Portfolio Management

CHAPTER I: INTRODUCTION
INTRODUCTION
Portfolio is a combination of securities such as stocks, bonds and money market instruments. The process of blending together the broad asset class so as to obtain optimum return with minimum risk is called portfolio construction. The finance industry has had an enviable contribution to the whole Global Business Market. For every type of Business we need many resources which are useful for the development of Business. Finance is one of the most important resources to start a business or to develop a Business. So, the first and foremost important resource is finance to start and to face the competition in the Business Market. In this competitive world every individual needs money to run to lead his life successfully. So, he follows different techniques to save his income in order to face future risks and uncertainties. Investing in securities is one of the ways where an individual mostly like to adopt as a source of income, because securities are those which may give him more returns and they are also more risky. Keeping in mind all the above this project work done for Data churn , to know the market position and a keen study is done on securities by taking 3 companies with their annual returns and companies information which is required is
collected from their company sites and magazines and successfully completed the project titled PORTFOLIO MANAGEMENT
NEED OF THE STUDY
1. The care taken in the construction of the portfolio should be extended to the review and revision of the portfolio. 2. Fluctuations that occur in the equity prices cause substantial gain or loss to the investors. 3. The investor should have competence and skill in the revision of the portfolio normally the average investor dislike to sell in the bull market with the anticipation of further rise.
OBJECTIVES
To find out the returns of the three firms chosen- ICICI, TCS & BHEL. To study the risk pattern of the chosen firms To understand portfolio selection process. To study the usefulness of efficient frontier technique in portfolio selection process.
RESEARCH METHODOLOGY
Research design or research methodology is the procedure of collecting, analyzing and interpreting the data to diagnose the problem and react to the opportunity in such a way where the costs can be minimized and the desired level of accuracy can be achieved to arrive at a particular conclusion. The methodology used in the study for the completion of the project and the fulfillment of the project objectives, is as follows: Market prices of the companies have been taken for the years of different dates, there by dividing the companies into 4 sectors. A final portfolio is made at the end of the year to know the changes (increase/decrease) in the portfolio.
Primary data:
The primary data information is gathered from data churn by interviewing Data churn executives.
Secondary data:
The secondary data is collected from various financial books, magazines and from stock lists of various newspapers and data churn as part of the training class undertaken for project.
TOOLS & TECHNIQUES Formulae used for Data Analysis:
1.
Return =
v _v v
e b
Ve = Value at the end Vb = Value at the beginning
2. Variance (2) =
( X )
N
2 ( ) =
3. Standard Deviation
4. Calculate of the maximum value = MAX (TOTAL RETURNS) 5. Calculate of the minimum value = MIN (TOTAL RETURNS)
LIMITATIONS
This study has been conducted purely to understand Portfolio Management for investors. Construction of Portfolio is restricted to three companies. Very few and randomly selected scrips / companies are analyzed from BSE listings. Detailed study of the topic was not possible due to limited size of the project. There was a constraint with regard to time allocation for the research study i.e. for a period of 45 days.
Period of the Study

I collected daily closing price of ICICI, BHEL, and TCS for the period of 6months, Oct 2009-March 2010
CHAPTER II
COMPANY PROFILE
COMPANY PROFILE DATA CHURN Financial Services is an independent financial research, consulting and strategy formulation organization. We analyze and present independent and unbiased opinion on the performance of Corporate, Mutual Funds, Banks, and Financial Institutions scattered across the world. We also help Individuals, Institutions and Corporates to formulate successful financial strategies based on meticulous planning and modeling. Our range of services include: Financial Planning, Financial Modeling, Financial Research, Company Analysis, Mutual Fund Analysis, Commodity Analysis, Fund Distribution, Stock Broking, Depository Services, Portfolio Management, Investment Management, Forex Management, and Financial Advisory Services. About Us: Making money grow is an art and only few master this precarious art. DATACHURN FINANCIAL SERVICES is one among them. We offer an array of financial solutions to Individuals, Institutions, Corporates (National and multiNational). We help them in Earning, Spending, Saving, and Investing. We access data from thousands of companies spread across the world. We monitor global financial markets round the clock. We are experts in churning plethora of financial data and deriving meaningful information at the speed of light, our continuous research enables us to do this task easily. Our financial experts will be ready to help you at your call or email. You may need our services to pick high-growth stocks; to identify successful Mutual Fund Schemes; identifying debt instruments matching your risk profile; design of tailormade portfolios; financial planning; financial modeling; financial research; retail and corporate loans etc.
To know more about our services and specific solutions we provide please e-mail to: info@datachurn.org
TEAM DATA CHURN: DATACHURN FINANCIAL SERVICES is a new age financial services organization, engaged in financial research, strategy formulation, consulting and advisory services, promoted by Dr. Y Rama Krishna. Dr. Ram -- as he is popularly known -- is an alumnus of IIM Ahmedabad and Gold medalist in MBA. He is currently involved in post dJANoral research in Behavioral Finance. His dJANoral thesis was in the field of Transformational Leadership from School of Management Studies JNTU, Hyderabad. Each year Dr. Ram and his team will provide training to hundreds of financial professionals through CMED School of Management, an educational arm of DATACHURN Financial Services, in the areas of financial research, financial planning, financial modeling, equity analysis, analysis of fixed income securities, derivative analysis etc. All the enrolled candidates will undergo a stringent training programme on par with international standards. After successful completion of the training programme they are absorbed into DATACHURN. STOCKS: Equity Research Indian stock markets are highly volatile and sensitive. Even a minute incident that takes place at any corner of the world will have influence on our stock markets. Currently Bombay Stock Exchange (BSE) has 7681 stocks and National Stock Exchange (NSE) holds 1233 stocks. However, active trading will take place only in case of limited number of stocks. Few of these stocks are listed in both the exchanges. For investment purpose picking a right stock from this list is Herculean task. It is assumed that investment in equity stocks will yield high returns which are associated with high risk. Before making an investment marision you need to recognize the dynamics of stock markets and also able to interpret the financial
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performance of the companies. This requires an expert knowledge in equity research; ability to analyze and interpret price movements; and competence to forecast future price. DATA CHURN Financial Services performs equity research at four levels: Business analysis Financial Statement Analysis Fundamental Analysis Technical Analysis
Historical analysis of the company may not suffice to make wise investment marision. You need to know how the company is going to perform in future, because its the future performance of the company that enhances your wealth. At DATA CHURN we analyze historical performance of the company for a minimum period of five years and will make a forecast for the coming five years. Mutual Funds : Do you wish to invest your modest money in blue chip stocks or low risk fixed income securities? Then mutual funds are the right choice for you. Mutual funds mobilize money in small amounts from large investors and will invest that pooled money in high yield stocks and bonds. As a small investor you may not be having sufficient funds, knowledge, resources, and time to make wise investment marision. You may expect mutual funds to perform in-depth study of securities, pick the right stocks and bonds on behalf of you. You are right in the sense that mutual funds make informed judgments. In India, currently thirty three mutual funds are offering thousands of schemes. The schemes range from high yield sector specific scheme to low risk money market scheme. For you, now choosing the right mutual fund and the right scheme has become a tricky task. You may need advice from an expert to choose the right scheme that suits your investment objectives.
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ABOUT STOCK MARKET: A stock market is a market for the trading of company stock, and derivatives of same; both of these are securities listed on a stock exchange as well as those only traded privately The Definition The term 'the stock market' is a concept for the mechanism that enables the trading of company stocks (collective shares), other securities, and derivatives. Bonds are still traditionally traded in an informal, over-the-counter market known as the bond market. Commodities are traded in commodities markets, and derivatives are traded in a variety of markets (but, like bonds, mostly 'over-thecounter'). The size of the worldwide 'bond market' is estimated at $45 trillion. The size of the 'stock market' is estimated at about $51 trillion. The world derivatives market has been estimated at about $300 trillion.[1] The major U.S. Banks alone are said to account for about $100 trillion. It must be noted though that the derivatives market, because it is stated in terms of notional outstanding amounts, cannot be directly compared to a stock or fixed income market, which refers to actual value. The stocks are listed and traded on stock exchanges which are entities (a corporation or mutual organization) specialized in the business of bringing buyers and sellers of stocks and securities together. The stock market in the United States includes the trading of all securities listed on the NYSE, the NASDAQ, the Amex, as well as on the many regional exchanges, the OTCBB, and Pink Sheets. European examples of stock exchanges include the Paris Bourse (now part of Euro next), the London Stock Exchange and the Deutsche Bores.
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Trading Participants in the stock market range from small individual stock investors to large hedge fund traders, who can be based anywhere. Their orders usually end up with a professional at a stock exchange, who executes the order. Some exchanges are physical locations where transactions are carried out on a trading floor, by a method known as open outcry. This type of auction is used in stock exchanges and commodity exchanges where traders may enter "verbal" bids and offers simultaneously. The other type of exchange is a virtual kind, composed of a network of computers where trades are made electronically via traders at computer terminals. Actual trades are based on an auction market paradigm where a potential buyer bids a specific price for a stock and a potential seller asks a specific price for the stock. (Buying or selling at market means you will accept any bid price or ask price for the stock.) When the bid and ask prices match, a sale takes place on a first come first served basis if there are multiple bidders or askers at a given price. The purpose of a stock exchange is to facilitate the exchange of securities between buyers and sellers, thus providing a marketplace (virtual or real). The exchanges provide real-time trading information on the listed securities, facilitating price discovery. The New York Stock Exchange is a physical exchange, where much of the trading is done face-to-face on a trading floor. This is also referred to as a "listed" exchange (because only stocks listed with the exchange may be traded). Orders enter by way of brokerage firms that are members of the exchange and flow down to floor brokers who go to a specific spot on the floor where the stock trades. At this location, known as the trading post, there is a specific person known as the specialist whose job is to match buy orders and sell orders. Prices are determined using an auction method known as "open outcry": the current bid price is the highest amount any buyer is willing to pay and the current ask price is the lowest price at which someone is willing to sell; if there is a spread, no trade
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takes place. For a trade to take place, there must be a matching bid and ask price. (If a spread exists, the specialist is supposed to use his own resources of money or stock to close the difference, after some time.) Once a trade has been made, the details are reported on the "tape" and sent back to the brokerage firm, who then notifies the investor who placed the order. Although there is a significant amount of direct human contact in this process, computers do play a huge role in the process, especially for so-called "program trading". Importance of stock market Function and purpose The stock market is one of the most important sources for companies to raise money. This allows businesses to go public, or raise additional capital for expansion. The liquidity that an exchange provides affords investors the ability to quickly and easily sell securities. This is an attractive feature of investing in stocks, compared to other less liquid investments such as real estate. History has shown that the price of shares and other assets is an important part of the dynamics of economic activity, and can influence or be an indicator of social mood. Rising share prices, for instance, tend to be associated with increased business investment and vice versa. Share prices also affect the wealth of households and their consumption. Therefore, central banks tend to keep an eye on the control and behavior of the stock market and, in general, on the smooth operation of financial system functions. Financial stability is the raison d'tre of central banks. Exchanges also act as the clearinghouse for each transaction, meaning that they collect and deliver the shares, and guarantee payment to the seller of a security. This eliminates the risk to an individual buyer or seller that the counterparty could default on the transaction. The smooth functioning of all these activities facilitates economic growth in that lower costs and enterprise risks promote the production of goods and services as well as employment. In this way the financial system contributes to increased prosperity.
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Relation of the stock market to the modern financial system The financial system in most western countries has undergone a remarkable transformation. One feature of this development is disintermediation. A portion of the funds involved in saving and financing flows directly to the financial markets instead of being routed via banks' traditional lending and deposit operations. The general public's heightened interest in investing in the stock market, either directly or through mutual funds, has been an important component of this process. Statistics show that in recent marades shares have made up an increasingly large proportion of households' financial assets in many countries. In the 1970s, in Sweden, deposit accounts and other very liquid assets with little risk made up almost 60 per cent of households' financial wealth, compared to less than 20 per cent in the 2000s. The major part of this adjustment in financial portfolios has gone directly to shares but a good deal now takes the form of various kinds of institutional investment for groups of individuals, e.g., pension funds, mutual funds, hedge funds, insurance investment of premiums, etc. The trend towards forms of saving with a higher risk has been accentuated by new rules for most funds and insurance, permitting a higher proportion of shares to bonds. Similar tendencies are to be found in other industrialized countries. In all developed economic systems, such as the European Union, the United States, Japan and other developed nations, the trend has been the same: saving has moved away from traditional (government insured) bank deposits to more risky securities of one sort or another. The stock market, individual investors, and financial risk Riskier long-term saving requires that an individual possess the ability to manage the associated increased risks. Stock prices fluctuate widely, in marked contrast to the stability of (government insured) bank deposits or bonds. This is something that could affect not only the individual investor or household, but also the economy on a large scale. The following deals with some of the risks of the financial sector in general and the stock market in particular. This is certainly more important now that so many newcomers have entered the stock market, or
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have acquired other 'risky' investments (such as 'investment' property, i.e., real estate and collectables). With each passing year, the noise level in the stock market rises. Television commentators, financial writers, analysts, and market strategists are all overtaking each other to get investors' attention. At the same time, individual investors, immersed in chat rooms and message boards, are exchanging questionable and often misleading tips. Yet, despite all this available information, investors find it increasingly difficult to profit. Stock prices skyrocket with little reason, then plummet just as quickly, and people who have turned to investing for their children's education and their own retirement become frightened. Sometimes there appears to be no rhyme or reason to the market, only folly. This is a quote from the preface to a published biography about the well-known and long term value oriented stock investor Warren Buffett.[1] Buffett began his career with only 100 U.S. dollars and has over the years built himself a multibillion-dollar fortune. The quote illustrates some of what has been happening in the stock market during the end of the 20th century and the beginning of the 21st. Stock Market Index The movements of the prices in a market or section of a market are captured in price indices called stock market indices, of which there are many, e.g., the S&P, the FTSE and the Euronext indices. Such indices are usually market capitalization (the total market value of floating capital of the company) weighted, with the weights reflecting the contribution of the stock to the index. The constituents of the index are reviewed frequently to include/exclude stocks in order to reflect the changing business environment. Derivative instruments Financial in Febation has brought many new financial instruments whose payoffs or values depend on the prices of stocks. Some examples are exchange
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traded funds (ETFs), stock index and stock options, equity swaps, single-stock futures, and stock index futures. These last two may be traded on futures exchanges (which are distinct from stock exchangestheir history traces back to commodities futures exchanges), or traded over-the-counter. As all of these products are only derived from stocks, they are sometimes considered to be traded in a (hypothetical) derivatives market, rather than the (hypothetical) stock market. Leveraged Strategies Stock that a trader does not actually own may be traded using short selling; margin buying may be used to purchase stock with borrowed funds; or, derivatives may be used to control large blocks of stocks for a much smaller amount of money than would be required by outright purchase or sale. Short Selling In short selling, the trader borrows stock (usually from his brokerage which holds its clients' shares or its own shares on account to lend to short sellers) then sells it on the market, hoping for the price to fall. The trader eventually buys back the stock, making money if the price fell in the meantime or losing money if it rose. Exiting a short position by buying back the stock is called "covering a short position." This strategy may also be used by unscrupulous traders to artificially lower the price of a stock. Hence most markets either prevent short selling or place restrictions on when and how a short sale can occur. The practice of naked shorting is illegal in most (but not all) stock markets. Margin Buying In margin buying, the trader borrows money (at interest) to buy a stock and hopes for it to rise. Most industrialized countries have regulations that require that if the borrowing is based on collateral from other stocks the trader owns outright, it can be a maximum of a certain percentage of those other stocks' value. In the United States, the margin requirements have been 50% for many
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years (that is, if you want to make a $1000 investment, you need to put up $500, and there is often a maintenance margin below the $500). A margin call is made if the total value of the investor's account cannot support the loss of the trade. (Upon a marline in the value of the margined securities additional funds may be required to maintain the account's equity, and with or without notice the margined security or any others within the account may be sold by the brokerage to protect its loan position. The investor is responsible for any shortfall following such forced sales.) Regulation of margin requirements (by the Federal Reserve) was implemented after the Crash of 1929. Before that, speculators typically only needed to put up as little as 10 percent (or even less) of the total investment represented by the stocks purchased. Other rules may include the prohibition of free-riding: putting in an order to buy stocks without paying initially (there is normally a three-day grace period for delivery of the stock), but then selling them (before the three-days are up) and using part of the proceeds to make the original payment (assuming that the value of the stocks has not declined in the interim). New issuance Main article: Thomson Financial league tables Global issuance of equity and equity-related instruments totaled $505 billion in 2004, a 29.8% increase over the $389 billion raised in 2003. Initial public offerings (IPOs) by US issuers increased 221% with 233 offerings that raised $45 billion, and IPOs in Europe, Middle East and Africa (EMEA) increased by 333%, from $ 9 billion to $39 billion. Investment strategies Main article: Stock valuation One of the many things people always want to know about the stock market is, "How do I make money investing?" There are many different approaches; two basic methods are classified as either fundamental analysis or technical analysis. Fundamental analysis refers to analyzing companies by their financial statements
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found in SEC Filings, business trends, general economic conditions, etc. Technical analysis studies price actions in markets through the use of charts and quantitative techniques to attempt to forecast price trends regardless of the company's financial prospects. One example of a technical strategy is the Trend following method, used by John W. Henry and Ed Seykota, which uses price patterns, utilizes strict money management and is also rooted in risk control and diversification. Additionally, many choose to invest via the index method. In this method, one holds a weighted or unweighted portfolio consisting of the entire stock market or some segment of the stock market (such as the S&P 500 or Wilshire 5000). The principal aim of this strategy is to maximize diversification, minimize taxes from too frequent trading, and ride the general trend of the stock market (which, in the U.S., has averaged nearly 10%/year, compounded annually, since World War II). Finally, one may trade based on inside information, which is known as insider trading.
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CHAPTER III
LITERATURE REVIEW
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LITERATURE REVIEW
PORTFOLIO MANAGEMENT A portfolio is a collection of investments held by an institution or a private individual. In building up an investment portfolio a financial institution will typically conduct its own investment analysis, whilst a private individual may make use of the services of a financial advisor or a financial institution which offers portfolio management services. Holding a portfolio is part of an investment and risklimiting strategy called diversification. By owning several assets, certain types of risk (in particular specific risk) can be reduced. The assets in the portfolio could include stocks, bonds, options, warrants, gold certificates, real estate, futures contracts, production facilities, or any other item that is expected to retain its value. Portfolio management involves marchiding what assets to include in the portfolio, given the goals of the portfolio owner and changing economic conditions. Selection involves marchiding what assets to purchase, how many to purchase, when to purchase them, and what assets to divest. These marchisions always involve some sort of performance measurement, most typically expected return on the portfolio, and the risk associated with this return (i.e. the standard deviation of the return). Typically the expected returns from portfolios, comprised of different asset bundles are compared. The unique goals and circumstances of the investor must also be considered. Some investors are more risk averse than others. Mutual funds have developed particular techniques to optimize their portfolio holdings. Thus, portfolio management is all about strengths, weaknesses, opportunities and threats in the choice of debt vs. equity, domestic vs. international, growth vs. safety and numerous other trade-offs encountered in the attempt to maximize return at a given appetite for risk.
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Aspects of Portfolio Management: Basically portfolio management involves A proper investment marchision making of what to buy & sell Proper money management in terms of investment in a basket of assets so as to satisfy the asset preferences of investors. Reduce the risk and increase returns. OBJECTIVES OF PORTFOLIO MANAGEMENT: The basic objective of Portfolio Management is to maximize yield and minimize risk. The other ancillary objectives are as per needs of investors, namely: Regular income or stable return Appreciation of capital Marketability and liquidity Safety of investment Minimizing of tax liability. NEED FOR PORTFOLIO MANAGEMENT: The Portfolio Management deals with the process of selection securities from the number of opportunities available with different expected returns and carrying different levels of risk and the selection of securities is made with a view to provide the investors the maximum yield for a given level of risk or ensure minimum risk for a level of return. Portfolio Management is a process encompassing many activities of investment in assets and securities. It is a dynamics and flexible concept and involves regular and systematic analysis, judgment and actions. The objectives of this service are to help the unknown investors with the expertise of professionals in investment Portfolio Management. It involves construction of a portfolio based upon the investors objectives, constrains, preferences for risk and return and liability. The portfolio is reviewed and adjusted from time to time with the market conditions. The evaluation of portfolio is to be done in terms of targets set for risk and return. The changes in portfolio are to be effected to meet the changing conditions.
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Portfolio Construction refers to the allocation of surplus funds in hand among a variety of financial assets open for investment. Portfolio theory concerns itself with the principles governing such allocation. The modern view of investment is oriented towards the assembly of proper combinations held together will give beneficial result if they are grouped in a manner to secure higher return after taking into consideration the risk element. The modern theory is the view that by diversification, risk can be reduced. The investor can make diversification either by having a large number of shares of companies in different regions, in different industries or those producing different types of product lines. Modern theory believes in the perspectives of combination of securities under constraints of risk and return. ELEMENTS: Portfolio Management is an on-going process involving the following basic tasks. Identification of the investors objective, constrains and preferences which help formulated the invest policy. Strategies are to be developed and implemented in tune with invest policy formulated. This will help the selection of asset classes and securities in each class depending upon their risk-return attributes. Review and monitoring of the performance of the portfolio by continuous overview of the market conditions, companys performance and investors circumstances. Finally, the evaluation of portfolio for the results to compare with the targets and needed adjustments have to be made in the portfolio to the emerging conditions and to make up for any shortfalls in achievements (targets).
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Schematic Diagram of Stages in Portfolio Management:
Specification and quantification of investor objectives, constraints, and preferences
Monitoring investor related input factors
Portfolio policies and strategies
Capital market expectations
Portfolio construction and revision asset allocation, portfolio optimization, security selection, implementation and execution
Attainment of investor objectives Performance measurement
Relevant economic, social, political sector and security considerations
Monitoring economic and market input factors
Process of Portfolio Management: The Portfolio Program and Asset Management Program both follow a disciplined process to establish and monitor an optimal investment mix. This six-stage process helps ensure that the investments match investors unique needs, both now and in the future.
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1. IDENTIFY GOALS AND OBJECTIVES: When will you need the money from your investments? What are you saving your money for? With the assistance of financial advisor, the Investment Profile Questionnaire will guide through a series of questions to help identify the goals and objectives for the investments. 2. DETERMINE OPTIMAL INVESTMENT MIX: Once the Investment Profile Questionnaire is completed, investors optimal investment mix or asset allocation will be determined. An asset allocation represents the mix of investments (cash, fixed income and equities) that match individual risk and return needs. This step represents one of the most important marchisions in your portfolio construction, as asset allocation has been found to be the major determinant of long-term portfolio performance. 3. CREATE A CUSTOMIZED INVESTMENT POLICY STATEMENT When the optimal investment mix is determined, the next step is to formalize our goals and objectives in order to utilize them as a benchmark to monitor progress and future updates.
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4. SELECT INVESTMENTS The customized portfolio is created using an allocation of select QFM Funds. Each QFM Fund is designed to satisfy the requirements of a specific asset class, and is selected in the necessary proportion to match the optimal investment mix. 5. MONITOR PROGRESS Building an optimal investment mix is only part of the process. It is equally important to maintain the optimal mix when varying market conditions cause investment mix to drift away from its target. To ensure that mix of asset classes stays in line with investors unique needs, the portfolio will be monitored and rebalanced back to the optimal investment mix 6. REASSESS NEEDS AND GOALS Just as markets shift, so do the goals and objectives of investors. With the flexibility of the Portfolio Program and Asset Management Program, when the investors needs or other life circumstances change, the portfolio has the flexibility to accommodate such changes. RISK: Risk refers to the probability that the return and therefore the value of an asset or security may have alternative outcomes. Risk is the uncertainty (today) surrounding the eventual outcome of an event which will occur in the future. Risk is uncertainty of the income/capital appreciation or loss of both. All investments are risky. The higher the risk taken, the higher is the return. But proper management of risk involves the right choice of investments whose risks are compensation.
RETURN: Return-yield or return differs from the nature of instruments, maturity period and the creditor or debtor nature of the instrument and a host of other factors. The most important factor influencing return is risk return is measured by taking the price income plus the price change.
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PORTFOLIO RISK: Risk on portfolio is different from the risk on individual securities. This risk is reflected by in the variability of the returns from zero to infinity. The expected return depends on probability of the returns and their weighted contribution to the risk of the portfolio. RETURN ON PORTFOLIO: Each security in a portfolio contributes returns in the proportion of its investment in security. Thus the portfolio of expected returns, from each of the securities with weights representing the proportionate share of security in the total investments. RISK RETURN RELATIONSHIP: The risk/return relationship is a fundamental concept in not only financial analysis, but in every aspect of life. If marchisions are to lead to benefit maximization, it is necessary that individuals/institutions consider the combined influence on expected (future) return or benefit as well as on risk/cost. The requirement that expected return/benefit be commensurate with risk/cost is known as the "risk/return trade-off" in finance. All investments have some risks. An investment in shares of companies has its own risks or uncertainty. These risks arise out of variability of returns or yields and uncertainty of appreciation or depreciation of share prices, loss of liquidity etc. and the overtime can be represented by the variance of the returns. Normally, higher the risk that the investors take, the higher is the return.
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Summary: Portfolio is a combination of various securities The general objective of the portfolio is current income, constant income, capital appreciation and preservation of capital.
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CHAPTER IV
DATA ANALYSIS & FINDINGS
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RETURNS VARIANCE AND STANDARD DEVIATION OF ICICI FOR THE MONTH OF OCT - 2009
NO.OF DAYS
MONTH
CLOSING Price 585
RETURN
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
1-Oct-09 2-Oct-09 3-Oct-09 4-Oct-09 7-Oct-09 8-Oct-09 9-Oct-09 10-Oct-09 11-Oct-09 14-Oct-09 15-Oct-09 16-Oct-09 17-Oct-09 18-Oct-09 21-Oct-09 22-Oct-09 23-Oct-09 24-Oct-09 25-Oct-09 28-Oct-09 29-Oct-09 30-Oct-09 31-Oct-09
589.1 621.05 571.9 603.6 605.15 594.35 621.7 616.9 591.6 578.9 529.15 519.75 551.85 617.45 642.95 661.7 738.7 730.2 656.75 663.4 607.7 636.1 637.3
0.70 5.42 -7.91 5.54 0.26 -1.78 4.60 -0.77 -4.10 -2.15 -8.59 -1.78 6.18 11.89 4.13 2.92 11.64 -1.15 -10.06 1.01 -8.40 4.67 0.19
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CALCULATION OF RETURN, VARIANCE, STANDARD DEVIATION, MINIMUM & MAXIMUM VALUES AND RANGE OF ICICI BANK FOR OCT 09 Calculation of Return: 1. Return earned on 2nd oct 09 is calculated as = (Price as on 2nd Oct - Price as on 1st Oct) * 100 Price as on 1st Oct = 5.42 2. Mean return is the arithmetic mean of the returns calculated as above. Calculation of average deviation and Variance: Variance is the average deviation of the returns from the mean. It is calculated as follows: Step-1: First calculate the difference between the return and the mean return. i.e. = return on 1st Oct 09 Total Returns = 0.70 0.54 = 0.16 Step-2: Then square the differences and later find the average of the above summation. The average so calculated is the variance. i.e., = (0.16) ^2 Variance = 0.03 Standard deviation: It is the square root of the above variance. i.e. = (0.03)^(1/2) S.D = 0.173 Maximum: The maximum value is calculated by the sum of total returns given, which is shown in the table. Max = Max (Total Returns) = 11.89
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Minimum: The minimum value is calculated by the sum of total returns given, which is shown in the table. Min = Min (Total Returns) = -10.06 Range: The range is calculated as, Range = maximum minimum = 11.89 (-10.06) = 21.95 Similar calculations are done for the other days of the month. Similar calculations are done and are tabulated at the end of the calculations.
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MAXIMUM MINIMUM RANGE VARIANCE AVERAGE SD
11.89 -10.06 21.95 33.76 0.54 5.81
GRAPHICAL REPRESENTATION OF RETURNS ICICI FOR THE MONTH OCT-2009
Calculation of ICICI-Oct
15.00 10.00 Return 5.00 0.00 -5.00 -10.00 -15.00
11
13
15
17
19
21
23
days Series1
The above graph shows the returns movement of icici here the returns started off with a positive return then the market declined to negative thereafter there is a continuous ups and down in returns, and the market stabilized only in at the end of the month , but most of the returns are below the normal line I.e. negative.
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RETURNS VARIANCE AND STANDARD DEVIATION OF ICICI FOR THE MONTH OF NOV - 2009
No of days
Month
Closing price 637.3
Return
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
1-Nov-09 4-Nov-09 5-Nov-09 6-Nov-09 7-Nov-09 8-Nov-09 11-Nov-09 12-Nov-09 13-Nov-09 14-Nov-09 18-Nov-09 19-Nov-09 20-Nov-09 21-Nov-09 22-Nov-09 25-Nov-09 26-Nov-09 27-Nov-09 28-Nov-09 29-Nov-09
642.4 640.45 694.1 706.65 707.95 731.6 771.15 740.65 710.7 673.45 665 677.7 678.8 643.7 644.55 657.15 666.55 649.95 632.55 671.9
0.80 -0.30 8.38 1.81 0.18 3.34 5.41 -3.96 -4.04 -5.24 -1.25 1.91 0.16 -5.17 0.13 1.95 1.43 -2.49 -2.68 6.22
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CALCULATION OF RETURN, VARIANCE, STANDARD DEVIATION, MINIMUM & MAXIMUM VALUES AND RANGE OF ICICI BANK FOR NOV 09 Calculation of Return: 1. Return earned on 4th Nov 09 is calculated as = (Price as on 4th Nov - Price as on 1st Nov) * 100 Price as on 1st Nov = -0.30 2. Mean return is the arithmetic mean of the returns calculated as above. Calculation of average deviation and Variance: Variance is the average deviation of the returns from the mean. It is calculated as follows: Step-1: First calculate the difference between the return and the mean return. i.e. = return on 1st Nov 09 Total Returns = 0.80 0.33 = 0.47 Step-2: Then square the differences and later find the average of the above summation. The average so calculated is the variance. i.e., = (0.47) ^2 Variance = 0.22 Standard deviation: It is the square root of the above variance. i.e. = (0.22)^(1/2) S.D = 0.469 Maximum: The maximum value is calculated by the sum of total returns given, which is shown in the table. Max = Max (Total Returns) = 8.38
35
Minimum: The minimum value is calculated by the sum of total returns given, which is shown in the table. Min = Min (Total Returns) = -5.24 Range: The range is calculated as, Range = maximum minimum = 8.38 (-5.24) = 13.62 Similar calculations are done for the other days of the month. Similar calculations are done and are tabulated at the end of the calculations. *The above calculations are done for the other two banks also.
36
8.38 -5.24 13.62 13.09 0.33 3.62
GRAPHICAL REPRESENTATION OF RETURNS ICICI FOR THE MONTH NOV-2009
Calculation of ICICI-Nov
Returns
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Days Series1
37
RETURNS VARIANCE AND STANDARD DEVIATION OF ICICI FOR THE MONTH OF DEC- 2009
No of days
Month
Closing Price 671.9
return
1 2 3 4 5 6 7 8 9 10 11 12 14 15 16 17 18 19 20 21 22
1-Dec-09 2-Dec-09 4-Dec-09 5-Dec-09 8-Dec-09 9-Dec-09 10-Dec-09 11-Dec-09 12-Dec-09 15-Dec-09 16-Dec-09 17-Dec-09 18-Dec-09 19-Dec-09 22-Dec-09 23-Dec-09 24-Dec-09 25-Dec-09 26-Dec-09 29-Dec-09 30-Dec-09
665 714.05 716.65 686.75 720.45 712.1 701 686.6 652.8 627.5 591.65 560.05 577.15 627.5 635.75 599.15 600.1 596.2 560.4 493.3 535.55
-1.03 7.38 0.36 -4.17 4.91 -1.16 -1.56 -2.05 -4.92 -3.88 -5.71 -5.34 3.05 8.72 1.31 -5.76 0.16 -0.65 -6.00 -11.97 8.56
38
CALCULATION OF RETURN, VARIANCE, STANDARD DEVIATION, MINIMUM & MAXIMUM VALUES AND RANGE OF ICICI BANK FOR DEC 09 Calculation of Return: 1. Return earned on 2nd Dec 09 is calculated as = (Price as on 2nd Dec - Price as on 1st Dec) * 100 Price as on 1st Dec = 7.38 2. Mean return is the arithmetic mean of the returns calculated as above. Calculation of average deviation and Variance: Variance is the average deviation of the returns from the mean. It is calculated as follows: Step-1: First calculate the difference between the return and the mean return. i.e. = return on 1st Nov 09 Total Returns = -1.03 (-0.94) = -0.09 Step-2: Then square the differences and later find the average of the above summation. The average so calculated is the variance. i.e., = (-0.09) ^2 Variance = 0.01 Standard deviation: It is the square root of the above variance. i.e. = (0.01) ^ (1/2) S.D = 0.1 Maximum: The maximum value is calculated by the sum of total returns given, which is shown in the table. Max = Max (Total Returns) = 8.72
39
40
8.72 -11.97 20.7 26.69 -0.94 5.17
GRAPHICAL REPRESENTATION OF RETURNS ICICI FOR THE MONTH DEC-2009
Calculation of ICICI- Dec 10.00 return 5.00 0.00 -5.00 -10.00 -15.00 Days
Series1
11
13
15
17
19
21
41
RETURNS VARIANCE AND STANDARD DEVIATION OF ICICI FOR THE MONTH OF JAN 2010
No of days
Date
Closing Price 535.55
return
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
1-Jan-10 3-Jan-10 6-Jan-10 7-Jan-10 8-Jan-10 10-Jan-10 13-Jan-10 14-Jan-10 15-Jan-10 16-Jan-10 17-Jan-10 20-Jan-10 21-Jan-10 22-Jan-10 23-Jan-10 24-Jan-10 27-Jan-10 28-Jan-10 29-Jan-10 31-Jan-10
550.9 504.35 490.05 485.05 453.75 363.65 425.15 449.55 414.15 416.15 391.25 411.35 431.05 396.7 365.8 310.5 316.1 335.5 345.35 398.75
2.87 -8.45 -2.84 -1.02 -6.45 -19.86 16.91 5.74 -7.87 0.48 -5.98 5.14 4.79 -7.97 -7.79 -15.66 2.46 6.14 2.94 15.46
42
CALCULATION OF RETURN, VARIANCE, STANDARD DEVIATION, MINIMUM & MAXIMUM VALUES AND RANGE OF ICICI BANK FOR JAN 2010 Calculation of Return: 1. Return earned on 3rd Jan 10 is calculated as = (Price as on 3rd Jan - Price as on 1st Jan) * 100 Price as on 1st Jan = -8.45 2. Mean return is the arithmetic mean of the returns calculated as above. Calculation of average deviation and Variance: Variance is the average deviation of the returns from the mean. It is calculated as follows: Step-1: First calculate the difference between the return and the mean return. i.e. = return on 1st Jan 10 Total Returns = 2.87 (-1.05) = 3.92 Step-2: Then square the differences and later find the average of the above summation. The average so calculated is the variance. i.e., = (3.92) ^2 Variance = 15.37 Standard deviation: It is the square root of the above variance. i.e. = (15.37)^(1/2) S.D = 3.920 Maximum: The maximum value is calculated by the sum of total returns given, which is shown in the table. Max = Max (Total Returns) = 16.91
43
44
16.91 -19.86 36.77 80.5 -1.05 8.97
GRAPHICAL REPRESENTATION OF RETURNS ICICI FOR THE MONTH JAN-2010
Calculation of ICICI-Jan
20.00 10.00 return 0.00 -10.00 -20.00 -30.00 days Series1 1 3 5 7 9 11 13 15 17 19
45
RETURNS VARIANCE AND STANDARD DEVIATION OF ICICI FOR THE MONTH OF FEB 2010
no of days
Month
closing price 398.75
return
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
3-Feb-10 4-Feb-10 5-Feb-10 6-Feb-10 7-Feb-10 10-Feb-10 11-Feb-10 12-Feb-10 14-Feb-10 17-Feb-10 18-Feb-10 19-Feb-10 20-Feb-10 21-Feb-10 24-Feb-10 25-Feb-10 26-Feb-10 28-Feb-10
430.7 457.8 450.85 433.4 432.3 471.85 434.35 397.3 395.9 386.45 360.2 348.25 319.5 334.05 322.55 321.1 350.85 351.65
8.01 6.29 -1.52 -3.87 -0.25 9.15 -7.95 -8.53 -0.35 -2.39 -6.79 -3.32 -8.26 4.55 -3.44 -0.45 9.27 0.23
46
CALCULATION OF RETURN, VARIANCE, STANDARD DEVIATION, MINIMUM & MAXIMUM VALUES AND RANGE OF ICICI BANK FOR FEB 2010 Calculation of Return: 1. Return earned on 4th Feb 10 is calculated as = (Price as on 4th Feb - Price as on 3rd Feb) * 100 Price as on 3rd Feb = 6.29 2. Mean return is the arithmetic mean of the returns calculated as above. Calculation of average deviation and Variance: Variance is the average deviation of the returns from the mean. It is calculated as follows: Step-1: First calculate the difference between the return and the mean return. i.e. = return on 3rd Feb 10 Total Returns = 8.01 (-0.53) = 8.55 Step-2: Then square the differences and later find the average of the above summation. The average so calculated is the variance. i.e., = (8.55) ^2 Variance = 73.10 Standard deviation: It is the square root of the above variance. i.e. = (73.10) ^ (1/2) S.D = 8.549 Maximum: The maximum value is calculated by the sum of total returns given, which is shown in the table. Max = Max (Total Returns) = 16.91 47
48
16.91 -8.53 25.44 32.53 -0.53 5.7
GRAPHICAL REPRESENTATION OF RETURNS ICICI FOR THE MONTH FEB- 2010.
Calculation of ICICI- Feb
15.00 10.00 Return 5.00 0.00 -5.00 -10.00 days

Series1
11
13
15
17
49
RETURNS VARIANCE AND STANDARD DEVIATION OF ICICI FOR THE MONTH OF MARCH - 2010
no of days
month
Closing Price 351.65
Return
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21
1-March-10 2-March-10 3-March-10 4-March-10 5-March-10 8-March-10 10-March-10 11-March-10 12-March-10 15-March-10 16-March-10 17-March-10 18-March-10 19-March-10 22-March-10 23-March-10 24-March-10 26-March-10 29-March-10 30-March-10 31-March-10
325.55 323.4 334.8 364 358.4 370 400.05 406.1 411 418.7 421 431.8 472 472.8 445.7 426.85 440.95 417.35 445 458.6 448.1
-7.42 -0.66 3.53 8.72 -1.54 3.24 8.12 1.51 1.21 1.87 0.55 2.57 9.31 0.17 -5.73 -4.23 3.30 -5.35 6.63 3.06 -2.29
50
CALCULATION OF RETURN, VARIANCE, STANDARD DEVIATION, MINIMUM & MAXIMUM VALUES AND RANGE OF ICICI BANK FOR MAR 2010 Calculation of Return: 1. Return earned on 4th Mar 10 is calculated as = (Price as on 2nd Mar - Price as on 1st Mar) * 100 Price as on 1st Mar = -0.66 2. Mean return is the arithmetic mean of the returns calculated as above. Calculation of average deviation and Variance: Variance is the average deviation of the returns from the mean. It is calculated as follows: Step-1: First calculate the difference between the return and the mean return. i.e. = return on 1st Mar 10 Total Returns = -7.42 1.26 = -8.69 Step-2: Then square the differences and later find the average of the above summation. The average so calculated is the variance. i.e., = (-8.69) ^2 Variance = 75.52 Standard deviation: It is the square root of the above variance. i.e. = (75.52) ^ (1/2) S.D = 8.6902 Maximum: The maximum value is calculated by the sum of total returns given, which is shown in the table. Max = Max (Total Returns) = 9.31
51
Minimum: The minimum value is calculated by the sum of total returns given, which is shown in the table. Min = Min (Total Returns) = -7.42 Range: The range is calculated as, Range = maximum minimum = 9.31 (-7.42) = 16.73 Similar calculations are done for the other days of the month. Similar calculations are done and are tabulated at the end of the calculations. * The above calculations are done for the other two banks also.
52
9.31 -7.42 16.73 20.91 1.26 4.57
GRAPHICAL REPRESENTATION OF RETURNS ICICI FOR THE MONTH MARCH-2010
Calculation of ICICI- March 15.00 return 10.00 5.00 0.00 -5.00 -10.00 days
Series1 The above graph shows the returns movement of icici here the returns started off with a positive return then the market declined to negative thereafter there is a continuous ups and down in returns, and the market stabilized only in at the end of the month , but most of the returns are below the normal line I.e. negative.
11
13
15
17
19
21
53
RETURNS VARIANCE AND STANDARD DEVIATION OF BHEL FOR THE MONTH OF OCT 2009.
No of days
month
closing price 1350
Return
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
1356.1 1423 1402.05 1500.2 1467.9 1498.7 1572.05 1563.4 1521.6 1467.25 1368.85 1378.6 1452.2 1531.8 1506.3 1597.4 1773.35 1727.6 1654 1649.7 1593.8 1667.15 1682
0.45 4.93 -1.47 7.00 -2.15 2.10 4.89 -0.55 -2.67 -3.57 -6.71 0.71 5.34 5.48 -1.66 6.05 11.01 -2.58 -4.26 -0.26 -3.39 4.60 0.89
54
11.01 -6.71 17.72 18.54 1.05 4.31
GRAPHICAL REPRESENTATION OF RETURNS BHEL FOR THE MONTH OCT-2009
Calculation of BHEL-oct
15.00 10.00 Return 5.00 0.00 1 -5.00 -10.00 Days Series1 3 5 7 9 11 13 15 17 19 21 23
The above graph shows the returns movement of BHEL here the returns started off with a positive return then the market declined to negative thereafter there is a continuous ups and down in returns, and the market stabilized only in at the end of the month , but most of the returns are below the normal line I.e. negative.
55
RETURNS VARIANCE AND STANDARD DEVIATION OF BHEL FOR THE MONTH OF NOV 2009.
No of days
Month
Closing price 1682
return
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
820.15 816 840.1 869.4 849.35 840.85 845.55 823.25 820.85 818.6 810.1 791.9 816 799.25 810.7 816.5 810.8 804.85 804.5 837.5
-51.24 -0.51 2.95 3.49 -2.31 -1.00 0.56 -2.64 -0.29 -0.27 -1.16 -2.13 3.04 -2.05 1.31 0.84 -0.94 -0.49 -0.04 4.10
56
4.1 -51.24 55.34 129.07 -2.44 11.36
GRAPHICAL REPRESENTATION OF RETURNS BHEL FOR THE MONTH of Nov-2009
Calculation of BHEL-nov
10.00 0.00 -10.00 Return -20.00 -30.00 -40.00 -50.00 -60.00 Days Series1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
The above graph shows the returns movement of BHEL here the returns started off with a negative return then the market declined to negative thereafter there is a continuous ups and down in returns, and the market stabilized only in at the end of the month , but most of the returns are below the normal line I.e. negative.
57
RETURNS VARIANCE AND STANDARD DEVIATION OF BHEL FOR THE MONTH OF DEC 2009.
No of days
Month
Closing price 837.5
return
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21
816.2 834.65 825.8 803.4 819.8 836.9 812 776.95 778.85 766.15 774.1 770.15 761.25 805.85 810.8 792.65 810.55 790.9 776 750.25 784.85
-2.54 2.26 -1.06 -2.71 2.04 2.10 -2.98 -4.32 0.24 -1.63 1.04 -0.51 -1.16 5.86 0.37 -2.00 2.26 -2.42 -1.88 -3.32 4.61
58
5.86 -4.32 10.18 6.97 -0.27 2.64
GRAPHICAL REPRESENTATION OF RETURNS BHEL FOR THE MONTH DEC-2009
Calculation of BHEL- Dec

8.00 6.00 4.00 Return 2.00 0.00 -2.00 -4.00 -6.00 Days Series1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21
59
RETURNS VARIANCE AND STANDARD DEVIATION OF BHEL FOR THE MONTH OF JAN 2010.
No of days
Month
Closing price 784.85
return
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
790.7 756.3 727.75 748.25 733.35 692.3 739.85 766.6 714.85 730.65 677.15 710.1 724.35 666.25 615.05 537.1 564.6 610.7 616.45 653.75
0.75 -4.35 -3.77 2.82 -1.99 -5.60 6.87 3.62 -6.75 2.21 -7.32 4.57 2.29 -8.02 -7.68 -12.67 5.12 8.17 0.94 6.05
60
8.17 -12.67 20.84 33.62 -0.74 5.8
GRAPHICAL REPRESENTATION OF RETURNS IBHELFOR THE MONTH JAN-2010
Calculation of BHEL - Jan

10.00 5.00 Return 0.00 -5.00 -10.00 -15.00 Days Series1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
61
RETURNS VARIANCE AND STANDARD DEVIATION OF BHEL FOR THE MONTH OF FEB 2010.
No of days
Month
Return
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
691.5 716.95 685.35 639.4 648.05 711.65 659.45 631.95 647.5 664.4 622.9 612.35 592 618.85 637.8 627.8 653 671.05
5.77 3.68 -4.41 -6.70 1.35 9.81 -7.34 -4.17 2.46 2.61 -6.25 -1.69 -3.32 4.54 3.06 -1.57 4.01 2.76
62
9.81 -7.34 17.15 22.3 0.26 4.72
GRAPHICAL REPRESENTATION OF RETURNS BHEL FOR THE MONTH of feb-2010
Calculation of BHEL - Feb.

15.00 10.00 Return 5.00 0.00 1 -5.00 -10.00 Days Series1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
63
RETURNS VARIANCE AND STANDARD DEVIATION OF BHEL FOR THE MONTH OF MARCH 2010.
No of days
Month
Return
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21
650.7 670.85 664 685.7 664.8 701.25 735.8 742.4 723.5 737.4 744.8 710.25 710.15 721.7 722.1 710.85 689.4 686.4 712.05 722.6 715.5
-3.03 3.10 -1.02 3.27 -3.05 5.48 4.93 0.90 -2.55 1.92 1.00 -4.77 0.13 1.63 0.06 -1.56 -3.02 -0.44 3.74 1.48 -0.98
64
5.48 -4.77 10.26 7.46 0.34 2.73
GRAPHICAL REPRESENTATION OF RETURNS BHEL FOR THE MONTH MARCH-2010.
Calculation of BHEL - March

6.00 4.00
Return2.00
0.00 -2.00 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 -4.00 -6.00 Days Series1

65
RETURNS VARIANCE AND STANDARD DEVIATION OF TCS FOR THE MONTH OF OCT 2009.
No of days
Month
Closing Price 840
return
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
847.7 876.5 856.65 844.5 852.25 830.2 876.75 868.4 798.6 767.85 750.65 728.1 783.25 793.85 812.8 831.85 860.55 802.55 799.2 806.25 810.95 838.95 833.75
0.92 3.40 -2.26 -1.42 0.92 -2.59 5.61 -0.95 -8.04 -3.85 -2.24 -3.00 7.57 1.35 2.39 2.34 3.45 -6.74 -0.42 0.88 0.33 3.71 -0.62
66
7.57 -8.04 15.61 18.54 0.03 4.31
GRAPHICAL REPRESENTATION OF RETURNS TCS FOR THE MONTH OCT-2009
Calculation of TCS - Oct

10.00 5.00 0.00 1 -5.00 -10.00 Days Series1
The above graph shows the returns movement of TCS here the returns started off with a positive return then the market declined to negative thereafter there is a continuous ups and down in returns, and the market stabilized only in at the end of the month , but most of the returns are below the normal line I.e. negative.
Return
11
13
15
17
19
21
23
67
RETURNS VARIANCE AND STANDARD DEVIATION OF TCS FOR THE MONTH OF NOV 2010.
No of days
Month
Return
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
840.65 815.35 829.7 860.55 853.35 845.1 833.95 819.25 828.3 833.2 841.55 841.25 841.6 817.85 819 818.2 834.05 818.45 792.35 812.2
0.83 -3.01 1.76 3.72 -0.84 -0.97 -1.32 -1.76 1.10 0.59 1.00 -0.04 0.04 -2.82 0.14 -0.10 1.94 -1.87 -3.19 2.51
68
3.72 -3.19 6.91 3.36 -0.11 1.06
GRAPHICAL REPRESENTATION OF RETURNS TCS FOR THE MONTH NOV2009
Calculation of TCS - Nov

5.00 4.00 3.00 Return2.00 1.00 0.00 -1.00 -2.00 -3.00 -4.00
3 4
8 9 10 11 12 13 14 15 16 17 18 19 20
Days Series1
The above graph shows the returns movement of TCS here the returns started off with a positive return then the market declined to negative there after there is a continuous ups and down in returns, and the market stabilized only in at the end of the month , but most of the returns are below the normal line I.e. negative.
69
RETURNS VARIANCE AND STANDARD DEVIATION OF TCS FOR THE MONTH OF DEC 2009.
No of days
Month
Closing price 812.2
Return
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21
814.95 848.8 844.2 838.4 856.7 864.8 850.9 836.7 810.55 762.8 748.85 730.1 721.15 766.85 766.8 721 713.05 688.4 676.2 620 665.6
0.34 4.15 -0.54 -0.69 2.18 0.95 -1.61 -1.67 -3.13 -5.89 -1.83 -2.50 -1.23 6.34 -0.01 -5.97 -1.10 -3.46 -1.77 -8.31 7.35
70
7.35 -8.31 15.67 13.53 -0.88 3.68
GRAPHICAL REPRESENTATION OF RETURNS TCS FOR THE MONTH OF DEC-2009.
Calculation of TCS - Dec

10.00 5.00 Return 0.00 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 -5.00 -10.00 Days Series1
71
RETURNS VARIANCE AND STANDARD DEVIATION OF TCS FOR THE MONTH OF JAN 2010.
No of days
month
Closing price 665.6
return
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
671.75 657.5 619 575.9 546.6 524.8 572.85 592.7 543.1 495 453.85 491.35 559.1 546.65 547.3 498.85 496.75 540.25 540.8 537.5
0.92 -2.12 -5.86 -6.96 -5.09 -3.99 9.16 3.47 -8.37 -8.86 -8.31 8.26 13.79 -2.23 0.12 -8.85 -0.42 8.76 0.10 -0.61
72
13.79 -8.86 22.65 52.27 -0.85 7.23
GRAPHICAL REPRESENTATION OF RETURNS TCS FOR THE MONTH JAN-2010
Calculation of TCS - Jan

15.00 10.00 Return 5.00 0.00 -5.00 -10.00 Days Series1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
The above graph shows the returns movement of TCS here the returns started off with a positive and negative return then the market declined to negative thereafter there is a continuous ups and down in returns, and the market stabilized only in at the end of the month , but most of the returns are below the normal line I.e. negative.
73
RETURNS VARIANCE AND STANDARD DEVIATION OF TCS FOR THE MONTH OF FEB 2010.
No of days
Month
Closing price 537.5
Return
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
547.4 510.5 506.4 500.2 525.15 546.45 528.85 534.9 530.85 519 483.15 482.65 469.25 506.45 519.9 504 527.45 559.4
1.84 -6.74 -0.80 -1.22 4.99 4.06 -3.22 1.14 -0.76 -2.23 -6.91 -0.10 -2.78 7.93 2.66 -3.06 4.65 6.06
74
13.79 -6.91 20.7 16.71 0.31 4.09
GRAPHICAL REPRESENTATION OF RETURNS TCS FOR THE MONTH FEB-2010
Calculation of TCS - Feb

10.00 5.00 Return 0.00 1 -5.00 -10.00 Days Series1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
75
RETURNS VARIANCE AND STANDARD DEVIATION OF TCS FOR THE MONTH OF MARCH 2010.
No of days
month
Closing price 559.4
return
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21
564.15 532.85 534.8 549.4 521.8 522.25 541.05 507.65 481.3 469.65 479.35 477.3 510.5 513.55 510.55 500.6 478.15 471.65 476.8 482.55 477.9
0.85 -5.55 0.37 2.73 -5.02 0.10 3.60 -6.17 -5.19 -2.42 2.07 -0.43 6.96 0.60 -0.58 -1.95 -4.48 -1.36 1.10 1.21 -0.96
76
6.96 -6.17 13.13 10.52 -0.69 3.24
GRAPHICAL REPRESENTATION OF RETURNS TCS FOR THE MONTH OF MARCH-2010
Calculation of TCS - March

8.00 6.00 4.00 Return 2.00 0.00 -2.00 -4.00 -6.00 -8.00 Days Series1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21
The above graph shows the returns movement of TCS here the returns started off with a positive and negative return then the market declined to negative thereafter there is a continuous ups and down in returns, and the market stabilized only in at the end of the month , but most of the returns are below the normal line I.e. negative.
77
CALUCULATION OF THE STANDARD DEVIATION ICICI OCT NOV DEC JAN FEB MARCH 5.81 3.62 5.17 8.97 5.70 4.57 BHEL 4.31 11.36 2.64 5.80 4.72 2.73 TCS 4.75 1.06 3.68 8.36 4.09 3.24
GRAPHICAL REPRESENTATION OF STANDARD DEVIATION
CALCULATION OF STANDARD DEVIATION

25 20
SD
15 10 5 0 OCT NOV DEC JAN FEB MAR MONTHS
TCS BHEL ICICI
The above graph shows the Stranded deviation movement of TCS, BHEL, ICICI here the returns started off with all positive return then the market marchland to negative thereafter there is a continuous ups and down values is a positive values, and the market stabilized only in at the end of the year, but most of the returns are below the normal line I.e. positive values. This all companies are better one is BHEL is high values.
78
FINDINGS
Mutual funds agents do not approaching all category investors. Some investors cannot meet MFs managers personally to invest. Once who accustom to MFs they would like to invest in MFs again and again. They become as if permanent investors of MFs. Many investors invest money simultaneously more than one company and more schemes. Investors do not bother much more about risk in MFs. Retired people migrate from NSC to MFs. MFs industry is being developed more than the existing private sector. Some people are aware to invest. These people have illusions about MFs industry.
79
CHAPTER V
SUGGESTIONS & CONCLUSIONS
80
SUGGESTIONS
Dont put your trust in only one investment. It is like putting all the eggs in one basket . This will help lessen the risk in the long term. The investor must select the right advisory body which is has sound knowledge about the product which they are offering. Professionalized advisory is the most important feature to the investors. Professionalized research, analysis which will be helpful for reducing any
kind of risk to overcome. Buy stocks in companies with potential for surprises. Take advantage of volatility before reaching a new equilibrium.
81
CONCLUSIONS
1. During the six month period, the returns were lowest in case of TCS. Its highest returns are just 0.31 % that was during Feb 2010. The highest returns earned among the given three companies were by ICICI i.e. 1.26% during Mar 2010. 2009 i.e. -2.44% 2. After studying the risk pattern of the companies, we find that the returns are less volatile in case of BHEL. Out of the six months, almost in four months the company experienced lower standard deviations than the other two companies. 3. Even the range values indicate that BHEL is less volatile out of the six months the range values are lower in four months in case of BHEL. 4. The optimum portfolio selection process have done with the two models, they are single index model and multi-index model. The lowest among the three was by BHEL during No
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Portfolio Management

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CHAPTER I: INTRODUCTION

NEED OF THE STUDY

TOOLS & TECHNIQUES Formulae used for Data Analysis:

Ve = Value at the end Vb = Value at the beginning

Period of the Study

Schematic Diagram of Stages in Portfolio Management:

Specification and quantification of investor objectives, constraints, and preferences

Monitoring investor related input factors

Portfolio policies and strategies

Capital market expectations

Attainment of investor objectives Performance measurement

Relevant economic, social, political sector and security considerations

Monitoring economic and market input factors

CLOSING Price 585

MAXIMUM MINIMUM RANGE VARIANCE AVERAGE SD

11.89 -10.06 21.95 33.76 0.54 5.81

GRAPHICAL REPRESENTATION OF RETURNS ICICI FOR THE MONTH OCT-2009

Closing price 637.3

MAXIMUM MINIMUM RANGE VARIANCE AVERAGE SD

8.38 -5.24 13.62 13.09 0.33 3.62

GRAPHICAL REPRESENTATION OF RETURNS ICICI FOR THE MONTH NOV-2009

Closing Price 671.9

MAXIMUM MINIMUM RANGE VARIANCE AVERAGE SD

8.72 -11.97 20.7 26.69 -0.94 5.17

GRAPHICAL REPRESENTATION OF RETURNS ICICI FOR THE MONTH DEC-2009

Closing Price 535.55

MAXIMUM MINIMUM RANGE VARIANCE AVERAGE SD

16.91 -19.86 36.77 80.5 -1.05 8.97

GRAPHICAL REPRESENTATION OF RETURNS ICICI FOR THE MONTH JAN-2010

closing price 398.75

MAXIMUM MINIMUM RANGE VARIANCE AVERAGE SD

16.91 -8.53 25.44 32.53 -0.53 5.7

GRAPHICAL REPRESENTATION OF RETURNS ICICI FOR THE MONTH FEB- 2010.

Calculation of ICICI- Feb

15.00 10.00 Return 5.00 0.00 -5.00 -10.00 days

Closing Price 351.65

MAXIMUM MINIMUM RANGE VARIANCE AVERAGE SD

9.31 -7.42 16.73 20.91 1.26 4.57

GRAPHICAL REPRESENTATION OF RETURNS ICICI FOR THE MONTH MARCH-2010

closing price 1350

MAXIMUM MINIMUM RANGE VARIANCE AVERAGE SD

11.01 -6.71 17.72 18.54 1.05 4.31

GRAPHICAL REPRESENTATION OF RETURNS BHEL FOR THE MONTH OCT-2009

Closing price 1682

MAXIMUM MINIMUM RANGE VARIANCE AVERAGE SD

4.1 -51.24 55.34 129.07 -2.44 11.36

GRAPHICAL REPRESENTATION OF RETURNS BHEL FOR THE MONTH of Nov-2009

Closing price 837.5

MAXIMUM MINIMUM RANGE VARIANCE AVERAGE SD

5.86 -4.32 10.18 6.97 -0.27 2.64

GRAPHICAL REPRESENTATION OF RETURNS BHEL FOR THE MONTH DEC-2009

Calculation of BHEL- Dec

Closing price 784.85

MAXIMUM MINIMUM RANGE VARIANCE AVERAGE SD

8.17 -12.67 20.84 33.62 -0.74 5.8

GRAPHICAL REPRESENTATION OF RETURNS IBHELFOR THE MONTH JAN-2010

Calculation of BHEL - Jan

Closing price 653.75

MAXIMUM MINIMUM RANGE VARIANCE AVERAGE SD

9.81 -7.34 17.15 22.3 0.26 4.72

GRAPHICAL REPRESENTATION OF RETURNS BHEL FOR THE MONTH of feb-2010

Calculation of BHEL - Feb.

Closing price 671.05

MAXIMUM MINIMUM RANGE VARIANCE AVERAGE SD