STUDY OF INVESTMENT DETAILS AND PORTFOLIO

PERFORMANCE AT
ANAND RATHI FINANCIAL
SERVICES

Summer Project
Submitted By
K.V.PRAVEEN KHUMAR

INSTITUTE FOR TECHNOLOGY AND

MANAGENENT, D 14, SIPCOT IT PARK, SIRUSERI, OLD
MAHABALIPURAM ROAD, CHENNAI - 603103

BONAFIDE CERTIFICATE
This is to certify that the Summer Project entitled STUDY OF INVESTMENT
DETAILS
AND PORTFOLIO PERFORMANCE submitted by PRAVEEN KHUMAR K.V to
INSTITUTE FOR
TECHNOLOGY AND MANAGEMENT CHENNAI for the award of the diploma
of Post Graduate
Diploma in Management, is a bonafide record of work carried out by them
under our
supervision. The contents of this report in full or in parts have not been
submitted to any
other Institute or University for the award of any degree or diploma. The
project work has
been carried out at the AnandRathi Share and Stock Brokerage Ltd.
Chennai 600 034
Date:

Mr.Arunkumar A (Cluster Head)

PROF.SATHYA SAMINADAN
AnandRathi Financial Services
FACULTY Guide
T.Nagar Branch
ITM CHENNAI

ACKNOWLEDGMENTS:
I take this opportunity to express our heartfelt gratitude
to Mr R Sundara
Murthy, Regional Head AnandRathi Financial Services Ltd. for providing us
an opportunity
to undertake this project at AnandRathi and for his valuable guidance and
inputs. We thank
Mr.Arunkumar K(CLUSTER HEAD) Branch Manager, Mr. Saravanan A, Mr.
Sathish A.D and
Mr Prabhu .D RelationshipManager/Dealer, Mr Vinoth.R Assistant
Relationship Manager for
their continuous support in accomplishing this project and the other
members of trading
team who always took time out to resolve my queries at different stages
of
project completion. I would also like to express thanks to all the staff of
AnandRathi
T.NagarBranch. I am very grateful to Prof. Sathya saminadan for his
benevolent support and
guidance towards the successful completion of the project.

EXECUTIVE SUMMARY:
KEYWORDS: Investment; financial securities; portfolio
management; portfolio
Performance. The core idea of investment is to ensure that idle funds are
utilized
productively to not only generate returns for the investor but also to
provide funds for
projects developed and managed by other entities such as corporations,
governments,
financial institutions etc. Of the many avenues of investment such as
equity, mutual funds,
fixed income, debt etc., a study of a high-risk, high-reward instrument
such as equity is
warranted. Equity investment is usually an organized process in which a
portfolio of
securities is constructed and managed. A portfolio of securities is essential
to not only
mitigate risks but also to take advantage of those securities that offer
higher rewards. Once
a portfolio is constructed, in order to maintain and improve its
performance, it is essential
to professionally manage the portfolio. The various phases involved are
security analysis,

portfolio analysis, portfolio selection, portfolio revision, and portfolio

evaluation. Portfolio
Management Services are provided by various financial services firms and
NBFCs to manage
investors portfolio professionally in India. AnandRathi Financial Services
also offers these
services, besides trading and brokerage services. This project studies the
tools, investment
details and the construction and performance of a portfolio consisting
mostly of equity and
some debt components. The project was conducted at AnandRathi
Financial Services at the
T-Nagar branch in Chennai. It explores the various components of
investments through the
brokerage services of AnandRathi. A brief overview of the trading terminal
called Trade X
Pro used by the dealers at the various branches of AnandRathi is made. A
portfolio is
constructed following the process adopted by the discretionary Portfolio
Management
Services of AnandRathi as well as using additional security analysis. The
performance of this
portfolio is evaluated and compared with leading mutual funds and some
of the market
indices. Finally, conclusions are drawn and recommendations for
improvement are
suggested.

TABLE OF CONTENTS:
BONAFIDE CERTIFICATE
ACKNOWLEDGMENTS
EXECUTIVE SUMMARY
TABLE OF CONTENTS

LIST OF FIGURES
LIST OF TABLES
GLOSSARY
ABBREVIATIONS

CHAPTER 1 PROJECT INTRODUCTION:

1.1 IMPORTANCE AND RELEVANCE
1.2 OBJECTIVES OF THE STUDY
1.3 LIMITATIONS AND CONSTRAINTS
1.4 METHOD

CHAPTER 2 ANAND RATHI FINANCIAL SERVICES PROFILE:

2.1 OVERVIEW
2.2 LOCATION
2.3 MISSION
2.4 VISION
2.5 MILESTONES
2.6 PRODUCTS
2.7 SERVICES
2.8 EQUITY & DERIVATIVES BROKERAGE
2.9 MUTUAL FUNDS
2.10 DEPOSITORY SERVICES
2.11 COMMODITIES
2.12 INSURANCE BROKING
2.13 IPO
2.14 GLOBAL PRODUCTS
2.15 OUR SERVICES
2.16 MANAGEMENT TEAM
2.17 AR THE BEST
2.18 COMPETITORS

CHAPTER 3 INDUSTRY PROFILE:

3.1 STOCK MARKET
3.2 INDIAN STOCK MARKET
3.3 STOCK EXCHANGES
3.3.1 BSE Bombay Stock Exchange
3.3.2 NSE National Stock Exchange
3.4 STOCK INDICES
3.5 SEBI
3.6 BROKERS AND TRADERS
3.6 PORTFOLIO MANAGEMENT
3.6.1 Security Analysis
3.6.2 Portfolio Analysis
3.6.3 Portfolio Selection
3.6.4 Portfolio Revision
3.6.5 Portfolio evaluation
3.7 PMS
3.7.1 Investment in PMS
3.7.2 Working of a Portfolio Management Service (PMS)
3.7.3 Portfolio Management Services (PMS) Charges
3.7.4 Taxation for Portfolio Management Services (PMS)
3.7.5 PMS and Mutual Funds

CHAPTER 4 TRADE X PRO:

4.1MARKET WATCH
4.2 SCRIP
4.3 SNAP QUOTE
4.4 TRADING
4.5 ORDER BOOK
4.6 TRADE BOOK
4.7 NET POSITION

4.8 SQUARE OFF

4.9 AFTER MARKET ORDERS

CHAPTER 5 INVESTMENT DETAILS AND PORTFOLIO ANALYSIS:

5.1 INVESTMENT DETAILS
5.2 PORTFOLIO PERFORMANCE
5.2.1 Selection Criteria
5.2.2 Portfolio Features
5.2.3 Assumptions and Limitations
5.2.4 Asset Allocation
5.2.5 Technical Indicators Used
5.2.6 Stock Information
5.2.7 Selected Companies
5.2.8 Diversification
5.2.9 Returns Performance

CHAPTER 6 CONCLUSION
6.1 FINDINGS
6.2 RECOMMENDATIONS
6.3 CONCLUSIONS

APPENDIX
APPENDIX 1: STOCK SELECTION FOR PORTFOLIO
APPENDIX II: PERFORMANCE VALUES OF LAST 3 YEARS FOR STOCK
SELECTION
REFERENCES

LIST OF FIGURES:
Figure 5.1 Intra-day Composition of Investors

Figure 5.2 Equity Sector Wise Composition

Figure 5.3 Intraday Derivatives Composition
Figure 5.4 Portfolio Asset Allocation
Figure 5.5 Portfolio Sector wise Allocation

LIST OF TABLES:
Table 4.1 Shortcut Keys used in Trade X Pro
Table 5.1 List of Stocks traded in sector wise classification
Table 5.2 List of Derivatives traded in sector wise classification
Table 5.3 List of Funds Allocated Sector wise
Table 5.4 Fund allocation to the selected stocks
Table 5.5 Portfolio Returns as on 30 Apr 2014
Table 5.6 Comparison of Returns with Indices

GLOSSARY:
Agent
of client to

: Security firm acting on behalf

buy/sell security.

Arbitrage
different

: Trading of securities between

stock markets based on the

price difference.
Ask or Offer
is ready to

: Lowest price at which a client

sell the security.

Bear Market
are falling.

: A market in which stock prices

Blue Chip Stocks

known stocks

: Stocks of leading and well

having good a track record.

Broker or Brokerage Firm

the stock

: A firm which acts a link between

exchange and the investors.

They dont own any

stock.
Bull Market
the market tend to

: It is when the stock prices in

rise.

Business Days
holidays.

: All weekdays expect national

Call Option
the holder a

: A type of option which gives

right and not an obligation

to buy a fixed
number of shares at a
specified amount at a
particular time. This is
usually bought when
prices tends to increase.
Cash Settlement
option not by the

: It is the settlement of an
delivery of the underlying

stock, but by the

cash payment of the
difference between the
strike or the exercise price
and the given
underlying settlement price.
Client Order
customer of any

: Any order given by a retail

participating organisation.

Close Price
stock at the time of

: The price of a particular

closing of the market.

Closing Transaction
open futures

: A transaction used to close an

or an open options

contract.
Commodities
of the

: Products which form the part

commerce which are traded

on a separate
and authorized exchange
based for
commodities. These include
agricultural
products and natural
resources such as gold,
oil, minerals and metals.
These for the
underlying asset for future
contracts in these
exchanges.
Cyclical Stock
belonging to a

: A stock of a company
particular industry or a

sector and it price is

extremely sensitive to the
prevailing
economic conditions.
Day Order
only for the day

: It is an order which is valid

when it is bought. The

order should be
terminated in the same day
before the

market closes else it will

deleted overnight.
Debenture
which are long

: These are debt instrument

term in nature and are

issued by
corporations and
governments which does
not have any collateral
attached against it. A
debenture is usually
unsecured and very
rarely a secured debt. A
debenture is called
unsecured be unsecured
when there are no
liens on any specific
assets.
Equities
represents a

: These are securities which

share of ownership in a

company.
Equity Option
which grants the

: This is an option contract

holder the right and not an

obligation to buy
or to sell a stated amount
of shares of stock
during a particular stated
price given by the
market regulator during a
specific period of
time.
European-Style Option
exercised only on

: Options which are to be

their date of expiration.

Exchange-Traded Fund (ETF)

trust which

: It is a special type of financial

enables the investor to buy

an entire basket
of shares through a single
security and it
tracks and matches the
returns of the stock
market index. ETFs are
considered to be a
variety type of index
mutual fund, but still
they will be listed on the
exchange and will
be traded like a stock. It
can also be called
as an index participation
unit (IPU).
Exercise
option who can

: It is the act of holder of the

choose to take delivery of

call option or
make delivery of put
options of the
underlying interest
against the exercised
price payment.
Face Value
of an individual

: It is the cash denomination

debt instrument. Face

value is the amount of

money which the holder of
the debt
instrument receives from
the issuer on the

debt instruments on its

maturity date. Face
value is also can also be
called as par value
or the principle.
Futures
buy or sell

: Contracts which enable us to

securities at a future date.

Growth Stock
firms that have

: These are the stocks of those

performed better than the

estimated average
growth over the past years
and are expected
to continue the same trend
in the future.
Hedge
by the investors

: It is a strategy usually used

to limit their losses in

investment by making
transactions that offset the
given position.
Income Stock
which pay-out

: These are the type of shares

dividend regularly and

which also offers a

dividend yield which is
much higher than
the average shares.
Index
performance of

: It gives the measure of the

the stock market; it is

based on the
performance of stocks. It
gives a statistical
measure of the market.

Inflation
for goods and

: An overall increase in prices

services. It is measured by

the change in
percentage in the
Consumer Price Index (CPI).
Insider
and senior

: It defines all the directors

officers of the company,

and all those who

may be presumed to have
access to inside
information in regards to
the company. It
can also be defined as any
person owning
more than 10% of the
shares of the company
having voting rights.
Investment
ownership of

: It refers to the purchase of

securities in order to

earn income, profit or

both. It can also include
real estate,
antiquities or art
paintings.
Issue
stock or the

: It is the issue of a firms

process of distributing

the securities among

the investors. The issued
stocks includes to
the part of the firm's
shares that have been

given as sale. A firm do

not have to issue all
of its authorized shares.
Limit Order
stock at a given

: It is an order to buy or sell

price. This order can be

executed only at the

stated price or can be
greater than the
mentioned price. It will
set the maximum
Listed Stock
stocks of the company

: These represent the

which are traded on the

stock exchange. The

companies pay a certain
amount as fees in
exchange to be listed
and should also abide
by the rules and
regulations set out by the
market regulator to
maintain the existing
privileges.
Money Market
market

: It is the part of the capital

established to buy and

sell short-term
financial obligation.
These market include
government bills, shortterm Government of
India bonds, commercial
papers etc.
Longer-term securities
are also traded in

these markets when

their maturity date
comes within three
years.
Mutual Fund
by financial

: These are funds managed

planning experts who

will invest the money

obtained from the
people who join in the
plans to various
securities which include
stocks, derivatives like
futures and options,
deposits and other
capital market
instruments. The
mutual fund will divided
in units called NAV's
and be purchased
from brokers or the
mutual fund directly.
Option
derivatives in which the

: These are financial

investor has a right and

never an obligation
to buy or sell particular
stocks or securities
for a stated price in a
given period of time.
Put Option
that gives the holder

: It is an options contract
the right but not the

obligation to sell a
given number of shares
at a specific price

within a fixed period of

time.

ABBREVIATIONS:
AD

: Authorised Dealers

AR

: Anand Rathi

BSE

: Bombay Stock Exchange

BM

: Branch Manager

BOLT

: BSE online trading software

CDSL
Securities Ltd

: Central Depositories

CM

: Capital Markets

CNX

: CRISIL NSE Index

CRISIL
Services India Ltd.

: Credit Rating Information

DP

: Depository Participant

FII

: Foreign Institutional Investor

F&O

: Futures and Options

FPO

: Follow-on Public Offering

HUF

: Hindu Undivided Family

ICDR
Disclosure Requirement

: Issue of Capital and

IPO

: Initial Public Offering

IPF

: Investor Protection Fund

KYC

: Know Your Client

NEAT
Automated Trading

: National Exchange for

NSDL
Depository Ltd

: National Securities

NSE

: National Stock Exchange

PAN

: Permanent Account Number

PMS

: Portfolio Management Service

SEBI
Board of India

: Securities and Exchange

SL

: Stop Loss

T+2

: Second day from trading day

TAME

: Technical Analysis Made Easy

CHAPTER 1 PROJECT
INTRODUCTION
1.1 Importance and Relevance:
The importance of this project can be gleaned from the emphasis placed
on finance in the
world, especially the idea of investment and markets. This project
explores the capital
market and derivatives market by gaining insights from the daily
happenings at a brokerage
branch of AnandRathi Financial Services. Specifically, the investing
sentiment of the market
players such as which the securities they usually prefer to engage in, the
software used by
the brokerage firms to perform the stock market trading, and the various
securities which
are primarily traded in the different sectors are looked at. This project also
covers the area
of portfolio management such as how the various components of a
portfolio are chosen, the
fundamental analysis performed to select the eligible stocks as well as
using certain
technical indicators to time the purchase of securities in the portfolio. The
performance of
the portfolio and in comparison with the various indices and mutual funds
is done. The
importance of portfolio management in the world of finance cannot be
overstated. By

having a well-diversified portfolio of different asset classes, wealth

creation can be handled
professionally to serve the needs of tomorrow.

1.2 Objectives of the study:

To study the composition of securities traded at AnandRathi Shares and
Stock
Brokers limited.
To study the performance of a portfolio and the comparison of its
returns with
various indices in mid-cap and small cap, industrial sectors and top
mutual funds.
To determine the correlation of returns with the CNX Midcap and CNX
500 and
to determine the CAGR of the constructed portfolio.

1.3 Limitations and Constraints:

There were various limitations faced during the project:
As per the company policy some of the details will not be published in
the report
pertaining to client amount invested and total funds invested in
particular stock and
only approximate values of the same can be provided.
In order to give a portfolio performance of at least two years the
portfolio is assumed
to have started from May to Dec of 2011 so most of the performance in
portfolio has
already occurred.
While security analysis is performed, portfolio analysis and portfolio
revision/portfolio churn is not conducted since it is beyond the scope of
this study.
Comparison of the portfolio performance with other leading financial
services firms is

not conducted.

Actual trading on Trade X Pro was not allowed, and only a demo
account was
provided to be acquainted with the screens.

1.4 Method:
The investment details were obtained by observing the positions of the
clients from the
Trade X pro database. The actual amount will not be revealed as per
company policy but
the details of the stocks which are traded and kept for long term
investments, the
derivatives which are traded options and futures of stocks and indices.
The sector wise
classification and the primary stocks traded in those sectors. The portfolio
selection method
was based on various fundamental factors including consistent growth,
good governance,
positive balance sheet performance like asset classification and debt
equity ratio and a good
domestic play performance. The stocks were assumed to have been
bought in the past by
analysing the technical indicators like Bollinger Bands, Relative Strength
Index and Money
Flow Index to decide the date of buying.

CHAPTER 2 ANAND RATHI GROUP

PROFILE
2.1 Overview:
AnandRathi (AR) is one of the leading full service securities firm providing
the whole gamut

of financial services. This firm was founded by Mr. AnandRathi in 1994.

Today it has a pan
India presence as well as an international presence through its offices in
Bangkok and Dubai.
AR gives a breadth of advisory and financial services and also corporate
advisory, wealth
management, investment banking, brokerage & distribution of equities,
commodities,
mutual funds and insurance, structured products which are all supported
by powerful
research teams. The philosophy of the firm is totally client centric, with a
clear aim on
providing long term value addition to clients, while maintaining the
highest standards of
excellence, professionalism an ethics. The entire activities of the firm are
divided across
distinct client groups: Individuals, Private Clients, Corporate and
Institutions. It was ranked
as one of the best in the South Asia's top 5 wealth managers for the ultrarich by Asia
Money 2006 poll. AnandRathis offices are located in 197 cities across 28
states and it has
also got branches in Dubai and Bangkok with more than 44000
employees. It has an excess
of Rs.4billion as its daily turnover. It has got more than one lakh clients
nationwide. Also, it
is the leading Distributor of IPO's in the country. Citigroup Venture Capital
International
joined the group as a financial partner in the year 2007.

2.2 Location:
Across India AnandRathi is present in 21 states, having various branches
in each state. These
include Andhra Pradesh, Assam, Bihar, Chhattisgarh, Delhi, Goa, Gujarat,
Haryana Jammu &

Kashmir, Jharkhand, Karnataka, Kerala, Madhya Pradesh, Maharashtra,

Orissa, Punjab,
Rajasthan, Tamil Nadu, Uttar Pradesh, Uttaranchal and West Bengal.

2.3 Mission:
To be India's first multinational providing complete financial services
solution across the
Globe.

2.4 Vision:
"To be a shining example as leader in innovation and the first choice for
clients &
employees"

2.5 Milestones:
1994: Began activities in consulting and Institutional equity sales with
15 staff
1995: Set up a research desk and empanelled with major institutional
investors
1997: Introduced investment banking businesses Launched retail
brokerage services
1999: Lead managed first IPO and executed first M & A deal
2001: Wealth Management Services was initiated
2002: Recommenced Retail business expansion with ownership model
2003: Wealth Management assets crossed Rs1500 crores Launched
insurance broking
Launched WMS in Dubai Network of Retail branches exceeded to 50
2004: Expanded Retail Branch network across 100 locations within
India. Introduced
commodities brokerage and real estate services Wealth Management
assets crossed

Rs3000crore Relaunched institutional equities business and senior

research team put in
place
2005: Expanded Retail Branch network across 130 locations within
India.
Launched Real Estate Private Equity Fund
2006: AnandRathi Middle East, WOS acquired membership of Dubai
Gold & Commodity
Exchange (DGCX).Ranked amongst South Asia's top 5 wealth managers
for the ultra-rich by
Asia Money poll. Ranked as 6th in FY2006 for All India Broker Performance
in equity
distribution in the High Net worth Individuals (HNI) Category. Ranked as
9th in the Retail
Category having more than 5% market share. Completed its presence in
all States across the
country with offices at 300+ Locations.
2007: Citigroup Venture Capital International picked up 19.9% equity
stake. Retail
Established presence in over 350 locations
2009: AR has been Ranked as the #1 Private Bank - Domestic in India
by Asia money Polls
2009 and Ranked as the #2 Private Bank - Overall in India by Asia money
Polls 2009
2010: AnandRathi Private Wealth adjudged Best Domestic Private Bank
(India) by Asia
Money Polls.

2.6 Products:
Equities, Bonds, Mutual Funds and Derivatives
Managed Investment Services or PMS
Commodities
FX Trading
Life Insurance

 General Insurance
Alternative Assets
Private Equity Funds
Structured Products
Real Estate Opportunities Fund
Special Situation Opportunities
Offshore Structures and Global Investments

2.7 Services:
Creation of a customized financial strategy
Diversification of assets based on a formal process of asset allocation
Active tracking, monitoring and review of portfolios
Creation of private trusts
Tax planning
Estate planning
Structuring of family wealth

2.8 Equity & derivatives brokerage:

AnandRathi provides end-to-end equity solutions to both institutional and
individual
investors. A competent and reliable research unit across the country has
been established
by them though consistent delivery of high quality advice on individual
stocks, sector trends
and investment strategy. Clients can trade online through us on NSE and
BSE for both
equities and derivatives. Across the country they are supported by
dedicated sales & trading
teams in our trading desks. Research and investment ideas can be
accessed either through
their designated dealers, email, web or SMS by the clients.

2.9 Mutual funds:

AR is one among Indias top mutual fund distribution houses. Their
success lies in their
philosophy of providing consistently superior, independent and unbiased
advice to their
clients supported by in-depth research. They firmly believe in the need of
selecting
appropriate asset allocations based on the client's risk profile.
They have a dedicated mutual fund research cell for mutual funds which
consistently churns
out superior investment ideas, picking best performing funds across asset
classes and
providing insights into performances of select funds.

2.10 Depository services:

AR Depository Services provides the clients with a secure and also a
convenient way for
holding your securities on both CDSL and NSDL.
Their depository services include settlement, clearing and custody of
securities, registration
of shares and dematerialization. They offer the clients daily updated
internet access to their
holding statement and transaction summary.

2.11 Commodities:
Commodities broking is entirely a new opportunity to hedge business risk
and an attractive
investment opportunity to deliver superior returns for investors. Their
commodities broking
services include online futures trading through NCDEX and MCX and
depository services
through CDSL. Their Commodities broking is supported by a dedicated
research cell that

provides both fundamental as well as technical research. Their research

covers a wide range
of traded commodities which includes precious and base metals, Oils and
Oilseeds, agrocommodities such as wheat, chana, guar, guar gum and spices such as
sugar, jeera and
cotton. They provide their clients customized advice on hedging
strategies, investment
ideas and arbitrage opportunities, in addition to transaction execution.

2.12 Insurance Broking:

They, as an insurance broker, provide to their clients comprehensive risk
management
techniques, both within the business as well as on the personal front. Risk
management
includes identification, measurement and assessment of the risk and
handling of the risk, of
which insurance is an inevitable part. The firm deals with both general
insurance and life
insurance products across all insurance companies.
Their guiding philosophy is to manage the entire risks of the clients set by
providing the
optimal level of cover at the least possible cost. The whole sales process
and product
selection is research oriented and customized to the needs of the client.
They lay great
emphasis on timely claim settlement and post sales services.

2.13 IPO:
AnandRathi Securities Ltd. is one of the leading primary market distributor
across the
country. Their strong performance in IPOs has been a result of their wide
experience in the
Primary Market, a wide network of branches across India, strong
distribution capabilities

and a dedicated research team.

They have been consistently ranked on all major offerings as among the
top 10 distributors
of IPOs. Their IPO research team provides clients with in-depth overviews
of forthcoming
IPOs as well as investment recommendations. Online filling of forms is also
available.

2.14 Global Products:

Structuring of trusts and investment companies
Offshore Mutual Funds
Structured Products and Deposits while include capital-guaranteed
notes
Trading in global markets (Equities, Bonds, Commodities)
Real Estate investments
Alternative investments (including hedge funds)

2.15 Our services:

Risk Management
Clear diligence and research on policies available
Recommendation on a comprehensive insurance cover based on
clients needs
Accurate maintenance of records of client policies
Good client assistance in premium paying
Continuous monitoring of the client account
Help assist client in settlements and claim negotiation.

2.16 Management Team:

AR brings in a high quality professional core management force that
comprises of individuals
with extensive business expertise and industry experience. The senior
Management

comprises of a diverse talent pool which brings together a group with

veteran experience
from across industry as well as financial service sectors. Mr. AnandRathi Group Chairman
Chartered Accountant Past President, BSE Experience in several Senior
Management
positions with one of India's premier industrial groups
Mr. Pradeep Gupta - Vice Chairman
More than 17 years of experience in Financial Service sector
Mr. Amit Rathi - Managing Director
Chartered Accountant & MBA
More than 11 years of experience in Financial Service sector

2.17 AR the Best:

Better understanding of the Indian economy & markets
Superior ability to structure and manage tax and regulatory
compliances
Highly dedicated relationship team
High quality product range - Indian and Global

2.18 Competitors:
The main competitors of Anandrathi are:
Karvy
Religare
Motilal Oswal
ShareKahn
Geojith

CHAPTER 3 INDUSTRY PROFILE

3.1 Stock Market:

Stocks are issued by companies in order to raise capitals and when bought
by investors they
acquire a portion of the company. A Stock market is a place where buying
and selling of
stocks takes place. Now with the advancement of internet and advanced
technology, buying
and selling of stocks takes place anywhere in India and from the world.
There is no need to
be physical present in exchanges like NSE and BSE. Stock markets are
perfect competitive
market. Primary market, both Government and corporations use to offer
shares for the first
time to the public through IPO. Here in order to raise resources to meet
their requirements
of investment, securities, in the form of equity or debt, can be issued in
domestic/international markets at face value, discount or premium.
Secondary market
refers to a market where securities are traded after being offered to the
public in the
primary market or listed on the Stock Exchange. Secondary market
comprises of equity,
derivatives and the debt markets.

3.2 Indian Stock Market:

The Indian Stock market is defined by the two exchanges BSE and NSE.
Most of the trading
activities happens in these exchanges. The various stocks have been
divided into various
sectors depending upon their operations. Some of the main sectors
include banking, IT,
Infrastructure, pharmaceuticals, agriculture, automobiles etc. Stocks of
the various
companies based on the sectors are traded daily. The timing of the stock
market is from
morning 9:15am to 3:30pm in the afternoon. Other than stocks, mutual
funds, IPO,

derivatives, commodities and currencies are also traded in the stock

market. Derivatives
mainly futures and options are traded based on the stock or a stock index
and interest rate
futures. Futures are mainly traded with a margin up to 15% on the amount
invested. In
options European way is used and hence the contract will be valid only till
the last Thursday
of the month. Both put and call options will be used and will be bought on
a given premium
for the respective strike price. Commodities includes from the major
sectors as metals
spices, cereals etc. Currency trading involves exchanging of the different
currencies based
on the differences.

3.3 Stock Exchanges:

3.3.1 BSE Bombay Stock Exchange:
BSE was established in 1875 in Mumbai. With more than 5000 companies
listed on this
exchange, having a total market capitalization of 1.32 trillion USD, BSE is
Asias oldest
stock exchange. It is also the fastest with a speed of 200 micro second. It
is also one of the
worlds leading exchange for Index options trading. Currently it is the third
as on March
2014. BSE is an index known for its smooth transparent and efficient
trading in equity, debt
instruments, derivatives, mutual funds. It will provide a host of other
services to the
participants in the market which includes risk management for the stocks
and importantly
the cash settlement and clearing processes and also market data services,
and education. It
is a well-known exchange with a positive image in the world and very well
known within the

nation. It has a certified on-line trading system called BOLT. It has a

capacity of 8 million
orders per day. BSE is the very first stock exchange in India and the
second exchange in the
world to receive an ISO 9001 certification and also the prestigious
Information Security
Management System standard for BOLT. The BSE was the first in the world
to introduce the
centralized exchange based trading system using the internet which is
known as the
BSEWEBx.co.in which will help the investors at any locations in the world
to perform
trading. Depository Services are also provided through its CDSL (Central
Depository
Services Ltd) arm.

3.3.2 NSE National Stock Exchange:

NSE situated in Mumbai was founded in 1994 and was established as a
demutualised
electronic exchange. With a market capitalization of over 989billion USD
and above 1650
companies listed, the NSE is a significant exchange, responsible for a
large number of stock
transactions. NSE has played a pivotal role in transforming the Indian
securities market and
as a result has brought about efficiency, transparency and market
integrity. Today NSE
network is spread across over 1500 locations, supporting over 2.3 lakh
terminals. NSE is
known for its diverse holding of shares. It was established by a group of
financial institutions
during that time. Its main functions are that it will offer trading which is
the primary and
followed by the clearing and settlement services for stocks, debt and
equity derivatives. It is

the largest stock exchange in India and is known in the global front for
stock trading,
currency trading and index options trading. The NSE TAME gives a good
platform for the
online traders for technical analysis for intraday trading. NSDL (National
Securities
depositories Ltd) is the depository service provided by NSE.

3.4 Stock Indices:

Index is the statistical indicator which measures the changes in the
economy in general or in
particular sectors. In case of financial markets, an index is a portfolio of
securities that
represent a particular market or a market sector. Each Index has its own
method of
calculation and is expressed in terms of a change from a base value. The
base value might
be as recent date or maybe many years in the past. Thus, the percentage
change has the
importance compared with the actual numeric value. Financial indices are
created to
measure the movements in prices of stocks, bonds, Treasury bills and any
other type of
financial securities. A stock index is created to provide the capital market
participants with
information regarding average share price movement in the market. Broad
indices are
expected to capture the overall behaviour of equity market and need to
represent the
return obtained by typical stocks in the country. The significance of the
index is very
important as it is an indicator of the performance of overall market or a
particular sector. It
also serves as a benchmark for portfolio performance. For managing
portfolios, belonging

either to individuals or mutual funds, the stock index is used as a measure

for evaluation of
their performance. It will be used as an underlying for financial application
of derivatives,
some of the products in OTC and exchange traded markets are based on
indices as
underlying asset.
The S&P BSE SENSEX, BSE's most popular equity index, comprising of top
30 stocks listed
on the exchange is Indias most widely tracked stock market benchmark
index.
The NSEs benchmark index is the S&P CNX NIFTY, which takes into
account the nifty
fifty or the top 50 of the listed companies in the exchange. NSE operates a
nation-wide,
electronic market trading in Capital Market, Derivatives Market and
Currency.
Many of the indices are formed by taking the companies which belong to a
particular sector
like the banks, infra, IT etc. Some of the other important indices in which
usually trading
occurs are stated below.

BANK NIFTY, BSE BANKEX

CNX METAL, CNX AUTO, CNX FMCG, CNX PHARMA, CNX IT, BSE AUTO, BSE
IT
BSE PSU, CNX 100, CNX 500, BSE 100, BSE 200, BSE 500, NIFTY JUNIOR
NIFTY MIDCAP 50, BSE SMALLCAP, BSE MIDCAP, NSE MIDCAP

3.5 SEBI:
The Securities and Exchange Board of India is the regulator for the
securities market in India.
It is also known as the market watch dog. It was establish in 1988 but
given statutory

powers on 12 April 1992 as per the SEBI Act 1992. The main objective is
to protect the
interest of investors and to promote the development of and to regulate
the securities
market. There are three groups which constitute the market those of
which are the issuers
of securities, the investors, the market intermediaries and SEBI has to be
responsible for
the smooth functioning among the same.UK Sinha is the present chairman
of SEBI.
The following are the main functions of SEBI:
1. Approving of the laws in the stock exchange.
2. Amending the laws of exchange.
3. To inspect and audit the books of accounts and call for periodical
returns from
recognized stock exchanges.
4. To inspect the books of accounts of a financial intermediaries.
5. To compel firms to list their shares in one or more stock
exchanges.
6. Registration brokers.

3.6 Brokers and Traders:

There are different types of traders. The hedger is one who tries to
minimize high loss or
gains using one of many financial instruments. An arbitrageur is one who
takes advantage of
price fluctuations in the two exchanges and tries to capitalize on the
same. He seeks to
make profit by looking for price discrepancies of shares listed in two
exchanges. A
speculator is one who engages in risky transactions and tries to make a
profit from market

fluctuations in the short or medium run. They pay less attention to the
fundamentals of a
security and are least bothered about capital gains, interest or dividends.
Day traders or
swing traders are a type of speculator who trade on a day to day basis.
Finally, the investor
is a person who allocates capital with an expectation of some financial
return. They may
also indulge in speculation but are long term investors with less appetite
for risk. A
brokerage firm is a financial institution which facilitates buying and selling
of securities
between buyers and sellers. They provide services to traders and assist in
their decision
making process. All brokers rely heavily on a dedicated research team
which serves as the
basis for the advice they render to their clients. A brokerage may also
serve as a private
bank providing a wide variety of services like insurance, wealth
management, portfolio
management, investment banking and Mergers/acquisitions.
shares are bought or

When

sold, the transaction goes through a specific medium. The Depository

Services provider
settles the trade or transactions made in the stock markets. Like banks,
the depository
service providers have a clearing house where at the end of the day all
the buying and
selling settlements take place through stock brokers. A depository is a
company which holds
the share one purchases. At present there are two depository companies,
NSDL and CDSL.

Intermediaries perform their actions in a variety of securities at

Depository on behalf of the

clients. These intermediaries are called DPs or depository participants and

need to be
registered under a depository before it begins to operate. For an investor
to avail the
services provided by the depository, he has to open a Depository account
more commonly
known as your Demat Account. Demat is short for dematerialization which
refers to the
conversion of physical share certificates into the electronic form. Today
physical certificates
are rarely used. Some brokers also offer a Margin account wherein the firm
allows you to
borrow from it any trade.

3.6 Portfolio Management:

Investing in financial securities requires a strategic top-level consideration
of the set of
securities one wants to invest in. This set of securities is called a portfolio.
A portfolio may
include equities, commodities, mutual funds, fixed income instruments
and so on. The
creation and handling of a portfolio of securities from selecting the
individual securities, to
analysing the portfolio, to revision of the portfolio and portfolio evaluation
is called
portfolio management.

3.6.1 Security Analysis:

Security analysis is the initial phase of the portfolio management process.
This step consists
of examining the risk-return characteristics of individual securities. The
basic strategy is to
buy under-priced securities and sell overpriced ones. The problem lies in
identifying the

mispriced securities. There are two alternative approaches to security

analysis, namely
fundamental analysis and technical analysis. Fundamental analysis, the
older of the two
approaches, deals with the fundamental factors that affect a company
such as the market
share, the earnings-per-share, return-on-equity, quality of management
etc. It also deals
with the fundamental factors that affect the industry to which the
company belongs as also
the fundamentals of the economy. Fundamental analysis identifies
companies that are
strong fundamentally to be included in an investors portfolio. Technical
Analysis, the
second alternative approach, assumes that price movements of the
securities are
systematic and exhibit certain consistent patterns. From the past
movements, trends and
patterns are identified to predict future price movements. The current
market price is
compared with the future predicted price to determine the extent of
mispricing which can
then be used to make investing or trading decisions.

3.6.2 Portfolio Analysis:

Security analysis provides the investor with a set of desirable securities
from which an
indefinitely large number of portfolios can be constructed by choosing
different sets of
securities and also by varying the proportion of investment in each
security. Each portfolio
constructed by combining individual securities has its own specific risk
and return
characteristics which are not just the aggregates of the individual security
characteristics.

Portfolio analysis phase of portfolio management consists of identifying

the range of
possible portfolios that can be constituted from a given set of securities
and calculating their
return and risk for further analysis.

3.6.3 Portfolio Selection:

Portfolio analysis provides the inputs for the next phase in portfolio
management which is
portfolio selection. An efficient portfolio is on which generates the highest
returns at a given
level of risk, and inputs from portfolio analysis can be used to identify the
set of efficient
portfolios. From this set of efficient portfolios, the optimal portfolio has to
be selected for
investment.

3.6.4 Portfolio Revision:

Once a portfolio is constructed, it has to be monitored constantly to
ensure that it continues
to be optimal. As the economy and the financial markets are dynamic and
changes take
place almost daily, securities which were once attractive may cease to be
so. Revision leads
to purchase of new securities and sale of some existing securities from the
portfolio. The
mix of securities and their proportion in the portfolio changes as a result
of the revision.
Portfolio revision may take place as a result of investor-related changes
also, such as
availability of additional funds, change in risk attitude, need of cash for
other alternative
use, etc.

3.6.5 Portfolio evaluation:

Portfolio evaluation is the process which is concerned with assessing the
performance of the
portfolio over a selected period of time in terms of return and risk.
Quantitative
measurement of actual return realized and risk borne by the portfolio over
the period of
investment is to be compared with objective norms to assess the relative
performance of
the portfolio.

3.7 Portfolio Management Service:

A Portfolio Management Service account is an investment portfolio in
stocks, debt and fixed
income products managed by a professional money manager that can
potentially be tailored
to meet specific investment objectives. When one invests in a PMS, one
owns individual
securities unlike a mutual fund investor, who owns units of the entire fund.
One has the
freedom and flexibility to tailor your portfolio to address personal
preferences and financial
goals.
Although portfolio managers may oversee hundreds of portfolios, every
account may be
unique. As per SEBI guidelines, only those entities who are registered with
SEBI for
providing PMS services can offer PMS to clients. There is no separate
certification required
for selling any PMS product. As per the SEBI guidelines, the minimum
investment required
to open a PMS account is Rs. 5 Lacks. However, different providers have
different minimum

balance requirements for different products. For example, Birla AMC PMS
has a minimum
amount requirement of Rs. 25 lacks for a product. Similarly HSBC AMC has
a minimum
requirement of 50 lacks for their PMS. In India, Portfolio Management
Services are also
provided by equity broking firms & wealth management services. The
service involves all the
processes involved in the creation and maintenance of an investment
portfolio such as
Security Analysis, Portfolio Analysis, Portfolio Selection, Portfolio Revision
and Portfolio
Evaluation. A PMS usually requires that there be a minimum ticket size
(investment
amount), a fee structure, profit sharing basis and brokerage, besides other
product features
and charges. There are broadly two types of PMS:
1. Discretionary PMS Where the investment is at the discretion of the
Fund Manager & the
client cannot intervene in the investment process.
2. Non-Discretionary PMS Under this service, the portfolio manager only
provides
suggestions on investment ideas. The choice as well as the timing of
investment decisions
rests solely with the investor. However the execution of the trade is done
by the portfolio
manager.
The client may give a negative list of stocks in a discretionary PMS at the
time of opening his
account and the Fund Manager would ensure that those stocks are not
bought in his
portfolio. Majority of PMS providers in India offer Discretionary Services.
Discretionary PMS is an investment service in which an investment
manager or fund
manager makes the buy-sell decisions without referring to the account
owner (client) for

every transaction. The manager, however, must operate within the agreed
upon limits to
achieve the client's stated investment objectives.

3.7.1 Investment in PMS:

There are two ways in which an investor can invest in a Portfolio
Management Service:
1. Through cheque payment.
2. Through transferring existing shares held by the customer to the PMS
account. The value
of the portfolio transferred should be above the minimum investment
criteria.
Beside this, a customer will need to sign a few documents like: PMS
agreement with the
provider, Power of Attorney agreement, New Demat Account Opening
format (even if
investor has a demat account she is required to open a new one) and
documents like PAN,
address proof and Identity proofs are mandatory. NRIs can invest in a PMS.
The NRI needs
to open a PIS account for investing in a PMS. The documentation required
for an NRI,
however, is different from a resident Indian. A checklist of documents is
provided by each
PMS provider.

3.7.2 Working of a Portfolio Management Service:

Each PMS account is unique and the valuation and portfolio of each
account may differ from
one another. There is no NAV for a PMS scheme; however the customer
will get the
valuation of his portfolio on a daily basis from the PMS provider. Each PMS
account is
unique from the other. Every PMS scheme has a model portfolio and all
the investments for

a particular investor are done in the Portfolio Management Services on the

basis of model
portfolio of the scheme. However the portfolio may differ from investor to
investor. This is
because of:
1. Entry of investors at different time.
2. Difference in amount of investment by the investors
3. Redemptions/additional purchase done by investor
4. Market scenario E.g. If the model portfolio has investment in Infosys,
and the
current view of the Fund Manager on Infosys is HOLD (and not BUY), a
new
investor may not have Infosys in his portfolio.
Under PMS schemes the fund manager interaction also takes place. The
frequency depends
on the size of the client portfolio and the Portfolio Management Services
provider. Bigger
the portfolio, more is the frequency of interaction. Generally, the PMS
provider arranges
for fund manager interaction on a quarterly/half yearly basis.

3.7.3 Portfolio Management Services Charges:

A PMS charges following fees. The charges are decided at the time of
investment and are
vetted by the investor.
Entry Load PMS schemes may have an entry load of 3%. It is charged at
the time of
buying the PMS only.
Management Charges Every Portfolio Management Services scheme
charges Fund
Management charges. Fund Management Charges may vary from 1% to
3% depending upon
the PMS provider. It is charged on a quarterly basis to the PMS account.

Profit Sharing Some PMS schemes also have profit sharing arrangements
(in addition to
the fixed fees), wherein the provider charges a certain amount of
fees/profit over the
stipulated return generated in the fund. For Eg PMS X has fixed charges of
2% plus a charge
of 20% of fees for return generated above 15% in the year. In this case if
the return
generated in the year by the scheme is 25%, the fees charged by the PMS
will be 2% +
{(25%-15%)*20%}. Apart from the charges mentioned above, the PMS
also charges the
investors on following counts as all the investments are done in the name
of the investor:
Custodian Fee
Demat Account opening charges
Audit charges
Transaction brokerage

3.7.4 Taxation for Portfolio Management Services:

Any income from Portfolio Management Services account is a business
income. Unlike MF,
PMS is not required to remain 65%+ invested in equity to get equity
taxation benefit. Each
Portfolio Management Services account is in the name of additional
investor and so the tax
treatment is done on an individual investor level.
Profit on the same can be considered as business income (i.e. slab wise).
Profit can be
considered as capital gains. [STCG (15%) or LTCG (Tax-free)]. It depends
on clients
Chartered Accountant or the assessing officer how he treats this income.
The PMS provider
sends an audited statement at the end of the FY giving details of STCG
and LTCG, it is on

the client and his CA to decide to treat it as capital gain or business

income.

3.7.5 PMS and Mutual Funds:

Both PMS and Mutual Funds are types of managed Funds. The advantage
to the investor of
a Portfolio Management Service over a Mutual Fund is:
Concentrated Portfolio.
Portfolio can be tailored to suit the needs of investor.
Investors directly own the stocks, rather than the fund owning the
stocks.
Difference in taxation

CHAPTER 4 TRADE X PRO

Anandrathi traders uses the nest software for performing the trading
operations. Nest
software is developed by Omnesys Technologies Ltd. It provides a user
friendly interface
which helps the dealers as well as clients to perform their activities
efficiently and
effectively.

4.1Market Watch:
The basic screen is the market watch window. It consists of an excel like
pattern showing
the details of the different listed companies in the row section and the
information of each
company stocks like the highs and lows, LTP, Ask price, Bid price, Ask
quantity, Bid
quantity etc.

4.2 Script:
The company information are called script. Each company has its own
unique scripts. Hence
if you want the details of the nifty stocks in your market watch, then you
will be having a
total of 50 scripts.

4.3 Snap Quote:

Snap quote of a scrip shows list of the trading price and quantity by which
it is being traded
along other information relevant for trading.

4.4 Trading:
Trading for a scrip is done through the buy and sell menu. The buy menu
you can give the
required quantity and price to buy a particular stock and in a sell menu
similarly you give the
required quantity and price to sell the stock. The orders will be executed
when the matching
prices are obtained.

4.5 Order Book:

The order book shows the open as well as the completed orders in the
trade. The Orders
which has not found the match yet will be there in Open Orders Frame
whereas the traded
orders can be seen in Completed Orders Frame. User can also see all
cancel or rejected
trade along with the reason in Completed Orders Frame. User can modify
the open orders
or cancel them whenever it is required.

4.6 Trade Book:

The orders placed which were traded are available in the trade book

4.7 Net Position:

The net position of the user is shown in the menu. It shows the net market
value of the
securities of the user along with the day wise positions in case any
intraday trading was
done during the day.

4.8 Square Off:

Square-off can be done for a particular position quantity wise. The squareoff can also be of
the % of total number of invested shares then uncheck the box and write
the % of the total
invested shares you want to squared off. After writing click on the squareoff option.

4.9 After Market Orders:

The user will be able to keep aftermarket orders to be executed in the
next day. Both the
buy and sell orders can be made in this. This option is available in the
orders and trades
menu as aftermarket orders.

Table 4.1 Shortcut Keys used in Trade X Pro:

Shortcut Keys

Function/Menu
Buy Menu
Sell Menu
Order Book
Snap Quote
Net Position
Trade Book

F1
F2
F3
F6
Alt+F6
F8

CHAPTER 5 INVESTMENT DETAILS AND

PORTFOLIO ANALYSIS
5.1 INVESTMENT DETAILS:
The main source of revenue for the company is from wealth management
and intraday
trading. The current section is regarding the details about intraday
trading.
AnandRathi has over 1.5 lakh registered trading accounts and in which 3040% of the clients
are HNI clients. These are the main participants in the intraday trading
and the average
transaction involves crores of rupees.
The clients not involved in intraday trading usually plan for a long term
investment and buy
equities and keep it for about 5-6 years for a good return. Commodity
trading and currency
trading are comparatively much less compared to the volume of equity
traded. In terms of
long term investments, equity hold the major stake, with commodity
especially in metals and followed by currency.
For intraday trading most of the transactions occurs in the F & O market.
The types of
derivatives traded are futures and options. Futures are traded in both
index and equities.
Index Futures involves BANK NIFTY, NIFTY FUTURES.
Options European style Call and Put are used for trading. Both index and
equities are

traded in options as well. The Index Options involves NIFTY 7200 CE,
NIFTY 6800 PE,
BANKNIFTY 15500 CE, BANK NIFTY 14500 PE etc.
Equities are also traded sometimes within the intraday market using the
short selling
strategy in a bear market. Sometimes it also acts a tool for hedging. Other
than that
sometimes BTST strategy is also used.
Commodity and currency are seldom traded during the intraday timings.
The research team of the company does technical analysis for giving the
intraday price
signals which they send to the dealers across the company. The dealers
will inform their
respective clients regarding the price signals and with their confirmation,
the trading will be
performed. Fundamental analysis is used for the stocks which can be for
a long term
investment. Options the various strategies will be used like long and short
straddle, long
call, long strangle etc. and most frequently long combo strategy was used
in the NIFTY
index options at the time of the elections for getting a positive revenue.

Figure 5.1 Intra-day Composition of Investors:

Futures 35%
Options 35%
Equity 30%

Intra Day Composition

Equity

35%

Futures

30%

Options

35%

Sector wise composition in terms of equity is given below

Figure 5.2 Equity Sector Wise Composition

Sectorwise Composition Equity

12%
4%
BANK

AUTO

FINANCE

30%
FMCG

IT

MEDIA

METAL

20%

9%

15%
10%

Banking and IT sector has the largest investment, followed by the auto
and metals sector
and FMCG and media constitute the rest of the investments by the clients.
In derivatives
trading, equity derivatives trades in the highest volume compared to their
index
counterparts.

Figure 5.3 Intraday Derivatives Composition

Derivative Trade Composition

Equity

30%

Index

70%

Below information shows the major stocks and derivatives traded by the
clients:
Stocks:

Table 5.1 List of Stocks traded in sector wise classification

BANK

SBIN, AXIS, ICICI, YES,KOTAK,KTK

AUTO

TATAMOTORS, MARUTI,
HEROMOTO,
APOLLOTYRE

ENERGY
RELIANCE,ONGC,BPCL,CAIRN,
ADANI
FINANCE

LIC,IDFC,RELIANCE CAPITAL
ITC, McDowells, JUBILFOOD

FMCG
IT

INFY,TCS,WIPRO,JUSTDIAL,TECHM

MEDIA

SUNTV,ZEETV

METALS

TATA STEEL,COAL INDIA,ISSLT,

HINDALCO,JSW STEEL,

Derivatives:
Table 5.2 List of Derivatives traded in sector wise classification:

FUTSTK
FUTIDX
OPSTK
OPIDX

SBIN,RCOM,AD
ANI
NIFTY,BANKNIF
TY
NIFTY,BANKNIF
TY
NIFTY

5.2 PORTFOLIO PERFORMANCE:

The key objective of the portfolio managers is to consistent return over
the long term, from
a portfolio of companies selected on basis of well-defined criteria and
good corporate track
record. Return on Equity is a key criteria based on which the underlying
universe of
companies are targeted. These companies are chosen on from the most
comprehensive
basket: CNX 500. The second important focus for selection is an optimum
size of corporate
operations and a good track record.
Consistency of key operating metrics is the final criteria based on which
the companies

would be eligible for the portfolio. CNX 500 is selected as the overall
universe. This is the
most comprehensive basket and the initial round of selection is done on
certain key
parameters and on unbiased basis. CNX 500 has 500 stocks with a
cumulative market cap of
approximate market capitalisation of Rs.74, 04,000 crores and free float
market cap of
Rs.31, 79,056 crores. First the CNX 500 list of companies were taken and
then filtered
according to the various sectors and the following set of steps were
performed on them.
ROE is the first key criteria which is used to filter the initial batch of
stocks. A cut off of 20%
was used to filter out the best companies.
The second filter is based on size and corporate governance. This batch
companies which
has met the initial criteria of ROE and in terms of size mainly w.r.t annual
sales and
corporate governance.
All the eligible companies from this previous basket are checked for the
following criteria:
Sales performance in the last three years
PBDIT performance in the last three years
PAT performance in the last three years

All the above parameters reflect consistency for the overall companys
performance for the
short, medium and the long term periods. These parameters takes care of
the short term
volatility and also provides a sense of how well the select companies have
tackled the tough
business environment.
Next the market capitalisation of the companies are checked to see if they
have increased

over the past three years consistently.

Most of the companies have less than 10% exports. No company has more
than 50%
exports, thus displaying the domestic play for the portfolio.
Asset Turnover ratio is high which qualifies them as non-asset players and
thus shields these
companies from interest variation.
Most of the companies have very less debt. NBFC & Banks are marked
N.A. But for the
financial sector stocks capital adequacy ratio and the NPAs have been
taken as the
benchmark for the selection of those stocks.
The next criteria to be fulfilled is if the net working capital to sales is less
than 20%. This has
not been satisfied properly by all the stocks of the portfolio.
Range of Market Capitalisation 3 companies are in the Rs.2500-10,000
Crores thus Mid Cap
Industries 10 Companies are in the > than Rs.10, 000Crores thus
classifying them as large
caps. 1 Company is a Small Cap Industry.

5.2.1 Selection Criteria:

ROE > 20% (Most of the companies delivering ROE of 20%)
Good Corporate Governance
Consistency of performance; Sales, PBDIT, PAT growth evaluated
Market Cap Growth
Domestic Play Exports
Asset Turnover is higher (At least 1.5x, except few cases).
Low Debt Equity ( < 1 except some cases) -> Less affected by Interest
Rate
movement
Networking Capital to Sales % < 20% in most cases

The portfolio features consists of the main details regarding the amount
invested and
number of stocks involved along with the type of securities in which the
amount will be
invested. These features are highlighted below:

5.2.2 Portfolio Features:

Amount Invested: Rs.25 lakhs.
Portfolio Content: 14 stocks, diversified across sectors.
Large cap companies in dominance with few midcap and a single or no
small cap.
Portfolio Theme: Domestic plays & Asset Light companies.
Most of the stocks will be part of core portfolio.
Type of instruments : Equity, Fixed Income
Benchmark: CNXMIDCAP

5.2.3 Assumptions and Limitations:

Assumptions:
The stocks for the portfolio has been invested within the period of 01May -2011 to
31-Dec-2011.
Portfolio is comprised of only stocks and Fixed deposit.
The amount allocated will be equally divided to buy various stocks in
one sector.

Limitations:
Equity derivatives and bonds were not included in the portfolio.
Churning was not performed on the portfolio.
Most companies selected in the Pharmaceutical sector did not fulfil the
net working
capital to sales criteria.

5.2.4 Asset Allocation:

The amount has been divided among seven sectors and the remaining has
been put in cash
deposit. The sectors in which the money were invested are Finance, Auto,
FMCG, Capital
Goods, Pharmaceuticals, Materials and Technology.
Now currently the exposure is to seven sectors and the finance and
pharmaceuticals sectors
are overloaded.
The below pie chart shows the composition of the liquidity giving the cash
deposit which is
almost 5% of the given invested amount.
The table shows the fund allocation to various sectors and the following
pie chart gives the
approximate allocation in percentage of the total amount invested.

Current Asset Allocation

5%

Liquid cash

Equity

95%

Table 5.3
Funds
Sector

Sector
AUTOMOBILE
CAPIAL GOOD
FINANCE
IT
FMCG
MATERIALS
PHARMA
CASH

Fund allocated
245365.65
503103.00
616175.80
206292.40
385802.60
122652.40
305588.25
115020.00

List of
Allocated
wise:

Figure 5.5 Portfolio Sector wise Allocation:

AUTOMOBILE 10%
CAPITAL GOODS 20%
FINANCE 25%
IT 8%
FMCG 15%
MATERIALS 5%
PHARMA 12%
CASH 5%

Sector Wise Allocation

12%

5% 10%

5%

20%

15%
8%

25%

AUTOMOBILE

CAPITAL GOODS

FINANCE

IT

FMCG

MATERIALS

PHARMA

CASH

5.2.5 Technical Indicators Used:

The stocks were bought by using technical indicators to see the day at
which the stocks
were at the lowest to get maximum returns thereafter. Here a combination
of RSI, MFI and
B-Bands has been used to determine the correct day of purchase.
Relative Strength Index
(RSI): It is a technical momentum indicator which compares the amount of
recent gains to
recent losses in order to determine overbought and oversold conditions of
the stock.
The RSI ranges from 0 to 100. An asset is deemed to be overbought once
the RSI approaches
the 70 level, meaning that it may be getting overvalued and on the other
hand if it reaches
to 30, it indicates the asset may be getting oversold. Money Flow Index
(MFI): It determines
the strength of money flowing into and out of a stock. The MFI takes into
account both the
prices and volume of the stocks involved. The Money Flow ranges from 0
to 100. Just like
the RSI, a stock is considered overbought in the 70- 80 range and oversold
in the 20-30
range. The number of days determines the volatility of the MFI. The
shorter the no of days
the more volatile will the index will be. Bollinger Bands (B-Bands): It
consists of an upper
band and a lower band which is the simple moving average plus or minus
two times
standard deviation. It gives a good indication of volatility. Closing prices
are used to
computer the B-Bands. It consists of the main double bottom buy and
double top sell. A
double bottom buy signal is given when prices penetrate the lower band
and remain above

the lower band after subsequent low forms. A sell signal is given when
prices peak above
the upper band and a subsequent peak fails to break above the upper
band. This setup is
bearish and is confirmed when prices decline below the middle band. The
stocks will
bought with the RSI and MFI both below 30 and B-Bands with the stock
price in the lower
price band.

5.2.6 Stock Information:

Table 5.4 Fund allocation to the selected stocks
Company

Date of
Purchase

Price

Total
Allocated
Amount

Number
of shares

Total
Purchase
Amount

MRF

22-JUN-11

6310.35

19

M&M

23-NOV11
03-NOV11

697.05

125000.0
0
125000.0
0
251250.0
0

119896.6
5
125469.9
0
251684.9
0

Crompton
Greaves

19-Jul-11

208.30

251250.0
0

1207

251418.1
0

CRISIL

30-Dec-11

885.90

232

Yes Bank

22-Aug-11

266.20

Canara
Bank

17-May11

542.70

205000.0
0
205000.0
0
205000.0
0

205528.8
0
205506.4
0
205140.6
0

Infosys

22-Aug-11

2194.60

94

Godrej
Consumer
Products

10-Oct-11

389.65

205000.0
0
192500.0
0

Honeywell
Automatio
n

2227.30

180
113

772
378

495

206292.4
0
192876.7
5

Jubilant
Food
works

05-Oct11

658.45

192500.0
0

293

192925.8
5

Pidilite
Industries

09-Dec11

148.85

122500.0
0

824

122652.4
0

Lupin

14-Dec-11

413.35

246

IPCA

24-Aug-11

305.80

101666.6
7
101666.6
7

101684.1
0
101831.4
0

FDC

05-Jul-11

90.25

101666.6
7

1131

102072.7
5

NET
TOTAL

2384980.
10

INVESTED
CASH
DEPOSIT
TOTAL

2385000.
00
115000.O
O
2500000.
OO

333

TOTAL

115019.9
0
2500000.
00

5.2.7 Selected Companies:

1. M.R.F:
Madras Rubber Factory (MRF) is based on manufacturing, distribution and
sales of
tyres for various types of automobiles. It produces tyres, tubes, flaps,
threads and
conveyor belts and exports to more than 65 countries. By its market
capitalization it is
a midcap company.

2. MAHINDRA AND MAHINDRA:

M&M Ltd is an Indian multinational automobile manufacturing corporation.
Its

headquarters is in Mumbai. It produces jeeps, cars, tractors and various

other types of
vehicles. It is the largest seller of tractors in the world. By market
capitalization is a
largecap company.

3. CRISIL:
Credit Rating Information Services of India Limited (CRISIL) is a worldwide
analytical firm which provides services including credit ratings, research,
and risk and
policy advices. CRISILs major shareholder is S&P (Standard and Poor). Its
business
wings can be divided into three main categories which are Ratings,
Research and
Advisory. It has rated/assessed over 61,000 companies within India. It
rates various
securities and debt instruments of large corporates to SMEs. It is a
largecap company
by market capitalization.

4. YES BANK:
Yes bank is an Indian Private bank whose headquarters is situated in
Mumbai. It was
found in 2004. The various services provided by them include corporate,
institutional,
commercial, retail, business and investment banking. It is well known for
its
marketing and branding strategies. It is a largecap company.

5. CANARA BANK:
Canara Bank is an Indian state owned bank which is headquartered in
Bangalore. It

was founded in 1906, making it one of the oldest banks in the country. It is
widely
known for their customer centricity. The bank was nationalised in 1969. It
occupies a
premier position in the committee of Indian banks having an unbroken
record of
profits from the beginning. It is also a largecap company.

6. INFOSYS
Infosys is an Indian multinational IT company that provides business
consulting,
outsourcing, information technology and software engineering services. Its
headquarters is in Bengaluru. Infosys is the third-largest Indian based IT
services
company based on the latest revenues. It has various business units in
various fields
like banking, finance, logistics, manufacturing in which it provides the
required
software services. It is large cap company and also one of the most traded
companies
in the stock exchange.

7. GODREJ CONSUMER PRODUCTS LIMITED

Godrej Consumer Products Limited (GCPL) is an Indian based consumer
goods
company headquartered in Mumbai. Its products include soap, hair
colours, toiletries
and liquid detergents. Its brands include 'Godrej Fair Glow', 'Godrej No.1',
'Godrej
Shikakai' an Cinthol in soaps, 'Godrej Powder Hair Dye', 'Renew',
'ColourSoft' in hair
colours and 'Ezee' liquid detergent. GCPL currently operates several
manufacturing
facilities in India spread over seven locations and grouped into four
Operating

Clusters.

8. JUBILANT FOODWORKS
Jubilant Food Works Ltd is an Indian based food company whose
headquarters is
located in Noida. It has the primary franchise for Domino's Pizza in India,
Bangladesh, Sri Lankans and Nepal. Recently it also got the franchise for
the Dunkin'
Donuts in India. The firm belongs to the part of the Jubilant Bhartia Group.
The
company later named themselves as Domino's Pizza India Private
Limited in 1995
and started operations in 1996.Later it changed back its name to Jubilant
Food Works
Limited in 2009. Jubilant Food Works got listed in February 2010. It is a
large cap
company.

9. LUPIN
Lupin Ltd is a transnational pharmaceutical company founded in 1968 and
which is
headquartered in Mumbai. It is the second largest Indian pharmaceuticals
company
according to market capitalization which makes it a large cap company. It
occupies
the fourteenth position as the largest generic pharmaceutical company.

10. IPCA LABS

IPCA Labs is an international pharmaceutical company founded by
businessman and
medical professionals in 1949, whose headquarters is based in Mumbai. It
is one of
the largest suppliers of the APIs and their intermediates around the world.
It produces

more than 150 type of medicines which include oral liquids, tablets, dry
powders, and
capsules. The various products of the company include formulations, drug
intermediates, and active pharmaceutical ingredients (API). FDC is a large
cap
company.

11. FDC
FDC Ltd is an Indian pharmaceutical company started in 1936 which is
located in
Aurangabad. Products consists of therapeutic drugs, anti-oxidants, energy
drinks,
vitamins. It has various manufacturing sites and a good distribution
system. It is a
small cap company.

12. HONEYWELL AUTOMATION

The Company was incorporated on 13th January 1984, as a private limited
company
under the name of Tata Process Control Private Ltd. In 1987 the Company
entered
into a technical collaboration agreement with Honeywell Inc. for state-ofthe-art
technology for Honeywell's process control and management systems. In
1988 it went
public. By market capitalization it is a largecap company.

13. COMPTON GREAVES

Crompton Greaves (CG) is an Indian company having multinational status
which is
mainly engaged in design, manufacturing, and marketing of products
related to power
generation, transmission, and distribution. Its location is in Mumbai. CG
forms a part

of Avantha Group. Col. R. E. B. Crompton founded R.E.B. Crompton &

Company in
1878. The name Crompton Greaves Limited was adopted on 2 August
1966.The main
products involve power systems, industrial systems and consumer
products.

14. PIDILITE INDUSTRIES

Pidilite Industries Limited is the largest adhesive manufacturer in India
founded in
1959. Its main products are based on adhesives, art material, construction
chemicals
and other industrial chemicals. Pidilite most famous product is the Fevicol
range of
adhesives. Other famous brands include "Fevikwik", Dr. Fixit, Cyclo,
Ranipal, Hobby
Ideas, M-seal and Acron. This brand is the most popular Instant Adhesive
in South
Asian countries. It is a largecap company by market capitalization.

5.2.8 Diversification:
The uncertainty of returns associated with investing in financial securities
introduces the
element of risk in an investment. The possibility of variation of the actual
return from the
expected return from an investment is termed as risk. An investment
whose returns
fluctuate significantly is considered to be a high-risk investment, whereas
that whose
returns are fairly stable is considered low-risk.
The elements of risk may be broadly classified into two groups:

The first group comprises factors that are external to a company and
affect a large number
of securities simultaneously. These are mostly uncontrollable in nature.
The impact of
economic, political and social changes on the performance of companies
and thus the prices
of their securities is system-wide. The risk produced by these system-wide
factors is known
as systematic risk. Systematic risk may be further divided into Interest
Rate Risk, Market
Risk and Purchasing Power Risk. The second group includes those factors
which are internal
to companies and affect only those particular companies. These are
controllable to a great
extent. The risk produced by this group of factors is known as
unsystematic risk. The risk
affecting specific securities arises from two sources: the operating
environment of the
company referred to as business risk, and the financing pattern adopted
by the company
referred to as financial risk.
Diversification is the reduction of non-systematic risk by investing in a
variety of assets. The
basic principle is Dont put all your eggs in one basket. In terms of
financial securities, this
means that it would be unwise to buy and hold the stock or security of
only one company or
of a few companies in the same sector. The chances of being affected by
negative returns
due to the realization of unsystematic risk can be reduced by choosing a
variety of securities
that complement each other so that if there is a reduction in asset value
for one or a few
securities then this may be compensated by adequate returns from the
other securities,

thereby stabilizing the portfolio. The correlation between asset returns of

individual
securities provides the basis for diversification. Choosing those securities
that have either
zero or a low positive correlation of returns would ensure that a downturn
for some
securities would not affect other securities.
The process of finding the optimal portfolio is described as portfolio
selection. The
conceptual framework and analytical tools for determining the optimal
portfolio in a
disciplined and objective manner have been provided by Harry Markowitz.
This method is
known as the Markowitz model and it is known today as modern portfolio
theory. The
Markowitz model has certain limitations such as the large number of input
data required for
calculations and the large number of complexity of computations required.
The particular PMS studied and emulated by us at AnandRathi does not
explicitly follow a
diversification model such as Markowitz or Single index or Multi-index
model, as far as we
know. But asset allocation in a variety of sectors with differing investment
amounts ensures
that unsystematic risk is diversified away.

5.2.9 Returns Performance:

Portfolio Returns as on 30Apr 2014(Absolute
Returns)
Portfolio

1 Month

6 Month

1 Year

2 Year

PMS

0.07%

12.14%

20.39%

36.36%

Since
inception
(May 2011
for PMS)
68.44%

CNX
Midcap

2%

16.60%

12.30%

17.60%

21.09%

CNX

0.59%

9.38%

17.72%

25.78%

8.97%

NIFTY

-0.12%

6.30%

12.92%

27.59%

10.88%

Table 5.5 Portfolio Returns as on 30 Apr

2014
The above table depicts the returns obtained by the portfolio we have set
up (named PMS).
The returns are compared with those of the market indices CNX Midcap,
CNX 500 and CNX
NIFTY. The time periods mentioned refer to the immediate previous time
period from the
current date. For Eg, 6 Month refers to the returns obtained from 1
November 2013 to 30
April 2014. As can be observed, the constructed PMS has outperformed all
the major indices
over the previous 1 year and 2 year periods. In the short-run, the indices
perform almost
equal to or marginally better than the PMS. The returns since inception
show that the PMS
is worth investing in. These results clearly show that a well-constructed
portfolio can beat
the markets over the long term. (check abbreviation: definition of CNX
500, CNX Midcap)

Last 1 year as on 30 April

2014

CNX Midcap

PMS
Portfolio
Plus

S&P CNX
Nifty

Annual Return
Average Monthly Return
Best Monthly Return
Worst Monthly Return
% Positive Months

12.30%
1.13%
10.30%
-6.60%
8

20.39%
1.74%
9.70%
-7.20%
8

12.90%
1.10%
9.80%
-4.70%
8

Annual Volatility
Annual Sharpe

20.20%
0.22

19.20%
0.68

15.20%
0.32

Table 5.6 Comparison of Returns with

Indices:
The above table shows a comparison of different performance measures
of the PMS and the
two indices CNX Midcap and CNX Nifty. Annual Return refers to the return
of the year
previous to 30 April 2014. Average, Best and Worst Returns are selfexplanatory. Positive
months means the number of months where returns were positive.
Annual volatility is a statistical measure of the dispersion of returns for the
index or security
or portfolio. Volatility can either be measured by using the standard
deviation or variance
between returns from that same portfolio or market index. The higher the
volatility, the
riskier is the security or portfolio. A higher volatility means that a
portfolio's value can
potentially be spread out over a larger range of values. This means that
the value of the
portfolio can change dramatically over a short time period in either
direction. A lower
volatility means that a portfolio's value does not fluctuate dramatically,
but changes in value
at a steady pace over a period of time. The above table shows that the
volatility of the PMS
lies in between the Nifty and the CNX Midcap, which is a good sign.

CHAPTER 6 CONCLUSION
6.1 Findings
The exploration of the tools, investment methods and the Portfolio
Management Service at

AnandRathi yielded many insights.

The Trade X Pro trading platform is a comprehensive platform for trading
in equities,
commodities, and foreign exchange. It allows order placing on both cash
and derivative
products. It gives quick response in placing orders or modifying the
existing orders. Its a
versatile software connected with the risk management system which the
details about
limits of each clients and thus specifying if the client has exceeded ones
set limit.
The investment details provided various inferences about the investor
trading pattern and
the stocks and derivatives picked up for trading in the market. The HNI
clients are more
prone to risk taking there by investing huge amounts in derivative
markets giving them large
returns as good profits most of the time and also considerable losses due
to sudden shift in
the market trend. The other clients are mostly risk averse and takes
chances during the time
of results and elections to gain some quick revenue. They usually trade
using the index
driving stocks which gives them a safe bet as compared to other lesser
traded stocks. The
stock being bought by the clients in the various sectors includes those
stocks which are
traded in high volumes. In derivatives market only futures and options are
traded and in
which index options only the prime indices NIFTY is traded in large
quantities and the
others are very few if coming into industry level indices BANKNIFTY is the
only index traded
in large quantities and very low in case of IT, INFRA, PHARMA etc. The
same is in the case of

index futures as well. The stock futures and options are traded in
accordance with the
change in the underlying asset which is their parent stock. So from the
details it can be
certain that the investments done by the client will ultimately create value
and wealth for
them most of the time.
The AnandRathi discretionary PMS has been found to be a great product
which provides
steady out performing returns over longer periods of investment when
compared with the
relevant market indices as well as the top mutual funds in the country. The
PMS has
moderate volatility while ensuring that the previous period returns as well
as the returns
since inception remains high. The PMS chosen here is high risk in that it is
heavily loaded
with equity and a little debt. However, the allocation of assets across a
broad spectrum of
sectors has ensured that the overall dependency on a single sector or
type of stock is
limited, thereby mitigating some of the unsystematic risk. The highlight
has been the
beating of the benchmark indices as well as the top mutual funds in the
country. From this
study it appears that following the AnandRathi discretionary PMS method,
as well as with
additional security analysis, it is possible to create portfolios that perform
well. The study
period is from mid-2011 to mid-2014, a time in which the financial
environment has not
been particularly conducive to growth. Even so, the returns generated by
the portfolio beats
inflation, fixed income securities and individual stocks. And all of this
without any portfolio

churn, which is normally carried out in PMS and which could improve
returns still further.

6.2 Recommendations
Dealers should communicate more to their HNI clients about
investments in stocks
other than the driver stocks which they are confident will give good
returns to the
client thus increasing their wealth.

Being a firm with reputation for an excellent research team, they

should follow up
their clients other than the HNI and intraday customers and help them
to make
investment decisions which can definitely increase their overall assets.

Dealers should contact those clients who are inactive and follow up
with to
understand the reason for their loose in interest in securities trading and
should
encourage them back into the game.

Although, asset allocation was carried out and investments were made
across the
different sectors, it would still be prudent to consider a diversification
model. If the
Markowitz diversification model is considered to be too cumbersome for
a large
portfolio then the single-index and multi-index models may be
considered in order to
improve the portfolio analysis and selection process still further.

 While measuring portfolio performance, it would be helpful to also

consider the
Treynor ratio. This measure is a reward to volatility ratio, where the ratio
is the
reward or risk premium to the volatility of return as measured by the
portfolio beta. It
employs the systematic risk as measured by the beta coefficient. In a
fully diversified
portfolio, all unsystematic risk would be diversified away and the
Treynor ratio would
be the appropriate measure of performance evaluation.

Another type of risk adjusted performance measure developed by

Michael Jensen
referred to as the Jensen ratio attempts to measure the differential
between the actual
return earned on a portfolio and the return expected from the portfolio
given its level
of risk. This could also be used as a measure of whether the portfolios
performance
has been better or worse than that of the market or a randomly selected
portfolio of
equivalent risk.

The comparison of performance of the PMS with the PMS of other

leading financial
services companies would help in understanding the competitive
environment and to
look for further efficiencies in the portfolio management process.

In the stock selection philosophy, different parameters could be used

for different
sectors. For example, in the banking sector, NPAs could be used as a
factor to filter
out stocks.

6.3 Conclusions
The study of the tools, investment details and portfolio management
system at AnandRathi
has not only yielded insights into the inner workings of a financial services
and brokerage
firm, but also provided exploratory areas for improvement of the same.
Trade X Pro is effective software in carrying out trade orders with ease. It
has a good
response time and is user friendly. It gives a clear idea about the positions
of each client and
gives out specific error messages and warnings when encountered. It
helps the dealers
make quick orders as and when their clients suggest thus making good
revenue for the
company.
Investment details suggested that clients choose blue chip and index
driving
stocks for doing the intraday trading, technical analysis is done in order to
take trading
decisions and fundamental analysis is given for filtering out stocks for long
term
investments giving good returns in the end. In intraday trading derivatives
are the main
securities active in the trading hours which generate transactions in terms
of crores by
investing in index and stock futures and options thus giving in a good
brokerage and
revenue for the branch.
Based on this limited study, the Portfolio Management Service
provided by AnandRathi has been found to be robust and successful in
terms of returns
generated over the long term. The selection processes as well as the
evaluation criteria
were found to be relevant for comparison and for yielding performance.

APPENDIX
APPENDIX 1: Stock Selection for Portfolio
Auto
Compan
y

ROE

Market Asset
cap
turnov
er
Y
Y
Y
Y

Cashflo D/E
w
ratio

NWC/Sal
es

Y
Y

Consist
ant
growth
Y
N

Bajaj
Hero
moto
M&m
Mothers
on sumi
MRF

Y
Y

Y
Y

N
N

Y
Y

Y
Y

Y
Y

Y
Y

Y
N

Y
Y

N
Y

Technology
Compa
ny

ROE

Infy

Consist
ant
growth
Y

Market
cap

Marke
t
cap
Y
Y
Y

Asset
turnov
er

Asset
turnov
er
Y

Cashflo D/E
w
ratio
Y

Cashflo
w

D/E
ratio

N
N

Y
Y
N

Y
Y
N

NWC/Sal
es

Finance
Company

RO
E

Crisil
Yes Bank
Muthoot
Finance
Canara

Y
Y
Y

Consista
nt
growth
Y
Y
Y

NWC/Sa
les

FMCG
Company

RO
E

Brittannia
Jubilliant
Godrej

Y
Y
Y

Consist
ant
growth
N
Y
Y

Market
cap

Market
cap

Y
Y
Y

Asset
turnov
er
Y
Y
Y

Cashfl
ow

D/E
ratio

NWC/Sal
es

Y
Y
Y

Y
Y
Y

Y
Y
Y

PHARMA
Compa
ny

ROE

LUPIN
Sun
pharm
a
Torrent
pharm
a
Ipca
Cadilla
Fdc

Y
Y

Consist
ant
growth
Y
N

Cashflo D/E
w
ratio

NWC/Sal
es

Y
Y

Asset
turnov
er
N
N

Y
Y

Y
Y

N
N

Y
Y
Y

Y
Y
Y

Y
Y
Y

N
N
N

Y
Y
Y

Y
Y
Y

N
N
Y

Market
cap

Cashflo D/E
w
ratio

NWC/Sal
es

Asset
turnov
er
N

MATERIALS
Compa
ny

ROE

Ultrate
ch
Coal
India
Gujarat
F&C
EID
Parry
Pidilite

Consist
ant
growth
N

CAPITAL GOODS

Compan
y

ROE

Market Asset
cap
turnov
er
Y
Y

Cashflo D/E
w
ratio

NWC/Sal
es

Consist
ant
growth
N

Honeyw
ell
BHEL
Crompt
on

Y
Y

Y
Y

N
Y

N
N

Y
Y

N
N

Y
Y

APPENDIX II: Performance Values of last 3 years for Stock

Selection
MRF
Indicators
ROE
Asset Turnover
Debt/Equity

2011
31.06
2.06
0.66

2010
23.2
2.4
0.56

2009
20.39
2.01
0.22

2011
29.46
2.01
0.23

2010
32.07
1.85
0.37

2009
17.56
1.61
0.77

2011
27.69
1.15
0

2010
28.89
1.09
0

2009
27.56
1.06
0

M&M
Indicators
ROE
Asset Turnover
Debt/Equity

INFY
Indicators
ROE
Asset Turnover
Debt/Equity

CRISIL

Indicators
ROE
Asset Turnover
Debt/Equity

2011
51.26
1.76
0

2010
51.24
1.26
0

2009
39.63
1.16
0

2011
23.07
17.9
0

2010
21.13
16.5
0

2009
20.27
20.6
0

2011
26.42
13.43
0

2010
26.76
14.1
0

2009
22.61
13.25
0

2011
36.84
1.81
0.18

2010
36.37
1.77
0.O1

2009
47.2
2.48
0.12

2011
46.77
4.82
0

2010
47.04
4.09
0.07

2009
36.48
3.6
3.4

2011
28.51

2010
33.23

2009
30.98

YES BANK
Indicators
ROE
Asset Turnover
Debt/Equity

CANARA BANK
Indicators
ROE
Asset Turnover
Debt/Equity

GODREJ
Indicators
ROE
Asset Turnover
Debt/Equity

JUBILIANT FOOD WOKS

Indicators
ROE
Asset Turnover
Debt/Equity

LUPIN
Indicators
ROE

Asset Turnover
Debt/Equity

1.19
0.31

1.28
0.36

1.28
0.69

2011
26.51
1.34
0.5

2010
27.73
1.33
0.52

2009
14.72
1.29
0.71

2011
26.22
1.23
0

2010
31.56
1.37
0

2009
21.02
1.42
0.01

2010
3.58
1.49
0.45

2009
21.32
1.46
0.78

2010
41.47
3.5
0.02

2009
37.05
4.04
0.04

2010
21.61
2.78
0

2009
35.18
3.06
0

IPCA LTD
Indicators
ROE
Asset Turnover
Debt/Equity

FDC LTD
Indicators
ROE
Asset Turnover
Debt/Equity

PIDILITE INDUSTRY
Indicators
ROE
Asset Turnover
Debt/Equity

2011
29.25
1.69
0.25

CROMPTON GREAVES
Indicators
ROE
Asset Turnover
Debt/Equity

2011
34.37
2.96
0.01

HONEYWELL AUTOMATION
Indicators
ROE
Asset Turnover
Debt/Equity

2011
18.41
2.76
0

REFERENCES:
http://www.rathi.com
http://www.nseindia.com
http://www.investopedia.com
http://www.tmxmoney.com
http://www.moneycontrol.com
http://www.livemint.com
http://www.rediffmoney.com
http://www.google.finance.com
http://www.stockcharts.com
http://www.omnesysindia.com
http://www.equitymaster.com
http://www.nism.ac.in
Security analysis and Portfolio Management, Kevin S, Eastern Economy
Edition
India Index Services and Products Ltd (IISL) information on indices
Technical Analysis for Dummies, 2nd Edition, Barbara Rockefeller, Wiley
Publications Ltd.