SECURITY ANALYSIS AND PORTFOLIO MANAGEMENT

BY VISESH ZINDAL 08D1162 BBM B(FINANCE 1)

PORTFOLIO ANALYSIS ( CLIENT 1)

CLIENT ANALYSIS

NAME OF THE CLIENT:

CLIENT 1

AMOUNT INVESTED

30,00,000

NATURE OF RISK

LOW

RETURNS

MEDIUM AND LONG TERM

MINIMUM ROI DEMAND

12 %

ASSUMPTIONS

 It is assumed that his total disposable income to invest is after considering and
deducting taxes.  The client is presently of 45 years (age).  He wants medium and long term profits.  He will retire in next fifteen years

 He has no life insurance till now.

 The increase in salary has been nullified by the effect of inflation.  It is further assume that his portfolio will be evaluated and modified each year according to his needs.

INVESTMENT STRATEGY

TOTAL BREAK UP

ITEM

AMOUNT (In Rs.)

Equity

15%

9,00,000

Mutual Fund

15%

10,50,000

Commodities

10%

3,00,000

Bond

55%

6,00,000

Cash

5%

1,50,000

TOTAL

100%

30,00,000

EQUITY ALLOCATION

COMPANY

SECTOR

% INVESTED

% RETURN EXPECTED

Bank of India S.B.I L&T Infosys I.T.C SAIL CIPLA

Banking Banking Capital Goods Software F.M.C.G Steel Pharmaceuticals

10% 8% 5% 5% 10% 15% 10%

20% 22% 20% 20% 15% 25% 15%

Reliance Industries

Petrochemicals

37%

18%

TOTAL

100%

20.00%

PORTFOLIO ANALYSIS (CLIENT 2)

NAME OF THE CLIENT:

CLIENT 2

AMOUNT INVESTED

30,00,000

NATURE OF RISK

MEDIUM

RETURNS

MEDIUM AND LONG TERM

MINIMUM ROI DEMAND

24 %

ASSUMPTIONS

 It is assumed that his total disposable income to invest is after considering and
deducting taxes.  The client is presently of 35 years (age).  He wants medium and long term profits.  He will retire in next twenty five years.

 He has no life insurance till now.

 The increase in salary has been nullified by the effect of inflation.  It is further assume that his portfolio will be evaluated and modified each year according to his needs.

INVESTMENT STRATEGY

TOTAL BREAK UP

ITEM

AMOUNT (In Rs.)

Equity

30%

12,00,000

Mutual Fund

30%

12,00,000

Commodities

20%

3,00,000

Bond

15%

1,50,000

Cash

5%

1,50,000

TOTAL

100%

30,00,000

EQUITY ALLOCATION

COMPANY

SECTOR

% INVESTED

% RETURN EXPECTED

Bank of India S.B.I L&T Infosys I.T.C SAIL CIPLA

Banking Banking Capital Goods Software F.M.C.G Steel Pharmaceuticals

10% 8% 5% 5% 10% 15% 10%

20% 22% 20% 20% 15% 25% 15%

Reliance Industries

Petrochemicals

37%

18%

TOTAL

100%

20.00%

PORTFOLIO ANALYSIS ( CLIENT 3)

CLIENT ANALYSIS

NAME OF THE CLIENT:

CLIENT 3

AMOUNT INVESTED

30,00,000

NATURE OF RISK

HIGH

RETURNS

SHORT TERM

MINIMUM ROI DEMAND

36 %

ASSUMPTIONS

 It is assumed that his total disposable income to invest is after considering and
deducting taxes.  The client is presently of 25 years (age).  He wants medium and long term profits.  He will retire in next thirty five years  The increase in salary has been nullified by the effect of inflation.  It is further assume that his portfolio will be evaluated and modified each year according to his needs.

INVESTMENT STRATEGY

TOTAL BREAK UP

ITEM

AMOUNT (In Rs.)

Equity

65%

19,50,000

Mutual Fund

15%

4,50,000

Commodities

10%

3,00,000

Bond

5%

1,50,000

Cash

5%

1,50,000

TOTAL

100%

30,00,000

EQUITY ALLOCATION

COMPANY

SECTOR

% INVESTED

% RETURN EXPECTED

Bank of India S.B.I L&T Infosys I.T.C SAIL CIPLA

Banking Banking Capital Goods Software F.M.C.G Steel Pharmaceuticals

10% 8% 5% 5% 10% 15% 10%

20% 22% 35% 30% 15% 25% 35%

Reliance Industries

Petrochemicals

37%

28%

TOTAL

100%

30.00%

JUSTIFICATION

Why invest in equity?

Equity funds seek to provide maximum growth of capital with secondary emphasis on dividend or interest income.

The fund would have long-term growth potential but provide low current income.

What is our investment goal? Capital preservation Focus on absolute returns Long term growth

Bank of India

Fundamental Analysis
Compared to last year net profit of Bank of India rose 24.10% to ` 725.13 crore in the quarter ended June 2010

NPA Price-Earnings Ratio Earnings Per Share Percentage Advanced from 52 W Low

0.56% 14.1 32.87 50.11

Technical Analysis
From the concept of Dow Theory, it is observed that the stock is Bullish.

As the pattern indicates, the stock follows Inverse Head and Shoulder Top (IHST). Hence, a bullish development. We recommend an indication to buy.

State Bank of India

Fundamental Analysis
State Bank of India, in Quarter 1, reported a Profit After Tax of ` 29.1 billion, a growth of 25% Reserves & Surplus has also increased from ` 71,755.51 in March 09 to ` 82,500.70 in March 10 NPA Price-Earnings Ratio Earnings Per Share Percentage Advanced from 52 W Low 0.69% 14.7 194.38 67.12

Technical Analysis

From the concept of Dow Theory, it is observed that the price is rising since march and hence the stock is Bullish. Dow Theory Movements: Primary movement i.e. the trend is bearish Secondary movement range(from june) is rising from 2200

Larsen & Toubro Ltd.

Financial Analysis

Net

it

en & Toubro resulted to ` 666.17 crore in t e quarter ended June 2010

Sales rose 6.42% to Rs 7835.10 crore in t e quarter ended June 2010 as against Rs 7362.71 crore during t e previous quarter ended June 2009. NPA Pri E rnings Rati 30.3 61.51 33.62

Earnings Per Share Percentage Advanced from 5 W Low

Technical Anal sis

In t e above chart we see rising trendline with a breakout in beginning August creating a good opportunit to invest. However a support level is created where the prices is not expected to fall below ` 1700.

Infosys Technologies Ltd.

Financial Analysis
The Company has posted a net profit after tax and exceptional item of Rs 14310 million for the quarter ended June 30, 2010 as compared to Rs 14640 million for the quarter ended June 30, 2009. Total Income has increased from Rs 53690 million for the quarter ended June 30, 2009 to Rs 59950 million for the quarter ended June 30, 2010. NPA Price-Earnings Ratio Earnings Per Share Percentage Advanced from 52 W Low 25.7 107.67 27.8

Technical Analysis

There is going to be a very-very strong support point as well as good trend decider in near future. So Rs 2720-2730 as long as the stock is above that, hold on and in case it keeps going up enjoy the ride." Infosys is making a head and shoulder pattern.

ITC Ltd.

Financial Analysis
Net profit of ITC rose 21.81% to Rs 1070.31 crore in the quarter ended June 2010 as against Rs 878.70 crore during the previous quarter ended June 2009. Sales rose 16.13% to Rs 4816.63 crore in the quarter ended June 2010 as against Rs 4147.58 crore during the previous quarter ended June 2009. NPA Price-Earnings Ratio Earnings Per Share Percentage Advanced from 52 W Low 35.2 4.63 31.01%

Technical Analysis

ITC is in a long-term uptrend. As far as ITC is concerned, the stock has been in a long-term uptrend since 1985. So higher tops and bottoms across last twenty-five years. Having said that, in the current move itself, the stock has moved from Rs 115 to Rs 165-170. But the stock is in a long-term uptrend, so the future looks reasonably well assured from that point of view.

Cipla Ltd. Financial Analysis

Cipla Ltd has announced the following Unaudited results for the quarter ended June 30, 2010: The Company has posted a net profit of Rs 2574.20 million for the quarter ended June 30, 2010 as compared to Rs 2417.10 million for the quarter ended June 30, 2009. Total Income has increased from Rs 13859.20 million for the quarter ended June 30, 2009 to Rs 14965.10 million for the quarter ended June 30, 2010. NPA Price-Earnings Ratio Earnings Per Share Percentage Advanced from 52 W Low 23.3 13.16 16.44

Technical Analysis

The line chart shows Triangle or coil formation. After the upside and downside now at the breakout it is good time for investment at 302, support level can be seen at 270-280.

However there is a correction seen at this level, and bullish movements are expected.

Steel Authority of India Financial Analysis

The Company has posted a net profit of Rs 11766.50 million for the quarter ended June 30, 2010 as compared to Rs 13304.30 million for the quarter ended June 30, 2009. Total Income

has decreased from Rs 97035.10 million for the quarter ended June 30, 2009 to Rs 95195.20 million for the quarter ended June 30, 2010. NPA Price-Earnings Ratio Earnings Per Share Percentage Advanced from 52 W Low 11.3 16.41 18.69

Technical Analysis

The above trend shows a Double Top Formation ; therefore a pause is created after which the previous trend is likely to be followed. A bearish development signalling the prices likely to rise is expected. The last one or two months we have seen some good kind of bottoms in SAIL between around Rs 185 levels. So the stock is showing some comfort, some good support at these levels. So the bounce up is expected in future.

Reliance Industries Ltd. Financial Analysis

The Company has posted a net profit after tax of Rs 48510 million for the quarter ended June 30, 2010 as compared to Rs 36660 million for the quarter ended June 30, 2009. Total Income

has increased from Rs 318960 million for the quarter ended June 30, 2009 to Rs 589500 million for the quarter ended June 30, 2010.

NPA Price-Earnings Ratio Earnings Per Share Percentage Advanced from 52 W Low 18.8 50.80 5.10%

Technical Analysis

For the past few trading sessions, the stock has made a decent base at around Rs 970 levels. The blue chip company might not increase or decrease by 5% or so in a day; but for a long view till the company announces its quarter 2 results.

COMMODITIES SILVER

 Silver this year has outperformed gold by generating a year-to-date return of 22.6% against 11.8% registered by gold.

 The subprime crisis and interest rate cuts by the US federal reserve spurred buying interest in silver. The intermittent weakening of the dollar also pushed up prices.

 Silver is the cheapest among the currently traded precious metals,and has been party to the commodity bull run since 2004.

 The principal sources of silver are ores of copper, copper-nickel, lead and lead-zinc with mining of base metals gaining ground across the world , silver production is bound to increase

 Total mining production rose by 3.6% during 2007 and is expected to register a similar rise this year.  Unlike gold, silver has varied fabrication uses in the industry, apart from being a store of value and a jewellery item. Silver is the best electrical and thermal conductor of all metals hence it is used in many electrical application particularly in conductors.

 Due to current uncertainty in the financial and currency markets the bull run in commodities has become more prominent and attractive for investors.

 Moreover, in the long term the poor mans gold may be a better investment bet than gold per say , as silver is likely to continue outperforming the yellow metal.

GOLD

 Traders believe that physical demand for gold would continue to be robust due to the upcoming festival season.

 The down trend in gold has been the marked decline in physical demand for gold at high levels especially in price sensitive markets such as India.So investing in gold at low rates and expecting it to rise in the future is very predictable and will prove profitable.

RISK ANALYSIS

 Their does exist risk in the above portfolio which is medium in nature

 In order to minimize the risk instruments such as bonds, savings have been made a part of the above portfolio.

 The highest degree of risk in the above portfolio lies in the equity share which is backed up by instrument such as bond which carry the least risk.  Since we have assumed the investor to be at an age of 45 years old, we have selected medium risk for the above portfolio.

The above diagram depicts that the portfolio we have chosen is has a medium risk. If we had invested only in assets it would have come under risk free asset but we have chosen a diversified portfolio which in the above picture is depicted as market portfolio.