To study weath maximization portfolio

A
PROJECT REPORT
ON
“TO STUDY WEATH MAXIMIZATION-PORTFOLIO
INVESTMENT”
UNDERTAKEN
AT
DEVASHISH SECURITIES PVT. LTD,BARDOLI
SUBMITTED BY:
BHAVESH N.KUNDANANI
(13 BBA 44)
GUIDED BY:
MS. VAISHALI R. PANCHAL
BBA PROGRAMME
(YEAR 2013-16)
THE MANDVI EDUCATION SOCIETY
CCOOLLLLEEGGEE OOFF BBUUSSIINNEESSSS AADDMMIINNIISSTTRRAATTIIOONN
MMAANNDDVVII..

DECLARATION
I BHAVESH KUNDANANI, student of The Mandvi Education Society
BBA College Mandvi, hereby declare that this project report has been
undertaken as a part of 6th Semester of Bachelor of Business
Administration (BBA) syllabus of Veer Narmad South Gujarat
University, Surat. I declare that this report has not been submitted
to any other university or institute for any other purposes.
Date: BHAVESH KUNDANANI
Place: Mandvi (13 BBA 44)

ACKNOWLEDGEMENT
I am greatly thankful to DEVASHISH SECURITIES PVT .Ltd for
giving me an opportunity to work on this project at their company.
I am thankful to my external guide Mr. DHARMESH H. PRAJAPATI,
without whom this project would not have been completed
successfully.
I wish to express my sincere thanks to Mr. Vimal Mahida, I/c director
of college & Mr. Pratik Shukla HOD of BBA who gave me the chance
to do this project report under DEVASHISH SECURITIES PVT .Ltd.
I wish to express my heartfelt gratitude to my internal guide
Ms.Vaishali R. Panchal who constant helped and supported me at all
stages of this project has enabled me to complete it.
Last but not least, I thank all those who have helped me directly or
indirectly during the course of this project.
BHAVESH KUNDANANI
(13 BBA 44)

EXECUTIVE SUMMARY
Wealth maximization means maximizing the net present value of a
course of action which is the difference between the gross present
value of the benefits of that action and the amount of investment
require to achieve those benefits.
The most widely accepted primary objective of the firm is to maximize
the value of the firm for its owner i.e. to maximize equity shareholder
wealth is represented by maximize price of the equity shares of the
firm.
The objective of my research project are to help investor selecting the
appropriate investment avenue for asset allocation, to study need for
risk profiting of an individual where by suggesting an ideal portfolio.
A research design specifies method and procedures for conducting a
particular study my problem solution needs the secondary data,
which is already available in market so I have used Descriptive
Research method which is based on the secondary data.
In my project, I have used Sharpe’s model. Period of my data collection
was 01/01/2014 to 31/12/2015. From the above mention period I
have collected closing value of 10 companies.
For analysis I have used the tools like variance, Beta, Alpha, Means
and Sharpe’s model.
From data analysis and interpretation it has been concluded that out
of total, only 6 securities HDFC, YES BANK, ASIAN PAINTS,
ULTRATECH CEMENT, GRASIM INDUSTRIES, TATA CHEMICALS are
selected for portfolio investment according to Sharpe’s model.

TABLE OF CONTENT
SR.NO. TOPIC PAGE NO.
1 INTRODUCTION 1-24
1.1 COMPANY PROFILE 1-10
1.2 ABOUT TOPIC 11-24
2 REVIEW OF LITERATURE 25-26
3 RESEARCH METHODOLOGY 27-30
4 DATA ANALYSIS AND INTERPRETATION 31-42
5 FINDINGS 43
6 CONCLUSION & RECOMMANDATION 44-45
7 BIBLIOGRAPHY 46

1
COMPANY PROFILE
INTRODUCTION OF DEVASHISH SECURITIES PVT.LTD.
During June 1996, we started as Devashish Investment, a family firm
with partners Krishankant Desai and his son Ashish Desai as partners.
Senior Partner Krishnakant Desai had long experience as Accountant in
Bardoli Sugar Factory and in SardarBagayat. Devashish Investment with
a gallop start as Financial Advisors due to overwhelming support from
surrounding residents of Bardoli areas, was converted into Devashish
Securities Pvt. Ltd. within three /four years.
Devashish Securities Pvt. Ltd Is a recognized sub-broker of SEBI, our
network Partner being Messes. KisanRatilalChoksey, Bombay based
Share Brokers. Gradually we started other departments – Mutual Fund –
Insurance Company Deposits etc.
Our office accommodation when we started our Business Activities was
only 150 Sq. Ft. of our own. Now it is one of the established companies in
these areas having 4500 Sq. Ft. office space.
We have full modern on-line equipments and infrastructure. We have
also established our website. So that our clients can track their portfolio,
can also know market related day- to-day news and information’s.
Our aim is full satisfaction of our valued customers and our Moto
―Service before Self‖. Our sister concern Devashish Commodities Pvt. Ltd.
is approved recognized member of India’s only Multi-commodities
Exchange, having rating of Asia’s third Commodity Exchange.
We have Branches in Navsari,Mahuva, Surat and Vyara where all types
of our Business Activities are successfully handled. Our franchises are
operating in Surat, Songadh, Bharuch, Unai, Ankleshwar, Palsana,
Kamrej,Nandurbar, Dehradun, Chandigadh, Indore, Chhapra, Mumbai,
Nasik & Jodhpur in their family they had agency of government of India.

2
Father if Ashishbhai was an employee of ―Bardoli sugar factory‖ holding a
key position of an accountant earned goodwill of hundred of farmer
member of the sugar factory. With this background, they launched in
June 1996; a partnership firm called ―Devashish Investment‖ Those were
the day when there were no official share brokers in Bardoli. Interested
customer had to go to Surat for their share dealing. Telephone facility
was poor. On-line Trading and E-mail facilitates came in to the picture
year later. But due to extra-ordinary support their client of Bardoli&
surrounding area Devashish Succeed in switching over to demand of the
changing time.
Devashish securities Pvt. Ltd [DSPL]‖ was sponsored in November 1999.
Then after in November -2005 ―Devashish Commodity Pvt. Ltd [DSPL]‖
was promoted.DSPL registration number is 04-38370 dated 17thJuly’
2000. While that of DCPL is U51100GJ2005PTC7197 at 16thJanuary’
2006. Both are private limited concerns controlled by the separate board
of director.
Shri.Krishnakant Desai is the chairman &Shri.Ashish Desai is the
managing director of the DSPL as well as DCPL.
Growth of the commercial activity of DSPL & DCPL demanded extension
of areas of departments. Hence opening of branches at Navsari in
January 2005 at Vyara in May 2005& at Mahuva in April 2010.
In the previous year in June they successfully completed Fourteen year of
their existence. Presently strength of their manpower on their payroll is
31 in the main office at Bardoli, 6 in Navsari branch 7 Vyara branch.
In January 2003 DSPL becomes the sub broker of ―KishanRatilalChoksey
share &security Pvt. Ltd.‖, Mumbai. A registered share broker of SEBI,
Mumbai. DSPL is also approved as broker firm of SEBI. Mumbai DSPL is
also approved as sub broker firm of SEBI. Mumbai DSPL manage DEMAT
as section as sub-department of messes ―K R Choksey‖. Their DP-CDS
registration number is 12010700. Their clients run their DP Account

3
with Devashish in their office only.
DCPL has a direct no. of ―multi commodity exchange‖, Mumbai. Their
member registration no. being 29745.As registration approved the broker
of MCX, and due to all on-line e-business machinery & equipment
installed in their all of three offices. Their clients do their commodity
dealing from Devashish office.
In their head office at Bardoli& branch in Navsari and Vyara they have
main three departments – equity dealing, commodity dealing, saving
investment viz, mutual funds, insurance schemes & company deposit.
BRANCHES: NAVSARI, VYARA, SURAT, MAHUVA
FRANCHISE:PALSANA,KAMREJ,UNAI,SONGADH,SURAT,BHARUCH,AN
KLESHWAR, NANDURBAR, DEHRADUN, CHANDIGADH, INDORE,
CHAPRA, MUMBAI, NASIKH, JODHPUR

4
AWARDS AND CERTIFICATES
Devashish Pvt. Ltd. has received the following certificates and
awards:
 In the year 2004 their outstanding overall performance by TATA mutual
fund.
 In March-2005 for their outstanding mobilization in the JM equity and
derivative fund IPO by JM Financial Co.
 In July/Aug-2005 for outstanding performance during reliance tax
services (ELSS) fund by Reliance Pvt. Ltd.
 In August-2005 for being winner Surat UCF in UTI opportunities funds.
 In January 2006 for being a winner in financial advisor leadership by
unit trust of India.
 ―Silver Membership Award‖ From ICICI Prudential in 2007-08.
 Certificate of Achievement (Best Performance) in West zone &Surat
Region from Reliance Life Insurance (2008-09)
 Certificate of Excellence from CDAC Channel Surat Cluster on 15th &
28th March 2008 for winning the March Bonanza contest by Reliance Life
Insurance.
 ICRA 5-Star Gold Award-2009
 Largest Income Fund in Category-ICICI Prudential Income Plan
 Reader’s Digest Trust Brand Gold Award-2008
 Reliance Mutual Fund-Partner Loyalty Program-gold Partner in 2009
 The Best Investor Award by UTI Mutual Fund-2010.
 The Most Preferred Partner 2010 From UTI Mutual Fund.
 Outstanding Support & Partnership Award by ICICI Pru. Mutual Fund-
Jan,2011.
 The Best Investor Award by Birla sun Life Mutual Fund- April,2011

5
QUALITY POLICY & MISSION:
Quality Policy
Dedication:
We dedicate ourselves in consistently delivering more than customer
expectations and believe in customer delight. To achieve this, we have
utilized our human and technological resources to provide superior
quality financial services
Efficiency:
We are efficient and committed to total quality by putting our best at our
resources and services at optimum cost and strive continually to improve
ourselves, our team and our services to get total customer satisfaction.
Valuation:
We will achieve our objectives through creation of a strong, responsive,
and innovative organization by a total quality commitment and by
emphasizing on total customer satisfaction, wealth & Value creation of
stakeholders through profitable growth and providing best working
environment to our employees
Mission
―To create enduring value for customers and stakeholders by providing
total quality products & Services at optimum cost, through creation of a
strong, responsive and innovative organization and strive constantly to
improve ourselves, our team & our services to meet customer
expectation‖

6
PRODUCT & SERVISES:
Devashish has wide range of product and services creating to Retail, HNI,
Corporate and NRI Customers spread all across the globe, we are leading
Broker in BSE/NSE and leading distributor of Mutual Funds, Insurance
and Equity IPO Products.
Broking
 BSE & NSE Cash market
 Derivatives Trading
 Commodities
Share Bank (DEMAT)
 Depository Services
 Online Execution
Fixed Income
 Mutual Funds
 RBI Bonds
 Fixed Deposits
Postal Schemes
 KVP
 NSC
 MIS
 SCSS

7
Life Insurance
 Child Life Solutions
 Student Life Solutions
 Young Earner’s Life Solutions
 Wealth Creator Life Solutions
 Retirement Plan
 Term Insurance
Financial Planning
 Retirement Planning
 Education Planning
Portfolio Advisory
 Equity Portfolio Advisory
 Wealth Creation
 Customized Solution for NRI’s
Services
 SMS alert
 Monthly Statement
 Internet Services
 Research Tips
 Morning Milk
 Evening Tea
 Stock News
 Techno Trends

8
DEVASHISH SECURITIES
PVT.LTD.
Mr. Krishnakant Desai
CHAIRMAN
Mr. Ashish Desai
DIRECTOR
Mr. Viral
Naik
HOD A/C
Mr. Dharmesh
Prajapati
BDM
Mr. Nilesh
Ramanandi
Mr.
Dharmendra
Tailor
HOD Demat
Mr. Mayur
Panchal
HOD System.
Mrs.
NikishaSurati
Insurance Exc.
Mr. Viral
Naik
HR
Mrs.
AnjuKhanger
A/C Exc.
Mr.
AnantModi
A/C Exc.
Mr.
AnupBhavsar
Dealing Exc.
(F & O)
Mr. Pratik
Patel
Dealing Exc.
Ms. Hemaxi
Bhavsar
Demat Exc.
Mr. Nehal
Naik
Mutual
Fund
Mr. Nishant
Shukla
Mrktg Exc.
Mr. Pradip
Patel
Pan Card
Exc.
Mr. Badal
Desai
SystemExe.Ex
c.

9
DEVASHISH COMMODITIES PVT.LTD.
Mr. Meghal
Patel
HODCommodity
Mr.
MayurPanchal
HOD System.
Mr. Viral Naik
HOD A/C
Mr. Hitesh
Panchal
A/C Exc.
Commodities
Mr. NehalNaik
Mutual Fund
Mr. Viral Naik
HR
CHAIRMAN
Mr. Ashish Desai
DIRECTOR
Mr.
NishantShukla
Mrktg Exc.
Mr.
MayankSoni
Commodity Exc.
Mr. Riken
Chauhan
Commodity
Exc.
Mr. Badal Desai
System
Exe.Exc.
Ms.
HemaxiBhavsar
Demat Exc.

10
DEVASHISH ADVISORY SERVICES PVT.LTD.
Mr.
NehalNaik
HOD of MF
Mr. Mayur
Panchal
HOD
System.
Mr. Viral
Naik
HOD A/C
Mr. Gaurav
Parekh
A/C Exc.
Miss. Dharti
Desai
CRM Exe.
Miss.Radhika
Mistry
B.O. Exc.
Mr. Pradip
Patel
PAN CARD
Exc.
Mr. Nishant
Shukla
Mrktg Exc.
Mr. Viral
Naik
HR
Mr. Nehal
Naik
Mutual
Fund
CHAIRMAN
Mr. Ashish Desai
DIRECTOR
Mr. Badal Desai
System
Exe.Exc.

11
ABOUT THE TOPIC
WEALTH MAXIMIZATION
According to experts like profit Solomon Ezra, Van Horne etc. the
ultimate objective to financial might should be wealth maximization. This
criteria on is based on the concept of cash flows generated by the
decision. Its inflows generation out flows, it will, maximize the wealth to
the owners.
Wealth maximization means maximizing the net present value of a course
of action, which is the different between the gross present value of the
benefits of that action and the amount of investment required to achieve
those benefits.
The most widely accepted primary objective of the firm is to maximize the
value of the firm for its owners i.e. to maximize equity shareholders
wealth is represented by maximize price of the equity shares of the firm.
From the share holders point of view, the wealth created by a company
through its actions is reflected in the market value of company share.
The shareholder wealth maximization goal state may be that ought to
seek to maximize the present value of the expected future refers to the
owners of the firm. Present value i defined as the value today of some
future put or stream of prints.
The objective of shareholders wealth maximization is an appropriate and
operationally feasible criterion to choose among the alternative financial
albinos. It provides an unambiguous measure of what financial might
should seek to maximize in making investment and financing decisions
on behalf of shareholder.
For a publicly traded company, Shareholder wealth maximization is the
part of its capitalization that is equity as opposed to long-term debt. In
the case of only one type of stock, this would roughly be the number of
outstanding shares times current share price. Things like

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dividendsaugment shareholder value while issuing of shares (stock
options) lower it. This Shareholder value added should be compared to
average/required increase in value, aka cost of capital.
ADVANTAGE OF WEALTH MAXIMIZATION
1. The objective explicitly considers the financing and risk of the
benefits expected to be received from stock ownership.
2. It is an impersonal objective.
3. In most of the cases decision made by firm has the effect to
increasing the market price of the firm’s stock.
DISADVANTAGE OF WEALTH MAXIMIZATION
1. EMPOLYMENT
Employment is a contract between two parties, one being the employer
and the other being the employee. An employee may be defined as: "A
person in the service of another under any contract of hire, express or
implied, oral or written, where the employer has the power or right to
control and direct the employee in the material details of how the work is
to be performed.
2. ETHICS
Ethics is the major branch of philosophy, encompassing proper conduct
and good living. It is significantly broader than the common conception of
ethics as the analyzing of right and wrong. A central aspect of ethics is
"the good life", the life worth living or that is simply satisfying, which is
held by many philosophers to be more important than moral conduct.
Profit Maximization Vs Wealth
Frequently, maximization of profits is regarded as the proper objective of
the firm, but it is not as inclusive a goal as that of maximizing
stockholder wealth. For one thing, total profits are not as important as
earnings per stock. A firm could always raise total profits by issuing

13
stock and using the proceeds to invest in Treasury bills. Even
maximization of earnings per stock, however, is not a fully appropriate
objective, partly because it does not specify the timing or duration of
expected returns. Is the investment project that will produce a $100,000
return 5 years from now more valuable than the project that will produce
annual returns of $15,000 in each of the next 5 years? An answer to this
question depends upon the time value of money. Few existing
stockholders would think favourably of a project that promised its first
return in 100 years, no matter how large this return. We must take into
account the time pattern of returns in our analysis.
Another shortcoming of the objective of maximizing earnings per stock is
that it does not consider the risk or uncertainty of the prospective
earnings stream. Some investment projects are far more risky than
others. As a result, the prospective stream of earnings per stock would be
more uncertain if these projects were undertaken. In addition, a company
will be more or less risky depending upon the amount of debt in relation
to equity in its capital structure. This financial risk is another
uncertainty in the minds of investors when they judge the firm in the
marketplace. Finally, earnings per stock objective do not take into
account any dividend the company might pay.
For the reasons given, an objective of maximizing earnings per stock may
not be the same as maximizing market price per stock. The market price
of a firm's stock represents the value that market participants place on
the firm.

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PORTFOLIO INVESTMENT
Portfolio investment represents passive holdings of securities such as
foreign stocks, bonds, or other financial assets, none of which entails
active management or control of the securities' issuer by the investor;
where such control exists, it is known as foreign direct investment.
Generally, this means the investor holds less than 10% of the total
shares or less than the amount needed to hold the majority vote.
Some examples of portfolio investment are:
 Purchase of shares in a foreign company.
 Purchase of bonds issued by a foreign government.
 Acquisition of assets in a foreign country.
Factors affecting international portfolio investment:
 tax rates on interest or dividends (investors will normally prefer
countries where the tax rates are relatively low)
 interest rates (money tends to flow to countries with high interest
rates)
 exchange rates (foreign investors may be attracted if the local
currency is expected to strengthen)
Portfolio investment is part of the capital account on the balance of
payments statistics.
MODERN PORTFOLIO THEORY
Modern portfolio theory (MPT) proposes how rational investors will use
diversification to optimize their portfolios, and how a risky asset should
be priced. The basic concepts of the theory are Markowitz diversification,
the efficient frontier, capital asset pricing model, the alpha and beta
coefficients, the Capital Market Line and the Securities Market Line.
MPT models an asset's return as a random variable, and models a
portfolio as a weighted combination of assets so that the return of a

15
portfolio is the weighted combination of the assets' returns. Moreover, a
portfolio's return is a random variable, and consequently has an expected
value and a variance. Risk, in this model, is the standard deviation of
return.
 Risk and return
The model assumes that investors are risk averse, meaning that given
two assets that offer the same expected return, investors will prefer the
less risky one. Thus, an investor will take on increased risk only if
compensated by higher expected returns. Conversely, an investor who
wants higher returns must accept more risk. The exact trade-off will
differ by investor based on individual risk aversion characteristics. The
implication is that a rational investor will not invest in a portfolio if a
second portfolio exists with a more favorable risk-return profile – i.e., if
for that level of risk an alternative portfolio exists which has better
expected returns.

16
 Mean and variance
It is further assumed that investor's risk / reward preference can be
described via a quadraticutility function. The effect of this assumption is
that only the expected return and the volatility (i.e., mean return and
standard deviation) matter to the investor. The investor is indifferent to
other characteristics of the distribution of returns, such as its skew
(measures the level of asymmetry in the distribution) or kurtosis
(measure of the thickness or so-called "fat tail").
Note that the theory uses a parameter, volatility, as a proxy for risk,
while return is an expectation on the future. This is in line with the
efficient market hypothesis and most of the classical findings in finance
such as Black and Scholes European Option Pricing (martingale
measure: shortly speaking means that the best forecast for tomorrow is
the price of today). Recent innovations in portfolio theory, particularly
under the rubric of Post-Modern Portfolio Theory (PMPT), have exposed
several flaws in this reliance on variance as the investor's risk proxy:
1. The theory uses a historical parameter, volatility, as a proxy for
risk, while return is an expectation on the future. (It is noted
though that this is in line with the Efficiency Hypothesis and most
of the classical findings in finance such as Black and Scholes
which make use of the martingale measure, i.e. the assumption
that the best forecast for tomorrow is the price of today).
2. The statement that "the investor is indifferent to other
characteristics" seems not to be true given that skewness risk
appears to be priced by the market.
Under the model:
3. Portfolio return is the proportion-weighted combination of the
constituent assets' returns.
4. Portfolio volatility is a function of the correlation ρ of the
component assets. The change in volatility is non-linear as the
weighting of the component assets changes.

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 Diversification
An investor can reduce portfolio risk simply by holding instruments
which are not perfectly correlated. In other words, investors can reduce
their exposure to individual asset risk by holding a diversified portfolio of
assets. Diversification will allow for the same portfolio return with
reduced risk.
If all the assets of a portfolio have a correlation of 1, i.e., perfect
correlation, the portfolio volatility (standard deviation) will be equal to the
weighted sum of the individual asset volatilities. Hence the portfolio
variance will be equal to the square of the total weighted sum of the
individual asset volatilities.
If all the assets have a correlation of 0, i.e., perfectly uncorrelated, the
portfolio variance is the sum of the individual asset weights squared
times the individual asset variance (and volatility is the square root of
this sum).If correlation is less than zero, i.e., the assets are inversely
correlated, the portfolio variance and hence volatility will be less than if
the correlation is 0.
 The efficient frontier
Every possible asset combination can be plotted in risk-return space, and
the collection of all such possible portfolios defines a region in this space.
The line along the upper edge of this region is known as the efficient
frontier (sometimes "the Markowitz frontier"). Combinations along this
line represent portfolios (explicitly excluding the risk-free alternative) for
which there is lowest risk for a given level of return. Conversely, for a
given amount of risk, the portfolio lying on the efficient frontier
represents the combination offering the best possible return.
Mathematically the Efficient Frontier is the intersection of the Set of
Portfolios with Minimum Variance (MVS) and the Set of Portfolios with
Maximum Return.

18
The efficient frontier is illustrated above, with return μp on the y-axis,
and risk σp on the x-axis; an alternative illustration from the diagram in
the CAPM article is at right.
The efficient frontier will be convex – this is because the risk-return
characteristics of a portfolio change in a non-linear fashion as its
component weightings are changed. (As described above, portfolio risk isa
function of the correlation of the component assets, and thus changes in
a non-linear fashion as the weighting of component assets changes.) The
efficient frontier is a parabola (hyperbola) when expected return is plotted
against variance (standard deviation).
The region above the frontier is unachievable by holding risky assets
alone. No portfolios can be constructed corresponding to the points in
this region. Points below the frontier are suboptimal. A rational investor
will hold a portfolio only on the frontier.
 The risk-free asset
The risk-free asset is the (hypothetical) asset which pays a risk-free rate.
It is usually provided by an investment in short-dated Government
securities. The risk-free asset has zero variance in returns (hence is risk-
free); it is also uncorrelated with any other asset (by definition: since its
variance is zero). As a result, when it is combined with any other asset,
or portfolio of assets, the change in return and also in risk is linear.

19
Because both risk and return change linearly as the risk-free asset is
introduced into a portfolio, this combination will plot a straight line in
risk-return space. The line starts at 100% in cash and weight of the risky
portfolio = 0 (i.e., intercepting the return axis at the risk-free rate) and
goes through the portfolio in question where cash holding = 0 and
portfolio weight = 1.
 Portfolio leverage
An investor adds leverage to the portfolio by borrowing the risk-free asset.
The addition of the risk-free asset allows for a position in the region
above the efficient frontier. Thus, by combining a risk-free asset with
risky assets, it is possible to construct portfolios whose risk-return
profiles are superior to those on the efficient frontier.
1. An investor holding a portfolio of risky assets, with a holding in
cash, has a positive risk-free weighting (a de-leveraged portfolio).
The return and standard deviation will be lower than the portfolio
alone, but since the efficient frontier is convex, this combination
will sit above the efficient frontier – i.e., offering a higher return for
the same risk as the point below it on the frontier.
2. The investor who borrows money to fund his/her purchase of the
risky assets has a negative risk-free weighting – i.e., a leveraged
portfolio. Here the return is geared to the risky portfolio. This
combination will again offer a return superior to those on the
frontier.
 The market portfolio
The efficient frontier is a collection of portfolios, each one optimal for a
given amount of risk. A quantity known as the Sharpe ratio represents a
measure of the amount of additional return (above the risk-free rate) a
portfolio provides compared to the risk it carries. The portfolio on the
efficient frontier with the highest Sharpe Ratio is known as the market

20
portfolio, or sometimes the super-efficient portfolio; it is the tangency-
portfolio in the above diagram. This portfolio has the property that any
combination of it and the risk-free asset will produce a return that is
above the efficient frontier—offering a larger return for a given amount of
risk than a portfolio of risky assets on the frontier would.
 Portfolio Investment Plan
A major thesis of investment is the need to consider individual
investments as components of an overall investment plan. Without
limiting the range of instruments covered, it is convenient to call
individual investment securities and the totality the portfolio. The basic
problem of portfolio management is to establish an investment goal or
objective and then decide how best to reach that goal with the securities
available. This has been stated as an attempt by the investor to obtain
the maximum return with minimum risk. In order to do a proper job of
portfolio management, the investor must be aware of the investment
process.
 Basic Principles:
1. It is the portfolio that matters.
2. Larger expected portfolio returns come only with larger portfolio
risk.
3. The risk associated with a security type depends on when the
investment will be liquidated.
4. Diversification works.
5. Each portfolio should be tailored to the particular needs of its
owner.
6. Competition for abnormal returns is extensive.

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 Portfolio Investment Process:
The process used to manage a security portfolio is conceptually the same
as that used in any managerial decision. The portfolio process is as
follows:
Portfolio Investment Process
Planning
1. Investor Condition
2. Market Condition
3. Investment/Speculative Policies
4. Statement of Investment Policy
5. Strategic Asset Allocation
Implementation
1. Rebalance Strategic Asset Allocation
2. Tactical Asset Allocation
3. Security Selection
Monitoring
1. Evaluate Statement of Investment Policy
2. Evaluate Investment Performance

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A. Planning
The aspect of portfolio management is the most important element of
proper portfolio investment and speculation. In the planning stage, a
careful review should be conducted of the investor's financial situation
and current capital market conditions. Investor and capital market
conditions are blended in order to determine a set of investment and
speculative policies as well as a long-run strategic asset allocation.
Portfolio Planning Stage
Investor condition
1. Financialsituation
 Marketable and non-
marketable assets
and liabilities
 Financial Distress
2. Knowledge
3. Risk Tolerance
Market conditions
1. Long-term Expectations
2. Short-term Expectations
Investor policies
1. Strategic Asset Allocation
 Current
 Passive Rebalancing
2. Speculative strategy
 Tactical Asset Allocation
 Security Selection
3. Internal/External Management
Statement of Investment Policy
Policy
1. Objective
2. Strategy (Policies)
3. Constraints

23
B. Implementation
In the implementation stage, three decisions need to be made, if the
percentage holdings of various classes are currently different from the
desired holdings. The implementation stage is shown as follows:
Portfolio Implementation Stage
Statement of
investment policy
Current market
conditions
Rebalance Strategic Asset Allocation
Rebalance Tactical Asset Allocation
1. Asset classes
2. Sectors/Industries
Security selection

24
C. Portfolio Monitoring
The last stage in the portfolio investment process consists of monitoring
portfolio returns in order to determine which speculative decisions seem
to be adding value to the portfolio and to ascertain that the portfolio's
objective and constraints are being met and have not changes. There are
3 aspects to this monitoring. First, the actual portfolio held should be
examined to ascertain that it is in compliance with the statement of
investment policy and to determine whether any passive rebalancing of
the asset mix is required. Second, investment performance should be
reviewed. This shou
ld consist of a review of returns on:
1. The aggregate portfolio;
2. Each asset class and investment manager;
3. The returns from any speculative strategies employed.
Finally, adjustments to the statement of investment policies and
investment managers should be made if necessary.
The portfolio monitoring stage is as follows:
Statement of Investment Policy
1. Compliance
2. Periodic Revision
Portfolio performance
1. Aggregate Portfolio
2. Asset classes and Managers
3. Speculative Strategy Return
Actions Required Control
1. Statement of Investment Policy
2. Manager Selection

CHAPTER-2
REVIEW OF
LITERATURE

25
REVIEW OF LITERATURE
Ananth N. madhavan (2003)
Conducted the research on, review of literature of risk analysis in
portfolio management the tools of this study are accurate measurement
and analysis of risk. The tools of this study is choice of risk model , risk
measurement tools can provided invaluable insights as to portfolio risk ,
they must be applied with considerable care. This detailed overview of
recent development in risk analysis and modeling focus on practical
application.
Peter Christoersen, Xuhui (Nick) Pan (2014)
Conducted the research on Equity Portfolio Management using Option
Price Information. The researcher survey the recent academic literature
that uses option-implied information to construct equity portfolios.
Studies show that equity managers can earn a positive alpha by using
information in individual equity options, by using stocks. Exposure to
information in market index options, and by using stocks.Exposure to
crude oil option information. Option-implied information can also help
construct better mean-variance portfolios and better estimates of market
beta.
PRIYANKA G. BHATT, PROF. (DR.) VIJAY H.VYAS (2014)
Conducted the research on A Study on Performance Evaluation of
Selected Equity Mutual Funds in India. The main objective of this study
work is to study financial performance of selected mutual fund schemes
This study is aimed at evaluating performance of mutual funds and also
to inspecting the role of asset management companies in reference to
public and private sector. beta, standard deviation, coefficient of
determination, Sharpe ratio. The findings of this study will helpful to
investors for their investment decisions in future.

26
S Rohitraj, Dr D H Rao (2015)
Conducted the research on performance evaluation of open ended large
cap equity mutual fund and mid & small cap equity mutual fund growth
Scheme with special reference to SBI mutual Fund and HDFC mutual
fund.The benchmark taken for this is CNX NIFTY Index. The study is
primarily Done to evaluate the performance of the selected Mutual Funds
schemes over a period ranging from 2009 to 2014. In this research work
the performance of the fund will be evaluated using five portfolios
Performance measurement parameters like Beta, Standard Deviation,
Sharpe Ratio, Treynor Ratio and Jensen’s Alpha.The performance of the
fund in various securities such as in stocks, bonds and short-term
money market instruments depends upon the economic condition of the
country and the world as a whole.

CHAPTER-3
RESEARCH
METHODOLOGY

27
Research Methodology
 Need for research
The investor should have knowledge of the risk and return of a securities
he invest and if he lacks in this knowledge he may lose the invested
money also so necessary to minimize risk maximize the return through
portfolio.
Any researcher being a logical process definitely follows our
predetermined sequence or step in order to obtain the desire result or
outcomes.
 Problem statement
The Research problem statement is that the “To study the wealth
maximization – portfolio investment”.
 Objectives
1) To help investor selecting the appropriate investment avenue for
asset allocation.
2) To study need for risk profiting of an individual where by suggesting
an ideal portfolio.
 Research design
Descriptive research design is essentially a research to describe
something. It may also be used for prediction purposes. Descriptive
information. Descriptive study is used to study the situation. This study
helps to describe the situation. A detail descriptive about present
situation can be found out by the descriptive study. In this involves the
analysis of the situation using the secondary data. Descriptive Research
Design is used in this study

28
 Data Collection:
Secondary data means the data, which are already collected and used by
somebody else. Secondary data has been collected from the following
This study is based on only secondary data which are collected from
website, magazine, and journals.
During my research study, Secondary data collection method is used.
 Sample Unit
NSE listed 50 securities.
 Sample Size
NSE 10 SECURITIES
 Sample Period
JAN-2014 to Dec-2015(Monthly basis).
 Limitation of the study
1. There was limited time period for research
2. Due to change in economic condition it is possible that result very
time to time

29
 Data Analysis Tools
 Average
In mathematics, an average, of a data set refers to a measure of the
"middle" or "expected" value of the data set. There are many different
descriptive statistics that can be chosen as a measurement of the central
tendency of the data items.
An average is a single value that is meant to typify a list of values. If all
the numbers in the list are the same, then this number should be used.
If the numbers are not all the same, an easy way to get a representative
value from a list is to randomly pick any number from the list. However,
the word 'average' is usually reserved for more sophisticated methods
that are generally found to be more useful.
 Arithmetic mean
In mathematics and statistics, the arithmetic mean (or simply the mean)
of a list of numbers is the sum of all of the list divided by the number of
items in the list. If the list is a statistical population, then the mean of
that population is called a population mean. If the list is a statistical
sample, we call the resulting statistic a sample mean.
The mean is the most commonly-used type of average and is often
referred to simply as the average. The term "mean" or "arithmetic mean"
is preferred in mathematics and statistics to distinguish it from other
averages such as the median and the mode.
 Beta (β)
Beta describes the relationship between the stocks return & the market
index returns. This can be positive & negative. It is the percentage
change in the price of the stock regressed to the percentage changes in

30
the market index. If beta is 1, a one percentage change in market index
will feed to one percentage change in price & stock. If beta is zero, stock
price is unrelated to the market index. If beta is minus one, it indicates a
negative relationship with market index.
BETA (β) =
( )( )
( )
 Alpha (α)
Alpha is the distance between the horizontal axis & lines intersection
with x axis. It measures the unsystematic risk of company. If x is a
positive return, then that scrip will have high returns. If x=0, then the
regression line goes through the origin & its returns simply depend on
the beta times the market return.
ALFA (α) =
( ) ( )
 Residual variance
It is unique and peculiar to a firm or an industry. It stems from
managerial inefficiency, technological change in the production process,
availability of raw material, changes in the consumer preference, and
labour problems. The nature and magnitude of the above mentioned
factors differ from industry to industry, and company to company. They
have to be analyzed separately for each industry and firm.
Residual variance (σ 2ei) =
( ( ) )

CHAPTER-4
DATA ANALYSIS &
INTERPRETATION

31
1. ACC
MONTH NSE COMPANY Return X Return Y XY X² Y²
X Y
Dec-13 6304.00 1108.20
Jan-14 6223.16 1010.85 -1.28 -8.78 11.26 1.64 77.17
Feb-14 6098.75 1103.45 -2.00 9.16 -18.31 4.00 83.92
Mar-14 6507.98 1391.55 6.71 26.11 175.20 45.03 681.68
Apr-14 6754.74 1291.70 3.79 -7.18 -27.21 14.38 51.49
May-14 7083.16 1339.50 4.86 3.70 17.99 23.64 13.69
Jun-14 7542.84 1468.05 6.49 9.60 62.28 42.12 92.10
Jul-14 7676.76 1394.50 1.78 -5.01 -8.89 3.15 25.10
Aug-14 7787.35 1491.70 1.44 6.97 10.04 2.08 48.58
Sep-14 8053.53 1404.15 3.42 -5.87 -20.06 11.68 34.45
Oct-14 7953.11 1500.90 -1.25 6.89 -8.59 1.55 47.48
Nov-14 8417.06 1470.35 5.83 -2.04 -11.87 34.03 4.14
Dec-14 8309.87 1399.40 -1.27 -4.83 6.15 1.62 23.28
Jan-15 8517.77 1560.05 2.50 11.48 28.72 6.26 131.79
Feb-15 8750.44 1683.25 2.73 7.90 21.57 7.46 62.37
Mar-15 8664.06 1560.60 -0.99 -7.29 7.19 0.97 53.09
Apr-15 8524.01 1438.70 -1.62 -7.81 12.63 2.61 61.01
May-15 8300.81 1514.55 -2.62 5.27 -13.81 6.86 27.80
Jun-15 8195.61 1440.65 -1.27 -4.88 6.18 1.61 23.81
Jul-15 8479.52 1383.15 3.46 -3.99 -13.83 12.00 15.93
Aug-15 8309.92 1334.55 -2.00 -3.51 7.03 4.00 12.35
Sep-15 7814.89 1344.15 -5.96 0.72 -4.29 35.49 0.52
Oct-15 8172.32 1376.10 4.57 2.38 10.87 20.92 5.65
Nov-15 7887.64 1347.00 -3.48 -2.11 7.37 12.14 4.47
Dec-15 7802.64 1343.95 -1.08 -0.23 0.24 1.16 0.05
TOTAL 22.78 26.65 257.87 296.39 1581.91
AVERAGE 0.95 1.11
VARIANCE 11.95
β 0.85 α 0.31 σ 2ei 61.61 Ri 1.11
INTERPRETATION
β= 0.85
Here, beta of ACC is 0.85 which indicates that , 1% change in market index leads
to 0.85 % change in price of ACC.
α= 0.31
Here α=0.31,It indicates the independent return of security. It means if market
return is zero then still security will able to earn return of 0.31.

32
2. ASIAN PAINTS LTD.
MONTH NSE COMPANY
Return
X
Return
Y
XY X² Y²
X Y
Dec-13 6304.00 490.75
Jan-14 6223.16 472.25 -1.28 -3.77 4.83 1.64 14.21
Feb-14 6098.75 472.95 -2.00 0.15 -0.30 4.00 0.02
Mar-14 6507.98 546.50 6.71 15.55 104.35 45.03 241.84
Apr-14 6754.74 505.15 3.79 -7.57 -28.69 14.38 57.25
May-14 7083.16 509.45 4.86 0.85 4.14 23.64 0.72
Jun-14 7542.84 592.70 6.49 16.34 106.05 42.12 267.03
Jul-14 7676.76 629.15 1.78 6.15 10.92 3.15 37.82
Aug-14 7787.35 624.15 1.44 -0.79 -1.14 2.08 0.63
Sep-14 8053.53 629.40 3.42 0.84 2.88 11.68 0.71
Oct-14 7953.11 656.15 -1.25 4.25 -5.30 1.55 18.06
Nov-14 8417.06 743.70 5.83 13.34 77.84 34.03 178.04
Dec-14 8309.87 751.75 -1.27 1.08 -1.38 1.62 1.17
Jan-15 8517.77 857.45 2.50 14.06 35.18 6.26 197.70
Feb-15 8750.44 818.35 2.73 -4.56 -12.46 7.46 20.79
Mar-15 8664.06 808.75 -0.99 -1.17 1.16 0.97 1.38
Apr-15 8524.01 762.90 -1.62 -5.67 9.16 2.61 32.14
May-15 8300.81 787.00 -2.62 3.16 -8.27 6.86 9.98
Jun-15 8195.61 754.45 -1.27 -4.14 5.24 1.61 17.11
Jul-15 8479.52 881.45 3.46 16.83 58.31 12.00 283.37
Aug-15 8309.92 848.60 -2.00 -3.73 7.45 4.00 13.89
Sep-15 7814.89 841.10 -5.96 -0.88 5.26 35.49 0.78
Oct-15 8172.32 828.70 4.57 -1.47 -6.74 20.92 2.17
Nov-15 7887.64 840.45 -3.48 1.42 -4.94 12.14 2.01
Dec-15 7802.64 883.85 -1.08 5.16 -5.56 1.16 26.67
TOTAL 22.78 65.44 358.00 296.39 1425.49
AVERAGE 0.95 2.73
VARIANCE 11.95
β 1.08 α 1.70 σ 2ei 42.20 Ri 2.73
INTERPRETATION
β= 1.08
Here, beta of ASIAN PAINTS is 1.08. Which indicates that, 1% change in market
price leads to 1.08 % change in price of ASIANPAINTS.
α= 1.70
It indicates the independent return of security. It means if market return is zero
then still security will able to earn return of 1.70.

33
3. GRASIM INDUSTRIES LTD.
X Y
Dec-13 6304.00 2714.50
Jan-14 6223.16 2573.85 -1.28 -5.18 6.64 1.64 26.85
Feb-14 6098.75 2537.90 -2.00 -1.40 2.79 4.00 1.95
Mar-14 6507.98 2886.55 6.71 13.74 92.18 45.03 188.73
Apr-14 6754.74 2613.60 3.79 -9.46 -35.85 14.38 89.41
May-14 7083.16 3180.25 4.86 21.68 105.41 23.64 470.06
Jun-14 7542.84 3428.40 6.49 7.80 50.64 42.12 60.88
Jul-14 7676.76 3220.90 1.78 -6.05 -10.75 3.15 36.63
Aug-14 7787.35 3398.75 1.44 5.52 7.95 2.08 30.49
Sep-14 8053.53 3550.00 3.42 4.45 15.21 11.68 19.80
Oct-14 7953.11 3510.70 -1.25 -1.11 1.38 1.55 1.23
Nov-14 8417.06 3554.35 5.83 1.24 7.25 34.03 1.55
Dec-14 8309.87 3391.20 -1.27 -4.59 5.85 1.62 21.07
Jan-15 8517.77 3882.05 2.50 14.47 36.21 6.26 209.50
Feb-15 8750.44 3759.15 2.73 -3.17 -8.65 7.46 10.02
Mar-15 8664.06 3622.15 -0.99 -3.64 3.60 0.97 13.28
Apr-15 8524.01 3597.35 -1.62 -0.68 1.11 2.61 0.47
May-15 8300.81 3643.05 -2.62 1.27 -3.33 6.86 1.61
Jun-15 8195.61 3441.60 -1.27 -5.53 7.01 1.61 30.58
Jul-15 8479.52 3708.65 3.46 7.76 26.88 12.00 60.21
Aug-15 8309.92 3439.05 -2.00 -7.27 14.54 4.00 52.85
Sep-15 7814.89 3492.90 -5.96 1.57 -9.33 35.49 2.45
Oct-15 8172.32 3709.70 4.57 6.21 28.39 20.92 38.53
Nov-15 7887.64 3739.70 -3.48 0.81 -2.82 12.14 0.65
Dec-15 7802.64 3747.25 -1.08 0.20 -0.22 1.16 0.04
TOTAL 22.78 38.65 342.11 296.39 1368.84
AVERAGE 0.95 1.61
VARIANCE 11.95
Β 1.11 α 0.56 σ 2ei 43.96 Ri 1.61
INTERPRETATION
β= 1.11
Here, beta of GRASIM INDUSTRIES LTD. is 1.11 which indicates that, 1% change
in market price leads to 1.11 %change in price of GRASIM INDUSTRIES LTD.
α= 0.56
Here α=0.555 ,It indicates the independent return of security. It means if market
return is zero then still security will able to earn return of 0.56

34
4. HCL TECHNOLOGIES LTD
X Y
Dec-13 6304.00 1263.10
Jan-14 6223.16 1464.70 -1.28 15.96 -20.47 1.64 254.74
Feb-14 6098.75 1576.00 -2.00 7.60 -15.19 4.00 57.74
Mar-14 6507.98 1390.50 6.71 -11.77 -78.98 45.03 138.54
Apr-14 6754.74 1403.65 3.79 0.95 3.59 14.38 0.89
May-14 7083.16 1417.35 4.86 0.98 4.75 23.64 0.95
Jun-14 7542.84 1496.55 6.49 5.59 36.26 42.12 31.22
Jul-14 7676.76 1554.90 1.78 3.90 6.92 3.15 15.20
Aug-14 7787.35 1630.35 1.44 4.85 6.99 2.08 23.55
Sep-14 8053.53 1715.35 3.42 5.21 17.82 11.68 27.18
Oct-14 7953.11 1605.25 -1.25 -6.42 8.00 1.55 41.20
Nov-14 8417.06 1662.15 5.83 3.54 20.68 34.03 12.56
Dec-14 8309.87 1595.95 -1.27 -3.98 5.07 1.62 15.86
Jan-15 8517.77 1794.10 2.50 12.42 31.06 6.26 154.15
Feb-15 8750.44 2020.50 2.73 12.62 34.47 7.46 159.24
Mar-15 8664.06 979.65 -0.99 -51.51 50.85 0.97 2653.74
Apr-15 8524.01 879.50 -1.62 -10.22 16.53 2.61 104.51
May-15 8300.81 1011.80 -2.62 15.04 -39.39 6.86 226.28
Jun-15 8195.61 921.05 -1.27 -8.97 11.37 1.61 80.45
Jul-15 8479.52 996.60 3.46 8.20 28.42 12.00 67.28
Aug-15 8309.92 971.60 -2.00 -2.51 5.02 4.00 6.29
Sep-15 7814.89 982.15 -5.96 1.09 -6.47 35.49 1.18
Oct-15 8172.32 869.55 4.57 -11.46 -52.44 20.92 131.44
Nov-15 7887.64 871.85 -3.48 0.26 -0.92 12.14 0.07
Dec-15 7802.64 855.45 -1.08 -1.88 2.03 1.16 3.54
TOTAL 22.78 -10.52 75.96 296.39 4207.83
AVERAGE 0.95 -0.44
VARIANCE 11.95
β 0.31 α -0.74 σ 2ei 189.83 Ri -0.44
INTERPRETATION
β=0.31
Here, beta of HCL TECHNOLOGY LTD.Is 0.31 which indicates that, 1% change in
market price leads to 0.31% change in price of HCL TECHNOLOGY LTD .
α= -0.74
Here α=-0.74, it indicates that the company performance is less than market
performance.

35
5. HDFC
X Y
Dec-13 6304.00 665.75
Jan-14 6223.16 628.90 -1.28 -5.54 7.10 1.64 30.64
Feb-14 6098.75 667.50 -2.00 6.14 -12.27 4.00 37.67
Mar-14 6507.98 748.85 6.71 12.19 81.78 45.03 148.53
Apr-14 6754.74 718.25 3.79 -4.09 -15.49 14.38 16.70
May-14 7083.16 794.10 4.86 10.56 51.35 23.64 111.52
Jun-14 7542.84 821.35 6.49 3.43 22.27 42.12 11.78
Jul-14 7676.76 833.65 1.78 1.50 2.66 3.15 2.24
Aug-14 7787.35 842.95 1.44 1.12 1.61 2.08 1.24
Sep-14 8053.53 871.50 3.42 3.39 11.58 11.68 11.47
Oct-14 7953.11 912.20 -1.25 4.67 -5.82 1.55 21.81
Nov-14 8417.06 957.40 5.83 4.96 28.91 34.03 24.55
Dec-14 8309.87 952.00 -1.27 -0.56 0.72 1.62 0.32
Jan-15 8517.77 1076.00 2.50 13.03 32.59 6.26 169.66
Feb-15 8750.44 1067.85 2.73 -0.76 -2.07 7.46 0.57
Mar-15 8664.06 1022.85 -0.99 -4.21 4.16 0.97 17.76
Apr-15 8524.01 989.20 -1.62 -3.29 5.32 2.61 10.82
May-15 8300.81 1051.10 -2.62 6.26 -16.39 6.86 39.16
Jun-15 8195.61 1067.45 -1.27 1.56 -1.97 1.61 2.42
Jul-15 8479.52 1111.20 3.46 4.10 14.20 12.00 16.80
Aug-15 8309.92 1028.15 -2.00 -7.47 14.95 4.00 55.86
Sep-15 7814.89 1068.90 -5.96 3.96 -23.61 35.49 15.71
Oct-15 8172.32 1097.05 4.57 2.63 12.05 20.92 6.94
Nov-15 7887.64 1075.95 -3.48 -1.92 6.70 12.14 3.70
Dec-15 7802.64 1074.05 -1.08 -0.18 0.19 1.16 0.03
TOTAL 22.78 51.46 220.48 296.39 757.89
AVERAGE 0.95 2.14
VARIANCE 11.95
β 0.62 α 1.55 σ 2ei 24.56 Ri 2.14
INTERPRETATION
β= 0.62
Here, beta of HDFC is 0.62 which indicates that, 1% change in market price leads
to 0.62%change in price of HDFC.
α= 1.55
Here α=1.55 ,It indicates the independent return of security. It means if market
return is zero then still security will able to earn return of 1.55.

36
6. PNB
X Y
Dec-13 6304.00 626.65
Jan-14 6223.16 548.60 -1.28 -12.46 15.97 1.64 155.13
Feb-14 6098.75 552.20 -2.00 0.66 -1.31 4.00 0.43
Mar-14 6507.98 744.10 6.71 34.75 233.19 45.03 1207.69
Apr-14 6754.74 784.20 3.79 5.39 20.43 14.38 29.04
May-14 7083.16 944.15 4.86 20.40 99.17 23.64 416.02
Jun-14 7542.84 992.30 6.49 5.10 33.10 42.12 26.01
Jul-14 7676.76 956.35 1.78 -3.62 -6.43 3.15 13.13
Aug-14 7787.35 946.00 1.44 -1.08 -1.56 2.08 1.17
Sep-14 8053.53 887.30 3.42 -6.21 -21.21 11.68 38.50
Oct-14 7953.11 930.70 -1.25 4.89 -6.10 1.55 23.92
Nov-14 8417.06 1076.95 5.83 15.71 91.67 34.03 246.93
Dec-14 8309.87 219.10 -1.27 -79.66 101.44 1.62 6345.00
Jan-15 8517.77 189.90 2.50 -13.33 -33.34 6.26 177.62
Feb-15 8750.44 165.55 2.73 -12.82 -35.03 7.46 164.42
Mar-15 8664.06 144.40 -0.99 -12.78 12.61 0.97 163.22
Apr-15 8524.01 159.65 -1.62 10.56 -17.07 2.61 111.53
May-15 8300.81 153.40 -2.62 -3.91 10.25 6.86 15.33
Jun-15 8195.61 139.15 -1.27 -9.29 11.77 1.61 86.29
Jul-15 8479.52 150.90 3.46 8.44 29.25 12.00 71.30
Aug-15 8309.92 144.85 -2.00 -4.01 8.02 4.00 16.07
Sep-15 7814.89 133.45 -5.96 -7.87 46.88 35.49 61.94
Oct-15 8172.32 128.40 4.57 -3.78 -17.31 20.92 14.32
Nov-15 7887.64 144.65 -3.48 12.66 -44.09 12.14 160.17
Dec-15 7802.64 120.20 -1.08 -16.90 18.21 1.16 285.71
TOTAL 22.78 -69.16 548.53 296.39 9830.89
AVERAGE 0.95 -2.88
VARIANCE 11.95
β 2.24 α -5.00 σ 2ei 375.40 Ri -2.88
INTERPRETATION
β= 2.24
Here, betais 2.24 of PNB which indicates that, 1% change in market price leads to
2.24 % change in price of PNB.
α= -5.00
Here α=-5.00, it indicates that the company performance is less than market
performance.

37
7. RELIANCE
X Y
Dec-13 6304.00 894.80
Jan-14 6223.16 830.85 -1.28 -7.15 9.16 1.64 51.08
Feb-14 6098.75 799.25 -2.00 -3.80 7.60 4.00 14.47
Mar-14 6507.98 929.50 6.71 16.30 109.35 45.03 265.58
Apr-14 6754.74 935.30 3.79 0.62 2.37 14.38 0.39
May-14 7083.16 1065.15 4.86 13.88 67.50 23.64 192.74
Jun-14 7542.84 1014.70 6.49 -4.74 -30.74 42.12 22.43
Jul-14 7676.76 1006.00 1.78 -0.86 -1.52 3.15 0.74
Aug-14 7787.35 999.25 1.44 -0.67 -0.97 2.08 0.45
Sep-14 8053.53 945.35 3.42 -5.39 -18.44 11.68 29.10
Oct-14 7953.11 999.20 -1.25 5.70 -7.10 1.55 32.45
Nov-14 8417.06 990.85 5.83 -0.84 -4.87 34.03 0.70
Dec-14 8309.87 891.15 -1.27 -10.06 12.81 1.62 101.25
Jan-15 8517.77 915.35 2.50 2.72 6.79 6.26 7.37
Feb-15 8750.44 866.25 2.73 -5.36 -14.65 7.46 28.77
Mar-15 8664.06 824.70 -0.99 -4.80 4.73 0.97 23.01
Apr-15 8524.01 862.85 -1.62 4.63 -7.48 2.61 21.40
May-15 8300.81 877.15 -2.62 1.66 -4.34 6.86 2.75
Jun-15 8195.61 1000.45 -1.27 14.06 -17.81 1.61 197.60
Jul-15 8479.52 1001.65 3.46 0.12 0.42 12.00 0.01
Aug-15 8309.92 856.80 -2.00 -14.46 28.92 4.00 209.12
Sep-15 7814.89 860.50 -5.96 0.43 -2.57 35.49 0.19
Oct-15 8172.32 947.85 4.57 10.15 46.43 20.92 103.04
Nov-15 7887.64 968.00 -3.48 2.13 -7.41 12.14 4.52
Dec-15 7802.64 1000.90 -1.08 3.40 -3.66 1.16 11.55
TOTAL 22.78 17.65 174.53 296.39 1320.70
AVERAGE 0.95 0.74
VARIANCE 11.95
β 0.57 α 0.19 σ 2ei 55.32 Ri 0.74
INTERPRETATION
β= 0.57
Here, betais 0.57 of RELIANCE which indicates that, 1% change in market price
leads to 0.57 %change in price of RELIANCE.
α= 0.19
then still security will able to earn return of 0.19

38
8. TATA CHEMICALS LTD.
X Y
Dec-13 6304.00 274.90
Jan-14 6223.16 262.35 -1.28 -4.57 5.85 1.64 20.84
Feb-14 6098.75 267.60 -2.00 2.00 -4.00 4.00 4.00
Mar-14 6507.98 286.85 6.71 7.19 48.27 45.03 51.75
Apr-14 6754.74 284.50 3.79 -0.82 -3.11 14.38 0.67
May-14 7083.16 303.45 4.86 6.66 32.39 23.64 44.37
Jun-14 7542.84 343.85 6.49 13.31 86.40 42.12 177.25
Jul-14 7676.76 347.25 1.78 0.99 1.76 3.15 0.98
Aug-14 7787.35 375.95 1.44 8.26 11.91 2.08 68.31
Sep-14 8053.53 398.75 3.42 6.06 20.73 11.68 36.78
Oct-14 7953.11 406.85 -1.25 2.03 -2.53 1.55 4.13
Nov-14 8417.06 436.70 5.83 7.34 42.80 34.03 53.83
Dec-14 8309.87 434.30 -1.27 -0.55 0.70 1.62 0.30
Jan-15 8517.77 456.70 2.50 5.16 12.90 6.26 26.60
Feb-15 8750.44 453.60 2.73 -0.68 -1.85 7.46 0.46
Mar-15 8664.06 442.00 -0.99 -2.56 2.52 0.97 6.54
Apr-15 8524.01 427.05 -1.62 -3.38 5.47 2.61 11.44
May-15 8300.81 432.45 -2.62 1.26 -3.31 6.86 1.60
Jun-15 8195.61 420.90 -1.27 -2.67 3.38 1.61 7.13
Jul-15 8479.52 489.05 3.46 16.19 56.09 12.00 262.16
Aug-15 8309.92 400.10 -2.00 -18.19 36.38 4.00 330.82
Sep-15 7814.89 380.95 -5.96 -4.79 28.51 35.49 22.91
Oct-15 8172.32 408.30 4.57 7.18 32.84 20.92 51.54
Nov-15 7887.64 420.25 -3.48 2.93 -10.20 12.14 8.57
Dec-15 7802.64 401.35 -1.08 -4.50 4.85 1.16 20.23
TOTAL 22.78 43.88 408.75 296.39 1213.21
AVERAGE 0.95 1.83
VARIANCE 11.95
β 1.34 α 0.56 σ 2ei 29.21 Ri 1.83
INTERPRETATION
β= 1.34
Here, beta of TATA CEMICALS is 1.34 which indicates that, 1% change in market
price leads to 1.34 % change in price of TATA CEMICALS.
α= 0.56
then still security will able to earn return of 0.56

39
9. ULTRATECH CEMENT LTD.
X Y
Dec-13 6304.00 1763.35
Jan-14 6223.16 1707.20 -1.28 -3.18 4.08 1.64 10.14
Feb-14 6098.75 1839.85 -2.00 7.77 -15.53 4.00 60.37
Mar-14 6507.98 2188.90 6.71 18.97 127.30 45.03 359.92
Apr-14 6754.74 2027.90 3.79 -7.36 -27.89 14.38 54.10
May-14 7083.16 2384.75 4.86 17.60 85.56 23.64 309.66
Jun-14 7542.84 2599.45 6.49 9.00 58.43 42.12 81.05
Jul-14 7676.76 2421.85 1.78 -6.83 -12.13 3.15 46.68
Aug-14 7787.35 2546.90 1.44 5.16 7.44 2.08 26.66
Sep-14 8053.53 2625.20 3.42 3.07 10.51 11.68 9.45
Oct-14 7953.11 2551.35 -1.25 -2.81 3.51 1.55 7.91
Nov-14 8417.06 2490.05 5.83 -2.40 -14.02 34.03 5.77
Dec-14 8309.87 2671.25 -1.27 7.28 -9.27 1.62 52.95
Jan-15 8517.77 3139.80 2.50 17.54 43.88 6.26 307.67
Feb-15 8750.44 3137.40 2.73 -0.08 -0.21 7.46 0.01
Mar-15 8664.06 2875.00 -0.99 -8.36 8.26 0.97 69.95
Apr-15 8524.01 2666.10 -1.62 -7.27 11.75 2.61 52.80
May-15 8300.81 2976.65 -2.62 11.65 -30.50 6.86 135.68
Jun-15 8195.61 2991.40 -1.27 0.50 -0.63 1.61 0.25
Jul-15 8479.52 3149.65 3.46 5.29 18.33 12.00 27.99
Aug-15 8309.92 2898.10 -2.00 -7.99 15.97 4.00 63.79
Sep-15 7814.89 2679.80 -5.96 -7.53 44.87 35.49 56.74
Oct-15 8172.32 2883.70 4.57 7.61 34.80 20.92 57.89
Nov-15 7887.64 2806.95 -3.48 -2.66 9.27 12.14 7.08
Dec-15 7802.64 2820.25 -1.08 0.47 -0.51 1.16 0.22
TOTAL 22.78 55.44 373.27 296.39 1804.74
AVERAGE 0.95 2.31
VARIANCE 11.95
Β 1.17 α 1.20 σ 2ei 59.20 Ri 2.31
INTERPRETATION
β= 1.17
Here, beta of ULTRATECH CEMENT is 1.17 which indicates that, 1% change in
market price leads to 1.17 %change in price of ULTRATECH CEMENT.
α= 1.20

40
10. YES BANK
X Y
Dec-13 6304.00 370.10
Jan-14 6223.16 307.95 -1.28 -16.79 21.53 1.64 282.00
Feb-14 6098.75 304.75 -2.00 -1.04 2.08 4.00 1.08
Mar-14 6507.98 413.50 6.71 35.68 239.45 45.03 1273.42
Apr-14 6754.74 440.70 3.79 6.58 24.94 14.38 43.27
May-14 7083.16 569.45 4.86 29.21 142.05 23.64 853.51
Jun-14 7542.84 541.90 6.49 -4.84 -31.40 42.12 23.41
Jul-14 7676.76 541.05 1.78 -0.16 -0.28 3.15 0.02
Aug-14 7787.35 571.65 1.44 5.66 8.15 2.08 31.99
Sep-14 8053.53 558.50 3.42 -2.30 -7.86 11.68 5.29
Oct-14 7953.11 684.15 -1.25 22.50 -28.05 1.55 506.15
Nov-14 8417.06 710.40 5.83 3.84 22.38 34.03 14.72
Dec-14 8309.87 772.85 -1.27 8.79 -11.19 1.62 77.28
Jan-15 8517.77 862.50 2.50 11.60 29.02 6.26 134.56
Feb-15 8750.44 862.75 2.73 0.03 0.08 7.46 0.00
Mar-15 8664.06 816.55 -0.99 -5.35 5.29 0.97 28.68
Apr-15 8524.01 839.80 -1.62 2.85 -4.60 2.61 8.11
May-15 8300.81 882.60 -2.62 5.10 -13.35 6.86 25.97
Jun-15 8195.61 843.00 -1.27 -4.49 5.69 1.61 20.13
Jul-15 8479.52 828.70 3.46 -1.70 -5.88 12.00 2.88
Aug-15 8309.92 689.50 -2.00 -16.80 33.59 4.00 282.15
Sep-15 7814.89 729.60 -5.96 5.82 -34.65 35.49 33.82
Oct-15 8172.32 759.10 4.57 4.04 18.49 20.92 16.35
Nov-15 7887.64 766.50 -3.48 0.97 -3.40 12.14 0.95
Dec-15 7802.64 726.15 -1.08 -5.26 5.67 1.16 27.71
TOTAL 22.78 83.94 417.76 296.39 3693.44
AVERAGE 0.95 3.50
VARIANCE 11.95
β 1.23 α 2.33 σ 2ei 135.63 Ri 3.50
INTERPRETATION
β= 1.23
Here, beta of YES BANK is 1.23 which indicates that, 1% change in market price
leads to 1.23 %change in price of YES BANK .
α= 2.33

42
 CALCULATION OF WEIGHTS
SECURITY NAME Zi Wi %
HDFC 0.0814 0.282 28.205
YES BANK 0.0243 0.084 8.4016
ASIAN PAINTS LTD. 0.0601 0.2081 20.809
ULTRATECH CEMENT LTD. 0.0356 0.1234 12.34
GRASIM INDUSTRIES LTD. 0.0322 0.1115 11.153
TATA CHEMICALS LTD. 0.0551 0.1909 19.093
TOTAL 0.2888
INTERPRETATION:
From the above table we can say that 28.21% amount is to be invested in
HDFC, 8.40% amount is to be invested in YES BANK, 20.81% amount is to
be invested in ASIAN PAINTS LTD, 12.34% amount is to be invested in
ULTRATECH CEMENT LTD, 11.15% amount is to be invested in GRASIM
INDUSTRIES LTD, 19.09% amount is to be invested in TATA CHEMICALS
LTD.
28%
9%
21%
12%
11%
19%
HDFC
YES BANK
ASIAN PAINTS LTD.
ULTRATECH CEMENT LTD.
GRASIM INDUSTRIES LTD.
TATA CHEMICALS LTD.

43
FINDINGS
 The YES bank has the highest return of 3.5% and the PNB has the
lowest return of -2.88%. If the investor wants to earn a maximum
return without considering the risk aspect then investment can be
made on those securities which yield high returns.
 The return from PNB has the highest beta value of 2.24 which means
that it is highly volatile. ULTRATECH CEMENT LTD (1.17), YES BANK
(1.23), Larsen & Toubro Limited (1.95), GRASIM INDUSTRIES LTD
(1.11) , TATA CHEMICALS LTD (1.34) ASIAN PAINTS LTD stock
returns (1.08) have the beta values greater than 1 which means that
they are also volatile. But, they are less volatile compared to the PNB
security's return.
 The excess return to beta ratio measures the additional return on a
security per unit of systematic risk. The HDFC's stock return has the
highest excess return to beta ratio of 3.306 and that of HCL
TECHNOLOGY Limited is the lowest at -1.650. This ratio provides the
relationship between potential risk and reward involved in a security's
return.
 The PNB’s stock return has the highest unsystematic risk σei2 of
375.40 and that of the HDFC bank has the least risk of 24.56. It is the
unique risk affecting the firm due to certain factors affecting only the
company issuing such security. It is the avoidable risk.
 The four securities ranking from 1 to 6 based on the Ci values were
identified along with the proportion of investment to be made. The
proportion of the investment to be made is 28.21% in HDFC’s stock,
8.40% in YES BANK’s stock, 20.81% in ASIAN PAINTS’s stock, 12.34%
in ULTRATECH CEMENT’s stock, 11.15% in GRASIM INDUSTRIES’s
stock, 19.09% in TATA CHEMICALS ’s stock. This implies that the
majority of funds may be invested on the HDFC bank's stock.

CHAPTER-6
CONCLUSION &
RECOMMANDATION

44
CONCLUSIONS
Risk and return play an important role in making any investment decisions.
This study aims at analyzing the opportunity that are available for investors
as per as returns are concerned and the investment of risk thereof. Out of
10 companies taken for the study, 2 companies are showing negative return
and the other 8 companies are showing positive returns. Risk is high in one
company compare to other companies and also with negative return.
Out of total ten companies, only 6 securities HDFC, YES BANK, ASIAN
PAINTS, ULTRATECH CEMENT, GRASIM INDUSTRIES, TATA CHEMICALS.
Securities are selected for portfolio investment with the help of Sharpe
Model. And also the portion is made to invest in each security which frame
as an efficient portfolio which can give higher return with minimum risk.

45
RECOMMENDATIONS
 As per the study any investors can minimize his risk and maximize
his return of his investment with the analyzing each securities which
are included in his portfolio. With help of this analysis the investor
can take decision whether a security should be included in the
portfolio or not.
 The investor should be careful about including the data of various
security at economic condition in his portfolio will give proper result.
 Investors should not select securities randomly in their portfolios.
 Investors should also consider the factors other than risk & return, which
may affect from the outside in their investment decision.

46
BIBLIOGRAPHY
Web links
 http://www.nseindia.com/
 http://www.netmba.com/statistics/covariance/
 http://www.moneycontrol.com/
 http://www.bseindia.com/
Reference Book:
 Security analysis and portfolio management, VIKAS PUBLISHING
HOUSE PVT. LTD,
 PUNITHAVATHY PANDIAN & PHI learning private limited, S. KEVIN.

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