each research study has its own specific purpose. It is like to discover to Question
through the application of scientific procedure. But the main aim of our research to find out
the truth that is hidden and which has not been discovered as yet. Our research study has
two objectives:-

OBJECTIVES

 To know the concept of Portfolio Management.

 To know about the schemes offered by the different insurance companies, new IPO’s,
Mutual Funds.
 To know in depth about Insurance, Mutual Funds, Stock, Bonds etc.
 To know about the awareness towards stock brokers and share market.
 To study about the competitive position of Sharekhan Ltd in Competitive Market.
 To study about the effectiveness & efficiency of Sharekhan Ltd in relation to it’s
competitors.
 To study about whether people are satisfied with Sharekhan Services & Management
System or not.
 To study about the difficulties faced by persons while Trading in Sharekhan.
 To study about the need of improvement in existing Trading system.

3.4 Type of Research

RESEARCH DESISGN OF THE STUDY

This report is based on primary as well secondary data, however primary data collection
was given more importance since it is overhearing factor in attitude studies. One of the most
important users of research methodology is that it helps in identifying the problem, collecting,
analyzing the required information data and providing an alternative solution to the problem .It
also helps in collecting the vital information that is required by the top management to assist
them for the better decision making both day to day decision and critical ones.

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 The study consists of analysis about Investors Perception about the Portfolio
Management Services offered by Sharekhan Limited. For the purpose of the study 100
customers were picked up at random and their views solicited on different parameters.

The methodology adopted includes

 Questionnaire
 Random sample survey of customers
 Discussions with the concerned

3.5 Data collection & Sample Design

Sources of Data

 Primary data: Questionnaire

 Secondary data: Published materials of Sharekhan Limited. Such as periodicals,

journals, news papers, and website.

Sampling Plan

 Sampling:

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 Since Sharekhan Limited has many segments I selected Portfolio Management Services
(PMS) segment as per my profile to do market research. 100% coverage was difficult within
the limited period of time. Hence sampling survey method was adopted for the purpose of the
study.

 Population: (Universe) customers & non consumers of Sharekhan limited

 Sampling size:

A sample of hundred was chosen for the purpose of the study. Sample consisted of
Investor as based on their Income and Profession as well as Educational Background.

 Sampling Methods:

Probability sampling requires complete knowledge about all sampling units in the
universe. Due to time constraint non-probability sampling was chosen for the study.

 Sampling procedure:

From large number of customers & non consumers sample lot were randomly picked up
by me.

3.6 Scope of the Study

The study of the Portfolio Management Services is helpful in the following

areas.

 In today's complex financial environment, investors have unique needs which are
derived from their risk appetite and financial goals. But regardless of this, every
investor seeks to maximize his returns on investments without capital erosion. Portfolio
Management Services (PMS) recognize this, and manage the investments
professionally to achieve specific investment objectives, and not to forget, relieving the
investors from the day to day hassles which investment require.

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  It is offers professional management of equity investment of the investor with an aim to
deliver consistent return with an eye on risk.
 Identify the key Stock in each portfolio.
 To look out for new prospective customers who are willing to invest in PMS.
 To find out the Sharekhan, PMS services effectiveness in the current situation.
 It also covers the scenario of the Investment Philosophy of a Fund Manager.

3.7 OBSERVATION AND FINDING

 About 85% Respondents knows about the Investment Option, because remaining 15%
take his /her residential property as Investment, but in actual it not an investment
philosophy carries that all the Investment does not create any profit for the owner.

 More than 75% Investors are investing their money for Liquidity, Return and Tax
benefits.

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 At the time of Investment the Investors basically considered the both Risk and Return
in more %age around 65%.

 As among all Investment Option for Investor the most important area to get more
return is share around 22%after that Mutual Fund and other comes into existence.

 More than 76% of Investors feels that PMS is less risky than investing money in
Mutual Funds.

 As expected return from the Market more than 48% respondents expect the rise in
Income more than 15%, 32% respondents are expecting between 15-25% return.

 As the experience from the Market more than 34% Investor had lose their money
during the concerned year, whereas 20% respondents have got satisfied return.

 About 45% respondents do the Trade in the Market with Derivatives Tools Speculation
compare to 24% through Hedging .And the rest 31% trade their money in Investments.

 Around 57% residents manage their Portfolio through the different company whereas
43%Investor manage their portfolio themselves.

 The most important reasons for doing trade with Sharekhan limited is ‘Sharekhan
Research Department’ than its Brokerage rate Structure.

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 Out of hundred respondents 56% respondents are using Sharekhan PMs services.

 Investors preferred more than 45% equity Portfolio, 28%Balanceed Portfolio and about
27% Debt Portfolio with Sharekhan PMS.

 About 52% Respondents earned through Sharekhan PMS product, whereas 18%
investor faced loses also.

 More than 63% Investor are happy with the Transparency system of Sharekhan
limited.

 As based on the good and bad experience with Sharekhan limited around 86% are
ready to recommended the PMS of Sharekhan to their peers, relatives etc.

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3.8 LIMITATION OF THE PROJECT

 As only Jaipur was dealt in the survey so it does not represent the view of the total
Indian market.

 The sample size was restricted with hundred respondents.

 There was lack of time on the part of respondents.

 The survey was carried through questionnaire and the questions were based on
perception.

 There may be biasness in information by market participant.

 Complete data was not available due to company privacy and secrecy.

 Some people were not willing to disclose the investment profile.

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 CHAPTER-4

PORTFOLIO
MANAGEMENT
SERVICES

Page 42
PORTFOLIO MANGEMNT SERVICES (PMS)

Portfolio (finance) means a collection of investments held by an institution or a private

individual. Holding a portfolio is often part of an investment and risk-limiting strategy called
diversification. By owning several assets, certain types of risk (in particular specific risk) can
be reduced. There are also portfolios which are aimed at taking high risks – these are called
concentrated portfolios.
Investment management is the professional management of various securities (shares,
bonds etc) and other assets (e.g. real estate), to meet specified investment goals for the
benefit of the investors. Investors may be institutions (insurance companies, pension funds,
corporations etc.) or private investors (both directly via investment contracts and more
commonly via collective investment schemes e.g. mutual funds).
The term asset management is often used to refer to the investment management of
collective investments, whilst the more generic fund management may refer to all forms of
institutional investment as well as investment management for private investors. Investment
managers who specialize in advisory or discretionary management on behalf of (normally
wealthy) private investors may often refer to their services as wealth management or portfolio
management often within the context of so-called "private banking".
The provision of 'investment management services' includes elements of financial
analysis, asset selection, stock selection, plan implementation and on-going monitoring of
investments. Outside of the financial industry, the term "investment management" is often
applied to investments other than financial instruments. Investments are often meant to
include projects, brands, patents and many things other than stocks and bonds. Even in this
case, the term implies that rigorous financial and economic analysis methods are used.

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 NEED OF PMS

As in the current scenario the effectiveness of PMS is required. As the PMS gives
investors periodically review their asset allocation across different assets as the portfolio can
get skewed over a period of time. This can be largely due to appreciation / depreciation in the
value of the investments.

As the financial goals are diverse, the investment choices also need to be different to
meet those needs. No single investment is likely to meet all the needs, so one should keep
some money in bank deposits and / liquid funds to meet any urgent need for cash and keep
the balance in other investment products/ schemes that would maximize the return and
minimize the risk. Investment allocation can also change depending on one’s risk-return
profile.

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OBJECTIVE OF PMS

There are the following objective which is fulfilled by Portfolio Management Services.

1. Safety Of Fund: The investment should be preserved, not be lost, and should remain in
the returnable position in cash or kind.

2. Marketability: The investment made in securities should be marketable that means, the
securities must be listed and traded in stock exchange so as to avoid difficulty in their
encashment.

3. Liquidity: The portfolio must consist of such securities, which could be en-cashed without
any difficulty or involvement of time to meet urgent need for funds. Marketability ensures
liquidity to the portfolio.

4. Reasonable return: The investment should earn a reasonable return upto keep the
declining value of money and be compatible with opportunity cost of the money in terms of
current income in the form of interest or dividend.

5. Appreciation in Capital: The money invested in portfolio should grow and result into
capital gains.

6. Tax planning: Efficient portfolio management is concerned with composite tax planning
covering income tax, capital gain tax, wealth tax and gift tax.

7.Minimize risk: Risk avoidance and minimization of risk are important objective of portfolio
management. Portfolio managers achieve these objectives by effective investment

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 planning and periodical review of market, situation and economic environment affecting
the financial market.

PORTFOLIO CONSTRUCTION

The Portfolio Construction of Rational investors wish to maximize the returns on their
funds for a given level of risk. All investments possess varying degrees of risk. Returns come
in the form of income, such as interest or dividends, or through growth in capital values (i.e.
capital gains).
The portfolio construction process can be broadly characterized as comprising the
following steps:

1.Setting objectives.

The first step in building a portfolio is to determine the main objectives of the fund given
the constraints (i.e. tax and liquidity requirements) that may apply. Each investor has different
objectives, time horizons and attitude towards risk. Pension funds have long-term obligations
and, as a result, invest for the long term. Their objective may be to maximize total returns in
excess of the inflation rate. A charity might wish to generate the highest level of income whilst
maintaining the value of its capital received from bequests. An individual may have certain
liabilities and wish to match them at a future date. Assessing a client’s risk tolerance can be
difficult. The concepts of efficient portfolios and diversification must also be considered when
setting up the investment objectives.

2. Defining Policy.

Once the objectives have been set, a suitable investment policy must be established. The
standard procedure is for the money manager to ask clients to select their preferred mix of
assets, for example equities and bonds, to provide an idea of the normal mix desired. Clients
are then asked to specify limits or maximum and minimum amounts they will allow to be
invested in the different assets available. The main asset classes are cash, equities,

Page 46
gilts/bonds and other debt instruments, derivatives, property and overseas assets. Alternative
investments, suchas private equity, are also growing in popularity, and will be discussed in a
later chapter. Attaining the optimal asset mix over time is one of the key factors of successful
investing.

3. Applying portfolio strategy.

At either end of the portfolio management spectrum of strategies are active and passive
strategies. An active strategy involves predicting trends and changing expectations about the
likely future performance of the various asset classes and actively dealing in and out of
investments to seek a better performance. For example, if the manager expects interest rates
to rise, bond prices are likely to fall and so bonds should be sold, unless this expectation is
already factored into bond prices. At this stage, the active fund manager should also
determine the style of the portfolio. For example, will the fund invest primarily in companies
with large market capitalizations, in shares of companies expected to generate high growth
rates, or in companies whose valuations are low? A passive strategy usually involves buying
securities to match a preselected market index. Alternatively, a portfolio can be set up to
match the investor’s choice of tailor-made index. Passive strategies rely on diversification to
reduce risk. Out performance versus the chosen index is not expected. This strategy requires
minimum input from the portfolio manager. In practice, many active funds are managed
somewhere between the active and passive extremes, the core holdings of the fund being
passively managed and the balance being actively managed.

4.Asset selections.

Once the strategy is decided, the fund manager must select individual assets in which to
invest.Usually a systematic procedure known as an investment process is established, which
sets guidelines or criteria for asset selection. Active strategies require that the fund managers
apply analytical skills and judgment for asset selection in order to identify undervalued assets
and to try to generate superior performance.

5.Performance assessments.

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 In order to assess the success of the fund manager, the performance of the fund is
periodically measured against a pre-agreed benchmark – perhaps a suitable stock exchange
index or against a group of similar portfolios (peer group comparison).The portfolio
construction process is continuously iterative, reflecting changes internally and externally. For
example, expected movements in exchange rates may make overseas investment more
attractive, leading to changes in asset allocation. Or, if many large-scale investors
simultaneously decide to switch from passive to more active strategies, pressure will be put
on the fund managers to offer more active funds. Poor performance of a fund may lead to
modifications in individual asset holdings or, as an extreme measure; the manager of the
fund may be changed altogether.

TYPES OF ASSETS
The structure of a portfolio will depend ultimately on the investor’s objectives and on the
asset selection decision reached. The portfolio structure takes into account a range of
factors, including the investor’s time horizon, attitude to risk, liquidity requirements, tax
position and availability of investment’s.The main asset classes are cash, bonds and other
fixed income securities,equities, derivatives, property and overseas assets.

 Cash and cash instruments

Cash can be invested over any desired period, to generate interest income,in a range of
highly liquid or easily redeemable instruments, from simple bank deposits, negotiable
certificates of deposits, commercial paper (short-term corporate debt) and Treasury bills
(short term government debt) to money market funds, which actively manage cash resources
across a range of domestic and foreign markets. Cash is normally held over the short term
pending use elsewhere (perhaps for paying claims by a non-life insurance company or for
paying pensions), but may be held over the longer term as well. Returns on cash are driven
by the general demand for funds in an economy, interest rates, and the expected rate of
inflation. A portfolio will normally maintain at least a small proportion of its funds in cash in
order to take advantage of buying opportunities.

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  Bonds

Bonds are debt instruments on which the issuer (the borrower) agrees to make interest
payments at periodic intervals over the life of the bond – this can be for two to thirty years or,
sometimes, in perpetuity. Interest payments can be fixed or variable, the latter being linked to
prevailing levels of interest rates.Bond markets are international and have grown rapidly over
recent years.The bond markets are highly liquid, with many issuers of similar
standing,including governments (sovereigns) and state-guaranteed organizations.Corporate
bonds are bonds that are issued by companies.To assist investors and to help in the efficient
pricing of bond issues, many bond issues are given ratings by specialist agencies such as
Standard & Poor’s and Moody’s. The highest investment grade is AAA, going all the way
down to D, which is graded as in default.Depending on expected movements in future
interest rates, the capital values of bonds fluctuate daily, providing investors with the potential
for capital gains or losses. Future interest rates are driven by the likely demand/supply of
money in an economy, future inflation rates, political events and interest rates elsewhere in
world markets. Investors with short-term horizons and liquidity requirements may choose to
invest in bonds because of their relatively higher return than cash and their prospects for
possible capital appreciation. Long-term investors, such as pension funds, may acquire
bonds for the higher income and may hold them until redemption – for perhaps seven or
fifteen years. Because of the greater risk, long bonds (over ten years to maturity) tend to be
more volatile in price than medium- and short-term bonds, and have a higher yield.

 Equities

Equity consists of shares in a company representing the capital originally provided by

shareholders. An ordinary shareholder owns a proportional share of the company and an
ordinary share carries the residual risk and rewards after all liabilities and costs have been
paid.Ordinary shares carry the right to receive income in the form of dividends(once declared
out of distributable profits) and any residual claim on the company’s assets once its liabilities
have been paid in full. Preference shares are an other type of share capital. They differ from
ordinary shares in that the dividend on a preference share is usually fixed at some amount

Page 49
and does not change. Also, preference shares usually do not carry voting rights and, in the
event of firm failure, preference share holders are paid before ordinary share holders.Returns
from investing in equities are generated in the form of dividend income and capital gain
arising from the ultimate sale of the shares. The level of dividends may vary from year to
year, reflecting the changing profitability of a company. Similarly, the market price of a share
will change from day to day to reflect all relevant available information. Although not
guaranteed, equity prices generally rise over time, reflecting general economic growth, and
have been found over the long term to generate growing levels of income in excess of the
rate of inflation. Granted, there may be periods of time, even years, when equity prices trend
downwards – usually during recessionary times. The overall long-term prospect, however, for
capital appreciation makes equities an attractive investment proposition for major institutional
investors.

 Derivatives

Derivative instruments are financial assets that are derived from existing primary assets
as opposed to being issued by a company or government entity. The two most popular
derivatives are futures and options. The extent to which a fund may incorporate derivatives
products in the fund will be specified in the fund rules and, depending on the type of fund
established for the client and depending on the client, may not be allowable at all.
A futures contract is an agreement in the form of a standardized contract between two
counter parties to exchange an asset at a fixed price and date in the future. The underlying
asset of the futures contract can be a commodity or a financial security. Each contract
specifies the type and amount of the asset to be exchanged, and where it is to be delivered
(usually one of a few approved locations for that particular asset). Futures contracts can be
set up for the delivery of cocoa, steel, oil or coffee. Likewise, financial futures contracts can
specify the delivery of foreign currency or a range of government bonds.The buyer of a
futures contract takes a ‘long position’, and will make a profit if the value of the contract rises
after the purchase. The seller of the futures contract takes a ‘short position’ and will, in turn,
make a profit if the price of the futures contract falls. When the futures contract expires, the
seller of the contract is required to deliver the underlying asset to the buyer of the contract.

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Regarding financial futures contracts, however, in the vast majority of cases no physical
delivery of the underlying asset takes place as many contracts are cash settled or closed out
with the offsetting position before the expiry date.
An option contract is an agreement that gives the owner the right, but not obligation, to
buy or sell (depending on the type of option) a certain asset for a specified period of time. A
call option gives the holder the right to buy the asset. A put option gives the holder the right to
sell the asset. European options can be exercised only on the options’ expiry date. US
options can be exercised at any time before the contract’s maturity date. Option contracts on
stocks or stock indices are particularly popular. Buying an option involves paying a premium;
selling an option involves receiving the premium. Options have the potential for large gains or
losses, and are considered to be high-risk instruments. Sometimes, however, option
contracts are used to reduce risk. For example, fund managers can use a call option to
reduce risk when they own an asset. Only very specific funds are allowed to hold options.

 Property

Property investment can be made either directly by buying properties, or indirectly by

buying shares in listed property companies. Only major institutional investors with long-term
time horizons and no liquidity pressures tend to make direct property investments. These
institutions purchase freehold and leasehold properties as part of a property portfolio held for
the long term, perhaps twenty or more years. Property sectors of interest would include
prime, quality, well-located commercial office and shop properties, modern industrial ware-
houses and estates, hotels,farmland and woodland. Returns are generated from annual rents
and any capital gains on realization. These investments are often highly illiquid.

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 Risk and Risk Aversion

Portfolio theory also assumes that investors are basically risk averse, meaning that, given
a choice between two assets with equal rates of return they will select the asset with lower
level of risk.
For example, they purchased various type of insurance including life insurance, Health
insurance and car insurance. The Combination of risk preference and risk aversion can be
explained by an attitude toward risk that depends on the amount of money involved.
A discussion of portfolio or fund management must include some thought given to the
concept of risk. Any portfolio that is being developed will have certain risk constraints
specified in the fund rules, very often to cater to a particular segment of investor who
possesses a particular level of risk appetite. It is, therefore, important to spend some time
discussing the basic theories of quantifying the level of risk in an investment, and to attempt
to explain the way in which market values of investments are determined

Definition of Risk

Although there is a difference in the specific definitions of risk and uncertainty, for our
purpose and in most financial literature the two terms are used interchangeably. In fact, one
way to define risk is the uncertainty of future outcomes. An alternative definition might be
the probability of an adverse outcome.

Composite risks involve the different risk as explained below:-

(1)Interest rate risk: -

It occurs due to variability cause in return by changes in level of interest rate. In long runs
all interest rate move up or downwards. These changes affect the value of security

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RBI, in India, is the monitoring authority which effectalises the change in interest rate. Any
upward revision in interest rate affects fixed income security, which carry old lower rate of
interest and thus declining market value. Thus it establishes an inverse relationship in the
prize of security.

TYPES RISK EXTENT

Cash equivalent Less vulnerable to interest rate risk

Long term Bond More vulnerable to interest rate risk.

(2) Purchasing power risk:

It is known as inflation risk also. This risk emanates from the very fact that inflation affects
the purchasing power adversely. Purchasing power risk is more in inflationary times in bonds
and fixed income securities. It is desirable to invest in such securities during deflationary
period or a period of decelerating inflation. Purchasing power risk is less in flexible income
securities like equity shares or common stuffs where rise in dividend income offset increase
in the rate of inflation and provide advantage of capital gains.

(3) Business risk:

Business risk emanates from sale and purchase of securities affected by business cycles,
technological change etc. Business cycle affects all the type of securities viz. there is cheerful
movement in boom due to bullish trend in stock prizes where as bearish trend in depression
brings downfall in the prizes of all types of securities.Flexible income securities are nearly
affected than fixrate securities during depression due to decline n the market prize.

(4) Financial risk:

Financial risk emanates from the changes in the capital structure of the company. It is also
known as leveraged risk and expressed in term of debt equity ratio. Excess of debts against

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equity in the capital structure indicates the company to be highly geared or highly levered.
Although leveraged company’s earnings per share (EPS) are more but dependence on
borrowing exposes it to the risk of winding up. For, its inability to the honor it’s commitments
towards the creditors are most important.
Here it is imperative to express the relationship between risk and return, which is depicted
graphically below

Maximize returns, minimize risks

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 RISK VERSUS RETURN

Risk versus return is the reason why investors invest in portfolios. The ideal goal in
portfolio management is to create an optimal portfolio derived from the best risk–return
opportunities available given a particular set of risk constraints. To be able to make decisions,
it must be possible to quantify the degree of risk in a particular opportunity. The most
common method is to use the standard deviation of the expected returns. This method
measures spreads, and it is the possible returns of these spreads that provide the measure of
risk.The presence of risk means that more than one outcome is possible. An investment is
expected to produce different returns depending on the set of circumstances that prevail.

For example, given the following for Investment A:

Circumstance Return(x) Probability(p)

I 10% 0.2
II 12% 0.3
III 15% 0.4
IV 19% 0.1

It is possible to calculate:

1. The expected (or average) return

Mean (average) = x = expected value (EV) = ∑px

Circumstan Return(x) Probability(p Px

ce )
I 10% 0.2 2.0
II 12% 0.3 3.6
III 15% 0.4 6.0
IV 19% 0.1 1.9

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 Expected Return (∑px) = 13.5%

2. The Standard deviation

Standard deviation(σ) = √ ∑p(x- x) 2

Also. Variance (VAR) is equal to the standard deviation squared or σ2

Circumsta Retur Probabilit Deviation

nce n y from p(x

I 10% 0.2
expected
-3.5%
-x)2 2.45

II 12% 0.3 -1.5% .68

III 15% 0.4 +1.5% 1.90

IV 19% 0.1 +5.5% 3.03

VARAIANCE= 7.06

Standard deviation (σ) = √Variance

= √ 7.06

= 2.66%

The standard deviation is a measure of risk, whereby the greater the standard deviation,
the greater the spread, and the greater the spread, the greater the risk.

If the above exercise were to be performed using an other investment that offered the
same expected return, but a different standard deviation, then the following result might
occur:

Page 56
 If the above exercise were to be performed using another investment that offered the
same expected return, but a different standard deviation, then the following result might
occur:

Plan Expected Return Risk(standard deviation)

Investment A 9% 2.5%
Investment B 9% 4.0%

Since both investments have the same expected return, the best selection of investment
would be Investment A, which provides the lower risk. Similarly, if there are two investments
presenting the same risk, but one has a higher return than the other, that investment would
be chosen over the investment with the lower return for the same risk.

In the real world, there are all types of investors. Some investors are completely risk
averse and others are willing to take some risk, but expect a higher return for that risk.
Different investors will also have different tolerances or threshold levels for risk–return trade-
offs – i.e. for a given level of risk, one investor may demand a higher rate of return than
another investor.

Portfolio Diversification

There are several different factors that cause risk or lead to variability in returns on an
individual investment. Factors that may influence risk in any given investment vehicle include
uncertainty of income, interest rates,inflation, exchange rates, tax rates, the state of the
economy, default risk and liquidity risk (the risk of not being able to sell on the investment). In
addition, an investor will assess the risk of a given investment (portfolio) within the context of
other types of investments that may already be owned ,i.e. stakes in pension funds, life
insurance policies with savings components, and property.

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 One way to control portfolio risk is via diversification, whereby investments are made in
a wide variety of assets so that the exposure to the risk of any particular security is limited.
This concept is based on the old adage ‘do not put all your eggs in one basket’. If an investor
owns shares in only one company, that investment will fluctuate depending on the factors in
fluencing that company. If that company goes bankrupt, the investor might lose 100 per cent
of the investment. If, however, the investor owns shares in several companies in different
sectors, then the likelihood of all of those companies going bankrupt simultaneously is greatly
diminished.Thus, diversification reduces risk. Although bankruptcy risk has been considered
here, the same principle applies to other forms of risk.

Covariance and Correlation

The goal is to hold a group of investments or securities within a portfolio potentially to

reduce the risk level suffered without reducing the level of return. To measure the success of
a potentially diversified portfolio, covariance and correlation are considered. Covariance
measures to what degree the returns of two risky assets move in tandem. A positive
covariance means that the returns of the two assets move together, whilst a negative
covariance means that they move in inverse directions.

Covariance

COV(x, y) = ∑p(x-x) (y-y)for two investments x and y, where p is the probability.

Covariance is an absolute measure, and covariance cannot be compared with one
another. To obtain a relative measure, the formula for correlation coefficient [r] is used.

Correlation coefficient

r = COVxy
σxσy
To illustrate the above, here is the example:

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Circumstanc Probability x-x y-y
∑p(x-x) (y-y)
e

I 0.2 +1.0 -3.5 -0.7

II 0.3 0 -1.5 0

III 0.4 +1.5 +1.5 0.9

IV 0.1 -4 +5.5 -2.2

COVxy=-2.0

For data regarding (y – y), see earlier example. Assume that a similar exercise has been
run for data regarding (x – x). Assume the variance or σ2 of x=2.45, and the variance or
σ2 of y = 7.06. Thus, the correlation coefficient would be
-2.0
r=
√ 2.45 √7.056
= -0.481

If, the same example is run again, but using a different set of numbers for y, a different
correlation coefficient might result of say, –0.988. It can be concluded that a large negative
correlation confirms the strong tendency of the two investments to move inversely.

Perfect positive correlation(correlation coefficient = +1) occurs when the returns from
two securities move up and down together in proportion. If these securities were combined in
a portfolio, the ‘offsetting’ effect would not occur.

Perfect negative correlation(correlation coefficient = –1) takes place when one security
moves up and the other one down in exact proportion. Combining these two securities in a
portfolio would increase the diversification effect.

Uncorrelated (correlation coefficient = 0) occurs when returns from two securities move
independently of each other – that is, if one goes up, the other may go up or down or may not

Page 59
move at all. As a result, the combination of these two securities in a portfolio may or may not
create a diversification effect. However, it is still better to be in this position than in a perfect
positive correlation situation.

Unsystematic and systematic risk

As mentioned previously, diversification diminishes risk: the more shares or assets held in
a portfolio or in investments, the greater the risk reduction. However, it is impossible to
eliminate all risk completely even with extensive diversification. The risk that remains is called
market risk; the risk that is caused by general market influences. This risk is also known as
systematic risk or non-diversifiable risk. The risk that is associated with a specific asset and
that can be abolished with diversification is known as unsystematic risk, unique risk or
diversifiable risk.

Total risk = Systematic risk + Unsystematic risk

Systematic risk = the potential variability in the returns offered by a security or asset caused
by general market factors, such as interest rate changes,inflation rate movements, tax rates,
state of the economy.

Unsystematic risk= the potential variability in the returns offered by a security or asset
caused by factors specific to that company, such as profitability margins, debt levels, quality
of management, susceptibility to demands of customers and suppliers.

TECHNOQUES OF PORTFOLIO MANAGEMENT

Page 60
 Various types of portfolio require different techniques to be adopted to achieve the desired
objectives. Some of the techniques followed in India by portfolio managers are summarized
below.

(1). Equity portfolio: Equity portfolio is affected by internal and external factors.

(a) Internal factors: Pertain to the inner working of the particular company of which
equity shares are held. These factors generally include:

(1) Market value of shares

(2) Book value of shares
(3) Price earnings ratio (P/E ratio)
(4) Dividend payout ratio

(b) External factors:

(1) Government policies

(2) Norms prescribed by institutions
(3) Business environment
(4) Trade cycles

(2). Equity stock analysis:

The basic objective behind the analysis is to determine the probable future – value of the
shares of the concerned company. It is carried out primarily fewer than two ways.

(a)Earnings per share

(b) Price earnings ratio

(a) Trend of earning:

 A higher price-earnings ratio discount expected profit growth. Conversely, a

downward trend in earning results in a low price-earnings ratio to discount anticipated
decrease in profits, price and dividend. Rising EPS causes appreciation in price of

Page 61
 shares, which benefits investors in lower tax brackets? Such investors have not pay
tax or to give lower rate tax on capital gains.
 Many institutional investor like stability and growth and support high EPS.
 Growth of EPS is diluted when a company finances internally its expansion program
and offers new stock.
 EPS increase rapidly and result in higher P/E ratio when a company finances it’s
expansion program from internal sources and borrowings without offering new stock.

(b) Quality of reported earning:

Quality of reported earnings affects P/E ratio. The factors that affect the quality of reported
earnings are as under:

 Depreciation allowances: -
Larger (Non Cash) deduction for depreciation provides more funds to company to
finance profitable expansion schemes internally. This builds up future earning power
of company.

 Research and development outlets: -

There is higher P/E ratio for a company, which carries R&D programs. R&D
enhances profit earning strength of the company through increased future sales.

 Inventory and other non-recurring type of profit: -

Low cost inventory may be sold at higher price due to inflationary conditions
among profit but such profit may not always occur and hence low P/E ratio.

(c)Dividend policy:
Dividend policy is significant in affecting P/E ratio. With higher dividend ratio, equity
price goes up and thus raises P/E ratio. Dividend rates are raised to push in share
prices up. Dividend cover is calculated to find out the time the dividend is protected, In
terms of earnings. It is calculated as under:

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 Dividend Cover = EPS / Dividend per Share

(d)Investors demand: Demand from institutional investors for equity also enhances
the P/E ratio.

(3) Quality of management:

Investors decide about the ability and caliber of management and hold and dispose of
equity academy. P/E ratio is more where a company is managed by reputed
entrepreneurs with good past records of management performance.

TYPES OF PORTFOLIOS

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 The different types of Portfolio which is carried by any Fund Manager to maximize profit
and minimize losses are different as per their objectives .They are as follows.

1. Agreesive Portfolio

Objective: Growth. This strategy might be appropriate for investors who seek
High growth and who can tolerate wide fluctuations in market values, over the short term.

2. Growth Portfolio

Objective: Growth. This strategy might be appropriate for investors who have
a preference for growth and who can withstand significant fluctuations in market value.

3. Balanced Portfolio

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 Objective: Capital appreciation and income. This strategy might be
appropriate for investors who want the potential for capital appreciation and some growth,
and who can with stand moderate fluctuations in market values

4. Conservative Portfolio

Objective: Income and capital appreciation. This strategy may be

appropriate for investors who want to preserve their capital and minimize fluctuations in
market value.

Sharekhan Portfolio Management Services

Page 65
 1. PRO PRIME

Product Approach

Investment will be keeping in mind 3 investment tenets.

1. Consistent, steady and sustainable returns.

2. Margin of Safety

3. Low Volatility

Product offering

Pro Prime is the ideal for investors looking at steady and superior with low and medium
risk appetite

The portfolio consists of a blend of quality blue chip and growth stocks ensuring a
balanced portfolio with relatively medium risk profile.

The portfolio constitutes of relatively large capitalization stocks, based on sector and
themes which have medium to long term growth potential.

Product Characteristics

 Bottom up stock selection

 In depth ,independent fundamental research

 High quality companies with relatively large capitalization

 Disciplined valuation approach applying multiple valuation measure.

 Medium to long term vision, resulting in low portfolio turnover.

Page 66
 How to invest?

 Minimum Investment : 5Lacs

 Lock in : 6 months

 Reporting: Access to website showing clients holding .Monthly reporting of portfolio

holding /transaction.

 Charges: 2.5% pa AMC (Annual Maintenances Charges) fees charged every quarter ,
0.5% brokerage ,20% profit sharing after 15% hurdle is crossed chargeable at the end
of fiscal year.

SHAREKHAN PROPRIME PERFORMANCE

BSE NSE NAV BSE NSE

DATE TOTAL MOVMENTS MOVMENTS RETURNS RETURNS RETURNS
30/06/2010 9,510,384.53 17,700.90 5312.50 1.8% 1.0% 1.2%
31/03/2010 9,341,971.87 17,527.77 5249.10 93.6% 80.5% 73.8%
31/03/2009 4,826,060.16 9,708.50 3020.95 -43.0% -37.9% -36.2%
31/03/2008 8,459,884.99 15,644.44 4734.50 15.8% 19.7% 23.9%
31/03/2007 7,305,890.21 13,072.10 3821.55 10.8% 15.9% 12.3%
31/03/2006 6,596,047.11 11,279.96 3402.55 75.5% 73.7% 67.1%

2. PRO ARBRITAGE

Product Approach

An opportunity lies in basis which is the difference between cash and future. Whenever
basis is high we buy the stocks and sell the future to lock in difference .The difference is
bound to be zero at expiry.

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Product Offered

Cash –future arbitrage: The product intends to spot low risk opportunities which will yield

more than the normal low risk product .Whenever such opportunity is spotted stocks will be

bought and to lock in the basis, future will be sold .This position will be liquated in the expiry

or before that if the basis vanishes early .Similarly the scheme will move on from opportunity

to opportunity.

Product Characteristics

Low Risk: This is relatively low risk product which can be compared with liquid funds
issued by mutual funds.

High return: Compared with other low risk products, this products offers an indicative
post tax return of 8 to 10% plus.

Product Details

 Minimum Investment:Rs.5 lacs

 Lock in :6 months

 Reporting: Fortnightly for portfolio Net worth, Monthly reporting pf portfolio Holding
/transaction.

 Charges: 0.035% brokerage for future ,0.07% for delivery

3. PRO TECH

Page 68
 Pro-tech using the knowledge of technique analysis and the power of depravities markets
to identify trading opportunities in the market .The protech line of the product is designed
around various risk/reward/volatility profiles for the different kind of investment needs.

Product Approach

Better performance is possible from superior market timing and from picking stocks before
inflation points in their trading cycles .Linear return are possible from having hedged/ sell
market positions in downtrends .Absolute return are targeted by focusing on finding trading
opportunities & not out performance of an index.

Product offered

1. Nifty Thirty :

Nifty futures will be bought and sold on the basis of an automated trading system
generated calls to go long/short. The exposure will never exceed the value of portfolio
i.e. no leveraging; but allows us to be short /hedged in Nifty in falling market therefore
allowing the client to earn irrespective of the market direction.

2. Beta Portfolio :

Positional trading opportunities are identified in the future segment based on

technical analysis .Inflection points in the momentum cycles are identified to go long
/short on stock/index futures with 1-2 months time horizon .The idea is to generate the
best possible return in the medium term irrespective of the direction of the market
without really leveraging beyond the portfolio value. Risk protection is done based on
stop losses on daily closing prices.

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 3. Star Nifty:

Swing trading technique and Dow theory is used to identify short –term reversal
levels for Nifty futures and ride with trend both on the long and short side This return
can be earned in bull and bear market .Stop and reverse means to reverse ones
position from long to short or vice a versa at the reversal levels simultaneously .The
exposure never exceeds value of portfolio i.e. there is no leveraging.

4. Trailing Stops.

Momentum trading techniques are used to spot short –term momentum of 5-10
days in stocks and stocks /index futures .Trailing stop loss method of risk management
or profit protection is used to lower the portfolio volatility and maximize return .Trading
opportunities are exposed both on the long side and the short side as the market
demands to get the best of both upward and downward trends.

Product Characteristics

 Using swing based index –trading systems stop and reverse .trend following and
momentum trading technique.

 Nifty based products for low impact cost and low product volatility

 Both long and short strategies to earn returns even in falling market.

 Trading in future market to allow for active risk protection using trailing stop losses.

How to invest?

 Minimum : Rs.5Lacs

Page 70
  Lock in : 6 months

 Reporting: Fortnightly reporting of portfolio Net Worth, monthly reporting of

portfolio Holding /Transaction.

 Charges: 0% AMC (Annual Maintenance Charges), 0.05% brokerage for

derivatives, 20% profit sharing on booked profit quarterly basis.

Protech Performance Report

PROTECH PERFORMANCE SUMMARY SINCE INCEPTION

INCEPTION 15-OCT-2009 01-FEB-2006 15-OCT-2009

BETA(NEW) NIFTY THIRFTY TRAILING STOPS
INCEPTION NAV 10.00 10.00 10.00

NAV as on 30/06/10 9.20 19.89 9.84

RETURNS(%) -8.00 98.90 -1.64

Nifty Thrifty:

NIFTY THRIFTY
Date NAV Sensex

01/02/2006 10.00 9859.26

30/06/2010 19.89 17700.90

Returns
98.90 79.54
(%)

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How it works:

Our first product is based completely on a mathematical model with zero human
intervention. This product has come out of its fifth draw-down period (in 28 years of back
testing) and the net asset value (NAV) is taking off to new heights.

Beta portfolio:

BETA PORTFOLIO
Date NAV Sensex
03/08/2007 10.00 15138.40
30/06/2010 9.20 17700.90
Returns
-8.00 16.93
(%)

How it works:

Our product is based on positional trading with a long and short model investing in plain vanilla
stock futures. In this, we identify stocks with greater risk-reward ratios with a time horizon of 1 to 2
months, based on the prevalent market situation.

Trailing Stops:

TRAILING STOPS
NAV Sensex
20/10/2007 10.00 17559.98
30/06/2010 9.84 17700.90

Returns (%) -1.60 0.80

How it works:

The trading strategy is to buy short-term momentum over a time frame of 1 to 5 days and
then book small profits consistently.

Page 72
4. ProTech Diversified

Product Approach

Aim – Absolute returns irrespective of market direction by long –short strategy applied on
basket of indexes and stocks
Disciplined trading approach with no human intervention based on back testing on indexes
and stocks
Invests in the following
 Nifty Futures
 Bank Nifty Futures
 Stock Futures

Advantages of ProTech-Diversified

 Non Toggle system

 Exposure to investments will be constant even after gains
 Helps in protecting the gains
 Reinvesting in case of draw-downs helps in faster recovery
 Non –leveraged product

Product Details

 Minimum Investment: Indian Resident Rs 5 lakhs,

For NRI's - Rs 50 Lacks
 Lock in: 6 months
 Fees: AMC fees : 0%
Brokerage: 0.05% only
Profit Sharing :20% profit sharing on booked profits on quarterly basis

Page 73
Performance Sheet

Performance for the Month ended June 2010

NAV as on 01-June-2010 10.07

NAV as on 30-June-2010 9.86
RETURNS (%) -2.07

Performance Summary Since Inception

As on 30 June 2010

INCEPTION NAV 10.00

NAV as on 30-June-2010 9.86
RETURNS (%) -1.35
OTHER PMS PROVIDED BY SHAREKHAN

1. Intraday Advisory Portfolio

 Ideal for Intraday Traders looking for aggressive returns with medium risk appetite
 Calls will be generated by Sharekhan Advisory Team
 Time Frame : Settlement of calls on closing Basis
 Is a Cash Market Portfolio

Intraday Advisory Portfolio - Key Features/Rules

Ticket size Rs. 1,00,000 & above
No of Scrips in portfolio Max.6
Upside returns potential 1-2%
Downside risk 0.5-1%
Stop loss stop loss will be given at the time call

Execution Initially RM at branch to do the execution

Shall be done to clients at the End of
Reporting day & Next day also
Product draw down 20% of clients corpus

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2.Smart Trade Portfolio

 Is a cash Market Delivery Portfolio

 Calls will be generated by Sharekhan Advisory Team
 Time Frame of 1 day – 1 month.
 Ideal for short term delivery trader lokking for aggressive returns with medium risk
appetite

Smart Trade Portfolio - Key Features/ Rules

Ticket size Rs. 1,00,000 & above
No of Scrips in portfolio Max.6
Upside returns potential 1-2%
Downside risk 0.5-1%
Stop loss stop loss will be given at the time call

Execution Initially RM at branch to do the execution

Shall be done to clients at the End of
Reporting day & Next day also
Product draw down 20% of clients corpus

3. Nifty Portfolio
• Is a Nifty – based derivative product
• Time frame of 1 day -15 days.
• Is aimed at traders who want to trade long – short in Nifty across all times frames

Page 75
 • Ample Liquidity & Low Impact Cost

Nifty Portfolio - Key Features/Rules

Ticket size Rs. 1,25,000 & above
No of lots in portfolio Max.3
Upside returns potential 1-8%
Downside risk 1-4%
Stop loss stop loss will be given at the time call

Execution Initially RM at branch to do the execution

Shall be done to clients at the End of
Reporting day & Next day also
Product draw down 20% of clients corpus

4. Derivative Portfolio

 Is a Derivative Segment Portfolio

 Time Frame of 1 day – 1 month
 Is aimed at Short Term Derivative trader
 Ideal for aggressive clients with risk appetite
 Calls generated by Sharekhan Advisory Team

Derivative Idea Portfolio - Key Features/Rules

Ticket size Rs. 5,00,000 & above
No of lots in portfolio Max.5
Upside returns potential 4-8%
Downside risk 1-4%
Stop loss stop loss will be given at the time call

Execution Initially RM at branch to do the execution

Shall be done to clients at the End of
Reporting day & Next day also
Product draw down 20% of clients corpus

Page 76
5. CTFT Portfolio

• Is aimed at traders who wants to carry position for tommorow

• Low Cost of Transaction
• Enjoy Gap Up Opening Benefits
• Call are flow at 3:15 PM
• Square off the position before 10:45 Am on next day
• Call are given on the basis of whole day market movement

CTFT Portfolio - Key Features/Rules

Ticket size Rs. 3,00,000 & above
No of lots in portfolio Max.4
Upside returns potential 1-4%
Downside risk 1-2%
Stop loss stop loss will be given at the time call

Execution Initially RM at branch to do the execution

Shall be done to clients at the End of
Reporting day & Next day also
Product draw down 20% of clients corpus

Page 77
 CHAPTER -5

DATA ANALYSIS AND

INTERPRETATION
Page 78
 1. Do you know about the Investment Option available?

Interpretation

As the above table shows the knowledge of Investor out of 100 respondent carried
throughout the Jaipur Area is only 85%.The remaining 15% take his/her residential property
as an investment. According to law purpose this is not an investment because of it is not
create any profit for the owner. The main problem is that in this time from year 2008-2009

Page 79
,the recession and the Inflation make the investor think before investing a even a Rs. 100.So
,it also create the problem for the Investor to not take interest in Investment option.

2. What is the basic purpose of your Investments?

Interpretation

As with the above analysis, it is found 75% people are interested in liquidity, returns and
tax benefits. And remaining 25% are interested in capital appreciations, risk covering, and
others. In the entire respondent it is common that this time everyone is looking for minimizing
the risk and maximizing their profit with the short time of period.
As explaining them About the Portfolio Management Services of Sharekhan, they were
quite interested in Protech Services.

Page 80
3. From which option you will get the best returns?

Page 81
 Interpretation

Most of the respondents say they will get more returns in Share Market. Since Share
Market is said to be the best place to invest to get more returns. The risk in the investment is
also high.
Similarly, the Investor are more Interested in Investing their money in Mutual Fund
Schemes as that is also very important financial product due to its nature of minimizing risk
and maximizing the profit. As the commodities market is doing well from last few months so
Investor also prefer to invest their money in Commodities Market basically in GOLD
nowadays.

Moreover, even who don’t want to take Risk they are looking for investing in Fixed Deposit
for long period of time.

4.“Investing in PMS is far safer than Investing in Mutual Fund”. Do you

agree?

Page 82
 Interpretation

In the above graphs it’s clear that 24% of respondent out of hundred feel that investing
their money in Mutual Fund Scheme are far safer than Investing in PMS. this is because of
lack of proper information about the Portfolio management services. As the basis is same for
the mutual fund and PMS but the investment pattern is totally different from each other and
which depends upon different risk factor available in both the Financial Products.

4. How much you carry the expectation in Rise of your Income from
Investments?

Page 83
Interpretation

The optimism is shown in the attitude of the respondents. The confidence was appreciable
with which they are looking forward to a rise in their investments. Major part of the sample
feels that the rise would be of around 15%. Only 8% of the respondents were confident
enough to expect a rise of upto 35%.

As all the respondents were considering the Risk factor also before filling the
questionnaire and they were asking about the performance report of all the PMS services
offered by Sharekhan limited.

6. If you invested in Share Market, what has been your experience?

Page 84
 Interpretation

20% of the respondents have invested in Share market and received satisfactory returns,
40% of the respondents have not at all invested in Share Market. Some of the investors face
problems due to less knowledge about the market. Some of the respondents don’t have
complete overview of the happenings and invest their money in wrong shares which result in
Loss. This is the reason most of the respondents prefer Portfolio Management Services to
trade now a days, which gives the Investor the clear idea when is the right time to buy and
right time to sell the shares which is recommended by their Fund Manger.

7. How do you trade in Share Market?

Page 85
 Interpretation

As we know that Share market is totally based on psychological parameters of Investors,

which changed as per the market condition, but at the same time the around 45%investor
trade on the basis of speculation and 31% depend upon Investment option Bonds, Mutual
Funds etc.

Moreover, the now a day’s Hedging is most common derivatives tools which is used by
the Investor to get more return from the Market ,this is mostly used in the Commodities
Market.

8. How do you manage your Portfolio?

Page 86
 Interpretation

About57% of the respondents say they themselves manage their portfolio and 43% of the
respondents say they depends on the security company for portfolio Management. 43% of
the respondents prefer PMS of the company because they don’t have to keep a close eye on
their investment; they get all the information time to time from their Fund Manager.
Moreover, talking about the Sharekhan PMS services they are far satisfied with the
Protech and Prop rime Performance during last year. They are satisfied with the quick and
active services of Sharekhan customer services where, they get the updated knowledge
about the scrip detail everyday from their Fund Manager.

9. If you trade with Sharekhan limited then why?

Page 87
 Interpretation

As the above research shows the reasons and the parameters on which investor lie on
Sharekhan and they do the trade.

Among hundred respondents 35% respondents do the trade with the company due to its
research Report, 28% based on Brokerage Rate whereas 22 % are happy with its Services.

Last but not the least, 15% respondents are depends upon the tips of Sharekhan which
gives them idea where to invest and when to invest.

At the time of research what I found is that still Sharekhan need to make the clients more
knowledge about their PMS product.

10. Which Portfolio Type you preferred?

Page 88
 Interpretation

The above analysis shows, in which portfolio the investor like to deal more in PMS.

As 45% investor likes to go for Equity Portfolio and 28% with Balanced Portfolio, whereas
around 27% investor like to, go for Debt Portfolio.

Page 89
 11. How was your experience about Portfolio Management services
(PMS) of Sharekhan Limited?

Interpretation

In the above analysis it is clear that the Investor have the good and the bad experience
both with the Sharekhan PMS services.

In this current scenario 52% of the Investor earned, whereas around 18% have to suffer
losses in the market. Similarly 30% of the Respondents are there in Breakeven Point (BEP),
where no loss and no profit.

Page 90
 CHAPTER – 6

SWOT
ANALYSIS
OF
SHAREKHAN

Page 91
1. STRENGTHS

• First Brokerage firm to go online

• Best Technological Tools

• Expert Reasearch Team

• User friendlly website

2. WEAKNESSES

• Provide very low leverage to customer

• Insufficient advertisement policy

• No acess to the rural market

3. OPPORTUNITIES

• Huge market

• Sharekhan having good customer relation stratergy so that it create good

opportunity to create goodwill and capture the market.

• Growing IPO create opportunity to capture the new market.

Page 92
4. THREATS

• High volatility of the share market.

• Stiff competition

• Government policy/ Restrictions

CHAPTER-7

CONCULSION

Page 93
 CONCLUSION

On the basis of the study it is found that Sharekhan Ltd is better services provider than
the other stock-brokers because of their timely research and personalized advice on what
stocks to buy and sell. Sharekhan Ltd. provides the facility of Trade tiger as well as
relationship manager facility for encouragement and protects the interest of the investors. It
also provides the information through the internet and mobile alerts that what IPO’s are
coming in the market and it also provides its research on the future prospect of the IPO. We
can conclude the following with above analysis.

 Sharekhan Ltd has better Portfolio Management services than Other Companies

 It keeps its process more transparent.

 It gives more returns to its investors.

 It charges are less than other portfolio Management Services

 It provides daily updates about the stocks information.

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 Investors are looking for those investment options where they get maximum returns
with less returns.

 Market is becoming complex & it means that the individual investor will not have the
time to play stock game on his own.

 People are not so much ware aware about the Investment option available in the
Market.

CHAPTER-8

RECOMMENDATIONS
&

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 SUGGESTIONS

RECOMMENDATIONS & SUGGESTIONS

 The company should also organize seminars and similar activities to enhance the
knowledge of prospective and existing customers, so that they feel more comfortable
while investing in the stock market.
 Investors must feel safe about their money invested.

 Investor’s accounts must be more transparent as compared to other companies.

 Sharekhan limited must try to promote more its Portfolio Management Services
through Advertisements.
 Sharekhan needs to improve more it’s Customer Services

 There is need to change in lock in period in all three PMS i.e.Protech, Proprime, Pro
Arbitrage.

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 ANNEXURE

QUESTIONNAIRE
NAME………………………………….

AGE…………………………………………

OCCUPATION……………………………... PHONE

NO..................................

1. Do you know about the Investments Option available?

A) YES B) NO

2. What is the basic purpose of your Investments?

A) Liquidity B) Return C) Tax Benefits D) Risk Covering

E) Capital Appreciation F) Others

3. From which option you will get the best returns?

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 A) Mutual Funds B) Shares C) Commodities Market D) Bonds

E) Fixed Deposits F) Property G) Others

4. “Investing in PMS is far safer than Investing in Mutual Fund”. Do you agree?

A) Yes B) No

5. How much you carry the expectation in Rise of your Income from Investments?

A) Upto 15% B) 15-25% C) 25-35% D) More than 35%

6. If you invested in Share Market, what has been your experience?

A) Satisfactory Return B) Burned Finger C) Unsatisfactory Result D) No

7. How do you trade in Share Market?

A) Hedging B) Speculation C) Investment

8. How do you manage your Portfolio?

A) Self B) Depends on the company for portfolio

9. If, you trade with Sharekhan limited then why?

A) Research B) Brokerage C) Services D) Investments Tips

10. Which Portfolio Type you preferred?

A) Equity B) Debt C) Balanced

11. How was your experience about Portfolio Management services (PMS) of Sharekhan
Limited?

A) Earned B) Faced Loss C) No profit No loss

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 BIBILOGRAPHY

WEBSITES

 www.sharekhan.com

 www.sebi.gov.in

 www.moneycontrol.com

 www.karvy.com

 www.valueresarchonline.com

 www.nseindia.com

 www.bseindia.com

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 Book Referred

 Kothari, C.R., Research Methodology, Second Edition, New Delhi,

New Age International (p) Ltd Publishers, 2006.
 Pandian, P., Security Analysis And Portfolio Management, Vikas
Publishers, 2007.

Magzines & Journals

 Value guide by Sharekhan

 Investors Eyes by Sharekhan

 Business world.

 The economist

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