A study on Portfolio Management

Submitted In Partial Fulfillment of the Requirement of Bachelor of Business

Management Degree Course of Bangalore University
BY
SOUMITRA GHOSH

(REG. NO. 11SKC18063)

UNDER THE GUIDANCE

PROF. Ravi V

DECLARATION
Project Title: PORTFOLIO MANAGEMENT
The Project Dissertation is submitted in partial fulfilment of academic requirements
for BBM Degree of Bangalore University in Finance. This dissertation is a result of
my own investigation. All sections of the text and results, which has been obtained
from other sources, are fully referenced.

Signature:
Name of the student: Soumitra Ghosh
Register number: 11SKC18063
Date:

CERTIFICATE BY THE GUIDE

Certified that this dissertation titled Portfolio Management , is based on a project
study conducted by Mr,Soumitra Ghosh under my guidance. He has attended the
guidance sessions helped. This project report has not formed a basis for the award of
any other Degree/Diploma of any University or Institution.

Signature of the Guide:

PROF, Ravi V

1st cross, 1st stage, Peenya Industrial Area, Bengaluru,

Karnataka 560058
CERTFICATE FROM THE INSTITUTION
Certified that this project titled, a study on PORTFOLIO MANAGEMENT IN BAJAJ
CAPITAL IN BANGALORE is based on the original project conducted by Mr. SOUMITRA
GHOSH under the guidance of Prof. Ravi

This project report has not formed a basis for the award of any other Degree/Diploma
of any University or Institution.

MR. BM RAMA MURTHY

Program Director
Place: Bangalore

DR.KERRON REDDY

Principal and CEO

ACKNOWLEDGEMENT
I wish to express my sincere thanks to Dr.Kerron Reddy, Director AIMS for giving me this
opportunity to do this course at this honoured institution.
I would like to thank Prof. B. M. Ramamurthy, HOD department of Bachelor of Business
Management, AIMS for his encouragement, guidance and support during the entire course. I am
also thankful to all the educators of AIMS for their help and support.
It is my great pleasure to express my sincere thanks and gratitude to my academic guides Prof.
Ravi of Bachelor of Business Management, AIMS for his valuable suggestions and guidance for
the successful completion of my project.
I am thankful to the management of AIMS for providing all the facilities and resources for the
successful completion of the course. I extent my sincere thanks to all the staffs and faculties of
AIMS for their support and co-operation.
Finally this view would not have been possible without the confidence, endurance and support of
my parents, family members and friends they have always been a source of inspiration and
encouragement. I would like to dedicate this work to my parents.

Soumitra Ghosh

CONTENTS
PG NO
CHAPTER 1;
CHAPTER 2;
CHAPTER 3;
CHAPTER 4:
CHAPTER 5:
CHAPTER 6:

INTRODUCTION
RESEARCH DESIGN
COMPANY PROFILE
DATA ANALYSIS AND INTERPREATION
FINDINGS AND CONCLUSIONS
RECOMMENDATION AND SUGGESTIONS

11-31
32-47
48-87
88-96
97-101
102-103

Need For Selecting The Project

. To get the overall knowledge of securities and investment

. To know that investment made in different securities minimizes the risk and
maximise the returns
.
. To get the knowledge of different factors that affects the investment decisions of
the investors

Executive Summary

Investing in equities require time, knowledge and constant monitoring of the market. For those who
need an expert for managing their investments. Portfolio Management Services (PMS) comes as an
answer

The Business of portfolio management has never been an easy one judging the limited choice in
hand with the twin requirement of adequate safety and sizeable returns is a task fraught with
complexities

Given the unpredictable nature of the market, it requires solid experience and strong reasearch to
make the right decision. In the end it boils down to make the right move in the right direction at the
right time . Thats were the expert comes in.

The term Portfolio Management is the art and science of making decisions about investment mix
and policy, matching investments to objectives, asset allocation for individuals and institutions, and
balancing risk against performance.

Portfolio management is all about strengths, weaknesses, opportunities and threats in the choice of
debt vs. equity, domestic vs. international, growth vs. safety, and many other tradeoffs encountered
in the attempt to maximize return at a given appetite for risk. Portfolio Management are merchant
banking activires recognised by Securities Exchange Board of India (SEBI) and these services can
be rendered by SEBI authorised portfolio managers or discretionary portfolio managers.

A portfolio manager by the virtue of his knowledge , background and experience helps his clients

to make investment in portfolio avenues . The portfolio manager has to comply to the rules and
regulations of SEBI 1993.

The project also tells how to maximize the returns and minimize the risk.

Chapter 1 (_(Part A)

About Industry
Financial services are the economic services provided by the finance industry, which encompasses a
broad range of organizations that manage money, including credit unions, banks, credit card
companies, insurance companies, accountancy companies, consumer finance companies, stock
brokerages,
Indias Financial Sector is diversified and expanding rapidly. It comprises of Commercial Banks,
Insurance Companies, Non Banking Financial Companies (NBFC), Cooperatives, Mutual Funds,
Pension Funds and other smaller financial entities
India is a bank dominated Financial Sector and commercial bank account for more than 60 % of the
total assets of the financial system followed by the insurance. Other banking intermediaries include
regional rural banks and cooperative banks that target under serviced rural and urban population.
Many Non Banking Financial Companies (NBFC) operate in specialized segments such as leasing,
factoring, micro finance and infrastructure finance, though some can except deposits. Pension
provision covers 12 % of the working population and consist of civil service arrangements, a
compulsory scheme for formal private sector employees and private schemes offered through
insurance companies.
The regulation and supervision of the financial system in India is carried out by different regulatory
authorities. The Reserve Bank of India (RBI) regulates and supervises the major part of the
financial system. The supervisory role of the RBI covers Commercial banks, Urban cooperatives
banks (UCBs), and some financial institutions Non Banking Financial Companies (NBFCs). Some
of the financial institutions, in turn regulate or supervise other institutions in the financial sector for
instance Regional Rural Bank and the Co-operative Bank are supervised by National bank for
Agriculture and Rural Development (NABARD) and Housing Finance Companies by National

Housing Bank (NHB), Department of Commerce Affairs (DCA). Government Of India regulates
deposit taking activities of cooperates other than NBFCS registered under Companies Act of India,
but not those which are under separate statutes. The Registrar of Cooperatives of different states in
case of single state cooperatives and the Central Government in the case of

multi- state

cooperatives are joint regulators, with the RBI for UCBs and the NABARD for rural cooperatives.
Whereas the RBI & NABARD with the banking functions of the cooperatives, management control
rests with the State/ Central Government. The dual control impacts the supervision and regulation
of the cooperative banks. The capital market, mutual funds and other market intermediaries are
regulated by Securities and Exchange Board of India (SEBI), Insurance Regulatory and
Development Authority (IRDA) and Pension Fund Regulatory and Development Authority
(PFRDA) regulates the pension fund.

Brief History
Indian Financial system evolved as time went on
1. Barter System:
Barter is a system of exchange by which goods or services are directly exchanged for other goods
or services without using a medium of exchange, such as money It is distinguishable from gift
economies in that the reciprocal exchange is immediate and not delayed in time. It is usually
bilateral, but may be multilateral (i.e., mediated through barter organizations) and usually exists
parallel to monetary systems in most developed countries, though to a very limited extent. Barter
usually replaces money as the method of exchange in times of monetary crisis, such as when the
currency may be either unstable (e.g., hyperinflation or deflationary spiral) or simply unavailable
for conducting commerce.
David Graeber argues that the inefficiency of barter in archaic society has been used by economists
since Adam Smith to explain the emergence of money, the economy, and hence the discipline of

economics itself. "Economists of the contemporary orthodoxy... propose an evolutionary

development of economies which places barter, as a 'natural' human characteristic, at the most
primitive stage, to be superseded by monetary exchange as soon as people become aware of the
latter's greater efficiency. However, extensive investigation by anthropologists like Graeber has
since then established that "No example of a barter economy, pure and simple, has ever been
described, let alone the emergence from it of money; all available ethnography suggests that there
never has been such a thing. But there are economies today which are nevertheless dominated by
barter.
Since the 1830s, direct barter in western market economies has been aided by exchanges which
frequently utilize alternative currencies based on the labour theory of value, and designed to prevent
profit taking by inter mediators. Examples include the Owenite socialists, the Cincinnati Time store,
and more recently Ithaca HOURS (Time banking) and the LETS system.

method of exchange in times of monetary crisis, such as when the currency may be either unstable
(e.g., hyperinflation or deflationary spiral) or simply unavailable for conducting commerce.
David Graeber argues that the inefficiency of barter in archaic society has been used by economists
since Adam Smith to explain the emergence of money, the economy, and hence the discipline of
economics itself. "Economists of the contemporary orthodoxy... propose an evolutionary
development of economies which places barter, as a 'natural' human characteristic, at the most
primitive stage, to be superseded by monetary exchange as soon as people become aware of the
latter's greater efficiency. However, extensive investigation by anthropologists like Graeber has
since then established that "No example of a barter economy, pure and simple, has ever been
described, let alone the emergence from it of money; all available ethnography suggests that there
never has been such a thing. But there are economies today which are nevertheless dominated by
barter.

Since the 1830s, direct barter in western market economies has been aided by exchanges which
frequently utilize alternative currencies based on the labour theory of value, and designed to prevent
profit taking by inter mediators. Examples include the Owenite socialists, the Cincinnati Time store,
and more recently Ithaca HOURS (Time banking) and the LETS system.

2. Money Lender:
A moneylender is a person or group who offers small personal loans at high rates of interest. The
high interest rates charged by them is justified in many cases by the risk involved. They play an
active role in lending in places with less access to banking activities or in situations where
borrowers do not have good credit history. In India licensed money lenders are governed by Money
Lenders Acts of respective states.

3. Chit Funds:
A Chit fund is a kind of savings scheme practiced in India. A Chit fund company means a company
managing, conducting or supervising, as foremen, agent or in any other capacity, chits as defined in
Section 2 of the Chit Funds Act, 1982. According to Section 2(b) of the Chit Fund Act, 1982, "Chit
means a transaction whether called chit, chit fund, chitty, kuree or by any other name by or under
which a person enters into an agreement with a specified number of persons that every one of them
shall subscribe a certain sum of money (or a certain quantity of grain instead) by way of periodical
installments over a definite period and that each such subscriber shall, in his turn, as determined by
lot or by auction or by tender or in such other manner as may be specified in the chit agreement, be
entitled to the prize amount"
Such chit fund schemes may be conducted by organized

financial institutions or may be

unorganised schemes conducted between friends or relatives. There are also variations of chits
where the savings are done for a specific purpose. Chit funds also played an important role in the
financial development of people of south Indian state of Kerala, by providing easier access to credit.
In Kerala, chitty (chit fund) is a common phenomenon practiced by all sections of the society. A

company named Kerala State Financial Enterprise exists under the Kerala State Government, whose
main business activity is the chitty.

4. Indigenous Bankers:
Indigenous bankers constitute the ancient banking system of India. They have been carrying on
their age-old banking operations in different parts of the country under different names.
In Chennai, these bankers are called Chettys ; in Northern India Sahukars, Mahajans and Khatnes;
in Mumbai, Shroffs and Marwaris; and in Bengal, Seths and Banias. According to the Indian
Central Banking Enquiry Committee, an indigenous banker or bank is defined as an individual or
private firm which receives deposits, deals in hundies or engages itself in lending money.
The indigenous bankers can be divided into three categories:
(a) those who deal only in banking business (e.g., Multani bankers);
(b) those who combine banking business with trade (e.g., Marwaris and Bengalies); and
(c) those who deal mainly in trade and have limited banking business.
The indigenous banker is different from the moneylender. The moneylender is not a banker; his
business is only to lend money from his own funds. The indigenous banker, on the other hand, lends
and accepts funds from public.

5. Corporative Movement:
India since the country's independence from Britain in 1947 has seen a huge growth in Cooperative
societies serving mainly the farming sector.
For example, most of the sugar production in India takes place at mills owned by local cooperative
societies. The members of the society include all farmers, small and large, supplying sugarcane to
the mill. Over the last fifty years, the local sugar mills have played a crucial part in encouraging
political participation and as a stepping stone for aspiring politicians.
This is particularly true in the state of Maharashtra where a large number of politicians belonging to
the Congress party or NCP had ties to sugar cooperatives from their local area. Unfortunately, due

to a policy of "profits for the company but losses to be borne by the government", has made a
number of these operations inefficient.
Cooperatives also play a great part in dairy marketing as well as banking. Cooperative banks in
India serve both the rural and urban societies. Just like the Sugar companies, these institutions serve
as the power base for local politicians.

6. Joint Stock Banks:

The Allahabad Bank, established in 1865 and still functioning today, is the oldest Joint Stock bank
in India. It is a nationalized bank with its head-quarters in Kolkata, India. It is the oldest joint stock
bank in India. It was founded in Allahabad in 1865.
As of 31 March 2012, it had over 2,500 branches across India. The bank did a total business of INR
3.1 trillion during the FY 2012-13 The bank has a branch in Hong Kong and a representative office
in Shenzen.
The bank's market capitalization in May 2013 was US$ 1.28 billion and it ranked #1466 on the
Forbes Global 2000 list.
On 24 April 1865, a group of Englishmen at Allahabad founded Allahabad Bank. By the end of 19th
century it had branches at Jhansi, Kanpur, Lucknow, Bareilly, Nainital, Calcutta, and Delhi.

Growth & Prospects

The growth of financial sector in India at present is nearly 8.5% per year. The rise in the growth rate
suggests the growth of the economy. The financial policies and the monetary policies are able to
sustain a stable growth rate.
The reforms pertaining to the monetary policies and the macro economic policies over the last few
years has influenced the Indian economy to the core. The major step towards opening up of the
financial market further was the nullification of the regulations restricting the growth of the
financial sector in India. To maintain such a growth for a long term the inflation has to come down
further.

The financial sector in India had an overall growth of 15%, which has exhibited stability over the
last few years although several other markets across the Asian region were going through a turmoil.
The development of the system pertaining to the financial sector was the key to the growth of the
same. With the opening of the financial market variety of products and services were introduced to
suit the need of the customer. The Reserve Bank of India (RBI) played a dynamic role in the growth
of the financial sector of India.
Growth of the banking sector in India

The banking system in India is the most extensive. The total asset value of the entire banking sector
in India is nearly US$ 270 billion. The total deposits is nearly US$ 220 billion. Banking sector in
India has been transformed completely. Presently the latest inclusions such as Internet banking and
Core banking have made banking operations more user friendly and easy.

Growth of the Capital Market in India

The ratio of the transaction was increased with the share ratio and deposit system

The removal of the pliable but ill-used forward trading mechanism

The introduction of infotech systems in the National Stock Exchange (NSE) in order to cater
to the various investors in different locations
Growth in the Insurance sector in India

With the opening of the market, foreign and private Indian players are keen to convert
untapped market potential into opportunities by providing tailor-made products.

The insurance market is filled up with new players which has led to the introduction of
several innovative insurance based products, value add-ons, and services. Many foreign companies

have also entered the arena such as Tokio Marine, Aviva, Allianz, Lombard General, AMP, New
York Life, Standard Life, AIG, and Sun Life.

The competition among the companies has led to aggressive marketing, and distribution
techniques.

The active part of the Insurance Regulatory and Development Authority (IRDA) as a
regulatory body has provided to the development of the sector.
Growth of the Venture Capital market in India

The venture capital sector in India is one of the most active in the financial sector inspite of
the hindrances by the external set up.

Presently in India there are around 34 national and 2 international SEBI registered venture
capital funds

Introduction to Portfolio Management (Part B)

Portfolio is a combination of securities such as bonds stocks and other instruments. For example if I
have purchased 100 shares of reliance, one lot of gold and one lot of silver along with few bonds
and debentures, all the above securities comprise my portfolio.

Portfolio management is the art of selecting the right investment policy for the individuals in terms
of minimum risk and maximum return. It refers to managing an individuals investments in the
form of bonds, shares, cash, mutual funds etc so that he earns the maximum profits within the
stipulated time frame. In plain terms, it is managing money of an individual under expert
guidance of portfolio managers.
. Portfolio management presents the best investment plan to the individuals as per their income,

budget, age and ability to undertake risks. Portfolio management minimizes the risks involved in
investing and also increases the chance of making profits. Portfolio management enables the
portfolio managers to provide customized investment solutions to clients as per their needs and
requirements.

The term Portfolio Management is the art and science of making decisions about investment mix
and policy, matching investments to objectives, asset allocation for individuals and institutions, and
balancing risk against performance.

Portfolio management is all about strengths, weaknesses, opportunities and threats in the choice of
debt vs. equity, domestic vs. international, growth vs. safety, and many other tradeoffs encountered
in the attempt to maximize return at a given appetite for risk. Portfolio Management are merchant
banking activires recognised by Securities Exchange Board of India (SEBI) and these services can
be rendered by SEBI authorised portfolio managers or discretionary portfolio managers.

Aspects of portfolio Management

1. Best use for your money

The most important aspect to consider if it is the right time for you to invest is to look at the best
use of your money.
For example, wouldnt it make more sense to pay your debt? The money you are spending on the
interest of your high credit card debt may be higher than what you might earn when you invest. For
example it makes sense to pay off that credit card debt that is costing you 20% per year, before
investing on mutual fund or stocks where you realistically expect to earn 10% or less.
Also more important, you should protect yourself from the financial catastrophes that could wipe
out all your investments, or worse, put you into a big burden of debt when they happen. This can be
done by buying insurance before investing.
First of all, make sure that you have adequate health insurance, to protect your money against the
high cost of being treated for health problems. A disability insurance is also a good idea because a
disability can wipe out your savings very fast.

Build up a cash cushion of 3 to 6 months expenses or salary in case you become unemployed, or as
protection from emergencies. Make sure that you place this money in an instrument that you can
easily convert into cash and you are not putting your money at risk, like high interest savings
account, Certificate of Deposits or Money Market Fund.

2. Your objective for investing

A factor that determines where to invest your money is your objective for investing.
You may want to hopefully grow your money fast and you do not care if you risk it because you
have more time to pick yourself up and recover from a downturn. Or your goal is just to preserve
your capital in the safest way because you will need your money soon, and it is important that it

does not lose its value.

These different goals are compatible with different kinds of investments or mix of investments, as
follows:

Keeping your money relatively safe because you need it soon if you are close to
retirement, you would not want your money to decrease in value just when you are about to retire.
Therefore if you have a financial goal that is near, investing in less risky instruments makes sense.
Investments in mostly bonds are suitable here. Bonds are safe instruments.

Taking moderate risk with your money for better appreciation if you can afford to take
a little risk with your money because you will not need it soon, then buying an investment like a
mix of stocks of very stable companies that pays out dividend (income) and stocks of company that
do not pay out dividend but reinvest its earnings in its future is a good choice for you.

Taking aggressive risks for higher gains if you can afford to take a risk with your money
for higher gains, then growth should be your goal. You should invest in stocks of companies that
plow its earning s back into its future. This is appropriate if you can keep your investment for a
long period of time because it takes time for some companies to make its value increase sizably.
It is also possible that you can invest for two different goals, such as investing for a house down
payment (short term), and investing to retire (long term).
3. Your Age
A factor you should consider to determine where to put your investment and how much to invest
is your age.
In investing, being young has an advantage. You are able to wait a longer time for your investment
to bear fruit. While young, you are also more secure, you do not have a lot of responsibilities, you
have more disposable income, and you can pick yourself up easier when you make mistakes.
Therefore, when you are young, you can get into investments that are riskier but can potentially
earn above average earnings.
Another advantage of being young is that you have more time for compound interest to work for

you. Compound interest is earning interest on your interests as well as principal, and this makes
your money grow at a faster rate over time.
If you are young, it is not very important to put in a lot of money for investment if you have very
long term goal such as retirement.
On the other extreme, if you are middle aged and thinking about retirement, but you are just starting
to save for retirement, you should invest the maximum amount you can afford so you can live
comfortably when you retire. You should also put your money in a relatively safe investment, so
there is very little risk of losing much of it by the time you retire.
Since stocks are relatively riskier investments than bonds, a formula you can follow to determine
how much percentage of stocks you should hold (vs. bonds and other safer instruments) is 120
minus your age.
4. Time before you need the money.
Not everyone invests to retire, some investments have shorter goals. Therefore, another factor you
should consider to determine where to invest is the time you have before turning your investment
into cash.
The longer you can stay invested, the more you can take risk (and hopefully get more gain) since
you can still recover from any potential loss. If you do not have a lot of time and taking a loss
would be disastrous to your plan, then it is best to stick to less risky investments like bonds.
Also consider that some investments will cost you charges or penalties if surrendered or redeemed
before a holding period. If this is a requirement, make sure that you do not need the money before
the prescribed redemption period.
You should also consider the tax implications of withdrawing your investment.
5. Risk tolerance
As a general rule, the higher the risk of an investment, the more potential for higher return.
However, not everyone can take risks with their money over a certain level. Not everyone is
comfortable with the ups and downs of the stock market, for example. You may be so averse to

risking your money that a potential higher rate of return may not be worth the stress and your losing
sleep.
If your personality is one who can accept losing money for the possibility of getting much more
profit on your investment, choose aggressive investments such as growth stocks.
If you are the more conservative type, choose the relative safety of bonds.

CHAPTER 2

RESEARCH DESIGN

Title of Study
A Study on Portfolio Risk and Returns on Various Scripts

Portfolio Management

The term Portfolio Management is the art and science of making decisions about investment mix
and policy, matching investments to objectives, asset allocation for individuals and institutions, and
balancing risk against performance.

Portfolio management is all about strengths, weaknesses, opportunities and threats in the choice of
debt vs. equity, domestic vs. international, growth vs. safety, and many other tradeoffs encountered
in the attempt to maximize return at a given appetite for risk. Portfolio Management are merchant
banking activires recognised by Securities Exchange Board of India (SEBI) and these services can
be rendered by SEBI authorised portfolio managers or discretionary portfolio managers.

Statement Of problem

Research Problem
To identify the stock market avenue and methods to help investors in selection of script

The Objective of Studying Portfolio Management

To get the overall knowledge of securities and investment

. To know that investment made in different securities minimizes the risk and maximise the returns
.
. To get the knowledge of different factors that affects the investment decisions of the investors

. To provide investors the knowledge of Beta that would help them in selection of script and
creation of portfolio.

Scope Of Portfolio Management

Portfolio management is a continuous process. It is a dynamic activity. The following are the basic
operations of a portfolio management.
a)

Monitoring the performance of portfolio by incorporating the latest market conditions.

b)

Identification of the investors objective, constraints and preferences.

c) To minimize the risk and increase the returns

Review Of Literature
Portfolio Management is the management of selected group of investments using integrated
strategic planning integrated architecture and measure of performance, risk management technique,
transition plans and portfolio investment strategies.

MARKOWITZ: introduced the concept of an efficient portfolio. An efficient portfolio is one

which has the smallest attainable portfolio risk for a given level of expected return (or a largest
expected return for a given level of risk.)

According to MAGINNAND TUTTLE

Portfolio Management is a process of integrating set of activities in a logical and orderly manner. It
is a continuous systematic, dynamic and flexible concept and it extends to all portfolio investments
including real estate, gold and other real assets.
INVESTOPEDIA explains 'Portfolio Management'

In the case of mutual and exchange-traded funds (ETFs), there are two forms of portfolio management:
passive and active. Passive management simply tracks a market index, commonly referred to as
indexing or index investing. Active management involves a single manager, co-managers, or a team of
managers who attempt to beat the market return by actively managing a fund's portfolio through
investment decisions based on research and decisions on individual holdings. Closed-end funds are
generally actively managed.

Portfolio Management

is concerned with efficient management of investments in the securities. An

Investment is defined as the current commitment of funds for a period of in order to derive a future
flow for funds that will compensate the investment unit.

Portfolio Management guides the investor in the method of selecting the best available securities that
will provide the expected rate of return for any given degree of risk and also mitigate (reduce) the risk.
It is a strategic decision which is addressed by top level managers.

Portfolio

Management

is

all

about

analysing

the

STRENGTHS

WEAKNESSES,

OPPURTUNITES AND THREATS for performing wide range of activities relating to ones portfolio
for maximising the returns at a given risk. It helps in making decisions about selecting Debt Vs
Equity, Growth Vs Safety and various other tradeoffs.

Operational Definition Of Concepts

Financial Concepts:
1

The Portfolio

The term portfolio refers to any collection of financial assets such as stocks, bonds, and cash.
Portfolios may be held by individual investors and/or managed by financial professionals, hedge
funds, banks and other financial institutions. It is a generally accepted principle that a portfolio is
designed according to the investor's risk tolerance, time frame and investment objectives. The
monetary value of each asset may influence the risk/reward ratio of the portfolio and is referred to
as the asset allocation of the portfolio. When determining a proper asset allocation one aims at
maximizing the expected return and minimizing the risk. This is an example of a multi-objective
optimization problem: more "efficient solutions" are available and the preferred solution must be
selected by considering a trade off between risk and return. In particular, a portfolio A is dominated
by another portfolio A' if A' has a greater expected gain and a lesser risk than A. If no portfolio
dominates A, A is a Pareto-optimal portfolio. The set of Pareto-optimal returns and risks is called
the Pareto Efficient Frontier for the Markowitz Portfolio selection problem.

2. Portfolio Structure
A portfolio Structure identifies and contains a number of portfolios. These structures like the
portfolio within it, should align with significant planning and result boundaries and with business
comp, if you have a product oriented portfolio structure then you would have a separate portfolio
for each major product or product group . Each portfolio will contain all the iniatives that helps in a
particular product or product group to contribute to the success of the enterprise business.

3. Portfolio Manager'

The person or persons responsible for investing a mutual, exchange-traded or closed-end fund's
assets, implementing its investment strategy and managing the day-to-day portfolio trading.

Portfolio managers are presented with investment ideas from internal buy-side analysts and sell-side
analysts from investment banks. It is their job to sift through the relevant information and use their
judgment to buy and sell securities. Throughout each day, they read reports, talk to company
managers and monitor industry and economic trends looking for the right company and time to
invest the portfolio's capital.
A team of analysts and researchers are ultimately responsible for establishing an investment
strategy, selecting appropriate investments and allocating each investment properly for a fund or
asset-management vehicle.
Portfolio managers make decisions about investment mix and policy, matching investments to
objectives, asset allocation for individuals and institutions, and balancing risk against performance.
Portfolio management is about strengths, weaknesses, opportunities and threats in the choice of debt
vs. equity, domestic vs. international, growth vs. safety, and other tradeoffs encountered in the
attempt to maximize return at a given appetite for risk.
In the case of mutual and exchange-traded funds (ETFs), there are two forms of portfolio
management: passive and active. Passive management simply tracks a market index, commonly
referred to as indexing or index investing. Active management involves a single manager, comanagers, or a team of managers who attempt to beat the market return by actively managing a
fund's portfolio through investment decisions based on research and decisions on individual
holdings. Closed-end funds are generally actively managed.
4. Asset Allocation
Asset allocation is an investment strategy that aims to balance risk and reward for an investor. This

is accomplished by apportioning a portfolios assets according to the individuals goals, risk

tolerance and investment time horizon.
5. Business Risk
There are certain events that only affect a specific company or industry, . The adverse impact on
its revenue or operating expenses may cause the value of the company stock to drop.

6.Chartered Accountant
The Chartered Accountant designation is given to accounting professionals after rigorous study,
examination and hands-on experience. The role of a CA is one of a trusted professional, known for
technical competence, integrity, objectivity and a commitment to the public interest.

Sources of Data

Secondary Data:
I have collected secondary data from website www.bajajcapital.com, www.investopedia.com,
www.franklintempletonmutualfund.in

www.moneycontrol.in

www.yahoofinance.com

www.wikipedia.com and also from magazines such as investors India and various factsheets

Sample Design

I have selected five individual scripts from companies having a beta value less than one, equal to
one and more than 1. Beta value less than 1 shows that risk are less as well as the returns while beta
value equal to one shows that returns are moderate as well as the risk and beta value more than 1
shows that returns are high as well the risk
below

This can be appropriately understood by the figure

From the above diagram we can see if the investor is willing to take risk of m1 he is likely to get a
expected return of r1 and if he takes a risk of m2 he is likely to get more returns of r2. So we can
conclude that risk is directly related to returns. If increases the other will also increase and if one
decreases, the other will also decrease.

From the above discussion I come to a conclusion that investors of three types
!. Investors who take minimum risk are expected to get minimum returns

2. Investors who take moderate are expected to get moderate returns.

3. Investors who take maximum risk are expected to get maximum returns

Types Of Research

Research design is an exploratory as the basic objective is to identify the stocks and the methods to
create and protect portfolio.

Plan of Analysis
I have considered random portfolio while designing my portfolio.

Random Portfolio:

Random Portfolio consists of the scripts that are randomly selected by the investor by his own
knowledge and preference of the stock. Here there is no analysis done on the scripts, that are
selected on the tips and buts received by the investors from the external sources.
BETA is a measure of the volatility, or systematic risk, of a security or a portfolio in comparison to
the market as a whole. Beta is used in the capital asset pricing model (CAPM), a model that
calculates the expected return of an asset based on its beta and expected market returns.
Beta indicates the proportion of the yield of the portfolio to the yield of the entire market ( as
indicated by some index like stocks) If there is an increase in the yield of the market, the yield of an
individual also may go up. If the index go up by 1.6 and the yield of an investors portfolio goes up
by 0.8 then beta is 0.8/1.6 i,e 0.5. In other words beta indicates that for every 1% increase in
market yield, the yield of the portfolio goes up by 0.5. High beta shares move higher than the
market when the market rises and the yield of the fund declines more than the yield of the market
when the market falls. In the Indian context a beta of 1.2 is considered very bullish.

Investors can be indifferent towards market swings , if they know their stocks well or if they can
put their portfolio into neutral or bias for the upside you are bullish or a little for the downside you
are bearish. Investors should have a mix of stocks that have certain betas in their portfolio. Bullish
investors have higher betas in their portfolio and they expect the market to rise and if the market

rises according to their prediction, they will get higher returns and thus their performance will be
better than the market similarly bearish investors use low beta or negative beta stock and want the
market to fall so that their portfolio goes down below the market so that their performance is better
than the market. And if they want be neutral

then they have to have a stock where beta is 1 or

develop a portfolio of stocks where beta is greater than 1 or less than 1 so that they have a whole
portfolio with an average beta of 1.

A Beta for stock is derived from historical data, This means it does not have any predictive value
for the future but it does show that if a stock continues to have the same price pattern relative to the
market in general as it has in the past then investors can predict how their portfolio will perform in
relation to the market. And with a portfolio with an average beta of 1 investors can create their own
index fund since they can move more or less in tandem with the market.

Interpretation of BETA
When B=1

means that the scrip the scrip the same volatility as compared to index. Suitable for

moderate investors

When B>1 means that the scrip the scrip has more volatility as compared to index and therefore
suitable for aggressive investors

When B<1 means that the scrip the scrip has less volatility as compared to index and therefore
suitable for defensive investors.

SO based on this BETA i have prepared three portfolio to match the risk taking capability of
investors.

Reference Period
I have a taken a period of 2 months starting from 2.12.2013-31.12.13 and 2.12.2013- 28.2.2014

Limitation of the Project

1.The time duration I got to complete the project was not sufficient

2. The report is basically made between the horizon of two months and the market situation is
very dynamic so the conclusion or the return may not reflect the true picture.

Chapter Scheme
1Introduction
The first chapter includes the industrial and theoretical background of the subject.
Chapter 2: Research Design
The research design is covered in the second chapter which consists of title of the study, statement
of the problem, sources of data, objectives of the study, scope of the study, operational definition of
concepts, sampling techniques, types of research, reference period, plan of analysis, methods of
analysis and limitations of the study.
Chapter 3: Company Profile
Third chapter consists of profile of the company. It includes of inception of the company, board of
directors, mission and vision statement, service profile, competitors, quality policy and business
operations of the company.
Chapter 4: Data Analysis and Interpretation
This chapter consists of data analysis and interpretation. It includes analysis and inference of the
table, graphical representation of the same.
Chapter 5: Findings and Conclusions
The summary of findings and conclusion is the this chapter.

Chapter 6: Recommendations and Suggestions

This is the final chapter of the study and it consists of the recommendations and suggestions to the
company with respect to the study carried out. The recommendations and suggestions are drawn in
line with the objectives of the study. These recommendations and suggestions are clear, practical,
acceptable and specific.

CHAPTER 3
COMPANY PROFILE
Inception
The company was promoted in 1965 by Shri. K K Bajaj with an objective to provide professional
guidance to investor on where, when and how to invest and to assist the corporate sector in its
resource raising activities. Bajaj capital became the first company to set up Investment Centers al
over India for this purpose.
Today Bajaj Capital has a vast network of 109 offices spread all across the country. Their team has
about 1500 highly trained professionals which includes MBA's CA's

Financial Analysis ,

Insurance Experts and Law Graduates. Their operations are fully computerised .
Every day Bajaj Capital raises resources for over 1000 top Institutions/corporates for their fixed
income and equity Indias largest distributor of financial products like Mutual funds and Insurance..

Type of Company
Bajaj Capital Limited, a financial services company, provides investment advisory and financial
planning services to individual investors, corporate houses, institutional investors, non-resident
Indians, and high net worth clients in India. It offers investment, insurance, tax saving, retirement,
financial, cash flow, and childrens future planning services. The company also distributes various
financial and investment products, such as mutual funds, life and general insurance, bonds, post
office schemes, fixed deposits, initial public offerings, and real estate property investments. In
addition, it provides investment banking services for private and public sector enterprises.
Nature of Company
Senior Manager to General Manager on Oct 08, 2011 X Doesn't Recommend to Join
view about the Bajaj Capital company nature and work.....
Top 3 Reasons to Work here

Remuneration

Learning & Development

Recreational Activities
Top 3 Skills to Succeed here

Relationship Management

Out of Box Thinking

Analytical Skills
My experience in this company as an intern
i have lots of memorable experience here, some are bad , and some are good,. I find the employees
ver cooperative and helpful
Their is unity and intergrity between employees.

Board Of Directors
Mr. K.K. Bajaj
Chairman

A visionary par excellence, a pioneer and a leader, Mr. K.K. Bajaj has been instrumental in shaping
Bajaj Capital's emergence as one of India's largest Investment Services Company. Mr. Bajaj is a
highly respected figure in the field of institutional and personal finance and Company FDs. His
emphasis on honesty, ethics and values are the guiding principles of the organisation.

Mr. Bajaj is also a prolific writer and has written over 200 articles on diverse issues such as
Personal Finance, Economic Affairs, and Health.

Mr. Rajiv Bajaj

Vice Chairman & Managing Director

Mr. Rajiv Bajaj is the Vice Chairman & Managing Director of Bajaj Capital
Ltd. He is also the Founding Chairman of Financial Planning Standards Board, India and has been
one of the key people involved in bringing the globally recognized Certified Financial PlannerTM
professional designation to India.

Mr. Bajaj has over 22 years of strategic management experience in the fields of Investment
Banking, Investment Advisory, Insurance Brokerage and Financial Planning. He had spent his
initial years in setting up of the investment banking business for Bajaj Capital. He also played an
important role in expanding the distribution reach of Bajaj Capital Group from 20 offices in 1990 to
around 200 now.

In the last few years, Mr. Bajaj has spent a lot of time in upgrading the operating system and
processes of the Group. Under his leadership, Bajaj Capital has won various category awards and
recognition nationally like 'Best Financial Advisor Retail' Award for 2009, 2011 and 2012 by
CNBC TV18 and Great Places to Work (2008 and 2009). He has been Awarded the Indian of the
year by CNN IBN for 2013

Mr. Anil Chopra

Group CEO & Director

Mr. Anil Chopra is the Group Chief Executive Officer & Director of Bajaj Capital Limited. He
joined the Company in 1984. Mr. Chopra has been instrumental in expanding the branch network of
Bajaj Capital Ltd. all over India.

A Chartered Accountant and a Certified Financial Planner, Mr. Chopra is credited with introducing
international accounting and HR practices in the organization. His most valuable contribution,
however, has been in building up a financially literate society and making Bajaj Capital Group a
strong retail brand. He is considered an authority, and is widely sought after by the media for quotes
on key developments in the industry.

Mr. Sanjivnayan Rahulkumar Bajaj

Joint Managing Director

Mr. Sanjivnayan Rahulkumar Bajaj, also known as Sanjiv, has been the Managing Director of Bajaj
Holdings & Investment Limited since April 1, 2012. Mr. Bajaj serves as Joint Managing Director of
Bajaj Capital, Ltd. He has been Managing Director of Bajaj Finserv Ltd., since February 20, 2008.
He served as the Chief Executive Officer of Bajaj Finserv Ltd. He served as Vice President of
Finance at Bajaj Holdings & Investment Limited. He serves as Chairman of Allianz Life Insurance
Company Limited. He has been Non Executive Vice Chairman of Bajaj Finance Ltd since October
15, 2013. He has been a Non-Executive Director of Maharashtra Scooters Ltd. since October 18,
2006. He has been a Non-Executive director of Bajaj Auto Ltd. since April 1, 2012. He serves as a
Director of Bajaj Allianz General Insurance Co. Ltd., Insurance Brokers Association of India and
Bajaj Allianz Life Insurance Company Ltd. He has been an Executive Director of Bajaj Holdings &
Investment Limited since April 1, 2012. He has been a Director of Bajaj Finserv Ltd since February

2008. He serves as a Director of Jeewan Ltd. He serves as a Non-Executive Director of Bajaj

Finance Ltd. He served as a Non-executive Director of Bajaj Finance Ltd (also known as Bajaj Auto
Finance Ltd.) until April 1, 2012. He served as a Non-Executive Director of Bajaj Holdings &
Investment Limited. from February 20, 2008 to March 31, 2012 and Hindustan Housing Co. Ltd.
since January 15, 2009. He served as an Executive Director of Bajaj Holdings & Investment
Limited from April 13, 2004 to February 20, 2008. He served as an Executive Director of Bajaj
Finance Ltd. since September 15, 2004. Mr. Bajaj received a B.E in Mechanical Engineering, first
class with distinction from the University of Pune, an M.Sc in Manufacturing Systems Engg with
distinction from the University of Warwick, UK and an MBA from Harward University, USA.

Organisation Chart

Chairman Mr K,K Bajaj

Vice Chairman Mr Rajiv Bajaj

Joint MD Mr Sanjay Bajaj
CEO
EVP

East

West

North

South

Sr VP

Sr VP

Sr VP

Sr VP

VP

VP

VP

VP

AVP

AVP

AVP

AVP

AH

BH

AH

BH

AH

AH

BH

BH

ACRM

ACRM

ACRM

ACRM

SrRM

SrRM

SrRM

SrRM

RM

RM

RM

RM

Functional Chart

Vision, Mission, Aims & Objectives

Mission Statement
Bajaj Capital aims to be the most useful, reliable and efficient provider of Financial Services. It is
our continuous endeavour to be a trustworthy partner to our clients, helping them protect and grow
their wealth, and achieve their life goals.
Our Aim
To serve our clients with utmost dedication and integrity so that we exceed their expectations
and build enduring relationships.
To offer unparalleled quality of service through complete knowledge of products, constant
innovation in services and use of the latest technology.
To always give honest and unbiased financial solutions and earn our cilent's everlasting trust.
To serve the community by educating individuals on the merits of investments and in turn
help shape a financially responsible citizen.
To create value for all stake holders by ensuring profitable growth.
To build an amicable environment that accords respect to every individual and permits their
personal growth.
To utilize the power of teamwork to function as a family and build a seamless organization.
Vision Statement
Our vision is to be the most preferred Investment Services Company in India by providing clients
with informed choices of lasting value, protect and grow wealth for them, to make their tomorrow
better than today

Service Profile

Mutual Funds

Mutual Funds are among the hottest favourites with all types of investors. Investing in mutual funds
ranks among one of the preferred ways of creating wealth over the long term. In fact, mutual funds
represent the hands-off approach to entering the equity market. There are a wide variety of mutual
funds that are viable investment avenues to meet a wide variety of financial goals. This section
explains

the

various

aspects

of

Mutual

Funds.

MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS. READ ALL

SCHEME RELATED DOCUMENTS CAREFULLY
A mutual fund is the trust that pools the savings of a number of investors who share a common
financial

goal.

Anybody with an investible surplus of as little as a few hundred rupees can invest in Mutual
Funds.
The money thus collected is then invested by the fund manager in different types of securities.
These could range from shares to debentures to money market instruments, depending upon the
schemes

stated

It gives the market returns and not assured returns.

objective.
In the long term, market returns have the

potential to perform better than other assured return products.

Mutual Fund is the one of the most

cost efficient financial products.

Advantages of Mutual Funds
Professional Management
cost

Diversification

Convenient Administration

Liquidity Transparency Flexibility Choice of schemes

Return potential

Well regulated

Low

Tax benefits

How to make money from a mutual fund?

Capital

appreciation:

As the value of securities in the fund increases, the fund's unit price will also increase. There would
be capital appreciation when you sell your available units at a price higher than the price at which
you

bought.

Coupon

Dividend

Income:

Fund will earn interest income from the bonds it holds or will have dividend income from the
shares.
Income

Distribution:

The fund passes on the profits it has earned in the form of dividends
How to invest in Mutual Funds, Selection Process- 3 steps
Step

What

are

How

Identify

my

much

your

investment
risk

investment

objectives

am

needs

and

willing

to

needs?
take?

What are my cash flow requirements?

Step

Choose

the

right

mutual

fund.

The track record of performance over the last few years in relation to the appropriate Benchmark
and

similar

funds

in

the

same

category.

How well the mutual fund is organized to provide efficient, prompt and personalized service.
Degree of transparency as reflected in frequency an d quality of their communications.

Step
Investing

3
in

Select
just

one

the
scheme

ideal
may

not

mix
meet

all

of
your

investment

schemes
needs.

You may consider investing in a combination of schemes to achieve your specific goals.

Taxation Benefit investing in Mutual Funds

The amount invested in tax-saving funds/Equity Linked Saving Schemes (ELSS) is eligible for
deduction under Section 80C upto a limit of Rs.1,00,000/- (in a financial year).
Dividend from Mutual Fund Schemes is Tax-Free in the hands of the Investor/recipient.
Indexation Benefit under Long term Capital Gain in Debt schemes.

Types of risks associated with Mutual Fund Investment

Risk is an inherent aspect of every form of investment. For Mutual Fund investments, risks would
include

variability,

or

period-by-period

fluctuations

in

total

return.

Market risk: At times the prices or yields of all the securities in a particular market rise or fall due
to

broad

outside

influences.

This

change

in

price

is

due

to

'market

risk'.

Inflation risk: Sometimes referred to as 'loss of purchasing power'. Whenever the rate of inflation
exceeds the earnings on your investment, you run the risk that you'll actually be able to buy less, not
more.

Credit risk: In short, how stable is the company or entity to which you lend your money

when you invest? How certain are you that it will be able to pay the interest you are promised, or
repay

your

principal

when

the

investment

matures?

Interest rate risk: Interest rate movements in the Indian debt markets at times can be volatile
leading to the possibility of large price movements up or down in debt and money market securities
and

thereby

Other

to

possibly
risks

large

movements

associated

in

the

NAV.

are:

Investment
Liquidity

risks
risk

Changes in the government policy

Bonds

Bond refers to a security issued by a Company, Financial Institution or Government, which offers
regular or fixed payment of interest in return for borrowed money for a certain period of time.

By purchasing a bond, an investor loans money for a fixed period of time at a predetermined

interest rate. While the interest is paid to the bond holder at regular intervals, the principal amount
is repaid at a later date, known as the maturity date. While both bonds and stocks are securities, the
principle difference between the two is that bond holders are lenders, while stockholders are the
part-owners/owners of the firm/organization/company. Another difference is that bonds usually
have a defined term, or maturity, after which the bond is redeemed, whereas stocks may be
outstanding indefinitely. An exception is a consol bond, which is a perpetuity (i.e., bond with no
maturity).

Thus a bond is like a loan: the issuer is the borrower (debtor), the holder is the lender (creditor), and
the coupon is the interest. Bonds provide the borrower with external funds to finance long-term
investments, or, in the case of government bonds, to finance current expenditure. Certificates of
Deposit (CDs) or Commercial Paper are considered to be money market instruments and not bonds.
Bonds must be repaid at fixed intervals over a period of time.

Securities investments are subject to risks. Please read the Offer Document/Prospectus, the
issue terms and conditions, carefully before taking any investment decision.
The Bonds may be held by

An individual, not being a Non-Resident Indian (NRI)

o

(a) in his or her individual capacity, or

(b) in an individual capacity on joint basis, or

(c) in an individual capacity on anyone or survivor basis, or

(d) on behalf of a minor as father/mother/legal guardian

A Hindu Undivided Family.

(a) Charitable Institution' to mean a Company registered under Section 25 of the

Indian Companies Act 1956

(b) an institution which has obtained a Certificate of Registration as a charitable

institution in accordance with a law

in force; or

(c) any institution which has obtained a certificate from Income Tax Authority for

the purpose of Section80G of the Income Tax Act, 1961

University means a university established or incorporated by a Central, State or Provincial Act, and
includes an institution declared under section 3 of the University Grants Commission Act, 1956 (3
of 1956), to be a university for the purposes of that Act.

Limit of Investment
(a) There is no maximum limit for investment in the Bonds.
Tax Treatment
(a) Income-Tax: Interest on the Bonds will be taxable under the Income-Tax Act, 1961 as
applicable according to the relevant tax status of the bond holder. (ii) Wealth Tax: The Bonds will
be exempt from Wealth-tax under the Wealth- Tax Act, 1957.
Issue Price
(i) The Bonds will be issued at par. (ii) The Bonds will be issued for a minimum amount of Rs.
1000/- (face value) and in multiples thereof. Accordingly, the issue price will be Rs.1000/- for every
Rs.1,000/-(Nominal).
Subscription
Subscription to the Bonds will be in the form of Cash/Drafts/ Cheques/ Cheques or drafts should be
drawn in favour of the Receiving Office, specified the respective Application Form.
Form

(i) The Bonds will be issued and held at the credit of the holder in an account called Bond Ledger
Account (BLA). (ii) New Bond Ledger series with the prefix (TB) are to be opened. All investment
in 8% Savings (Taxable) Bonds by an existing BLA holder will be viewed as a new investment
under a new BLA. (iii) The Bonds in the form of Bond Ledger Account will be issued by and held
with designated branches of the agency banks and SHCIL as authorized by Reserve Bank of India.
(iv) The Certificate of Holding in respect of Bond Ledger Account will be issued in Form TBX or
Form TBY as applicable for non-cumulative and cumulative investments respectively. (v) The
Certificate of Holding in respect of cash applications may be issued on the same day as per the
extant instructions.
Applications
(i) Applications for the Bonds may be made in the prescribed form or in any other form as near as
thereto stating clearly the amount and the full name and address of the applicant. (ii) Applications
should be accompanied by the necessary payment in the form of cash/drafts/cheques. (iii)
Applicants who have obtained exemption from tax under the relevant provisions of the Income Tax
Act, 1961, shall make a declaration to that effect in the application and submit a true copy of the
certificate obtained from Income-Tax Authorities.
Receiving Offices
(i) Applications for the Bonds in the form of Bond Ledger Account will be received at: (a)
Authorised Branches of State Bank of India, Associate Banks, Nationalized Banks, four private
sector banks and SHCIL or as may be specified in the application form. (b) Any other bank or
branches of the banks and SHCIL as may be specified by the Reserve Bank of India in this regard
from time to time.
Nomination
(a) A sole holder or a sole surviving holder of a Bond, being an individual, may nominate in such
prescribed form or as near thereto as may be, one or more persons who shall be entitled to the Bond
and the payment thereon in the event of his/her death.

Transferability
(a) The Bond in the form of Bond Ledger Account shall not be transferable.
Interest
(i) The bond will be issued in cumulative and non-cumulative form, at the option of the investor.
(ii) The Bond will bear such interest as specified in the offer documents/forms. Interest on noncumulative bonds will be payable at half-yearly intervals from the date of issue. Interest on
cumulative bonds will be compounded with half-yearly rests and will be payable on maturity along
with the principal. Interest to the holders opting for non-cumulative Bonds will be paid from date of
issue upto 31st July/31st January, as the case may be and thereafter at half-yearly for period ending
31st July/31st January on 1st August and 1st February. Interest on Bond in the form of "Bond
Ledger Account" will be paid, by cheque/warrant or through ECS by credit to bank account of the
holder as per the option exercised by the investor/holder.
Advances/Tradability against Bonds
(a) The Bonds shall not be tradeable in the secondary market and shall not be eligible as collateral
for loans from banks, financial Institutions and Non Banking Financial Companies, (NBFC) etc.
Repayment
(a) The Bonds shall be repayable on the expiry of 6 (Six) years from the date of issue. No interest
would accrue after the maturity of the Bond.
Tax free bonds
Tax free bonds have emerged as highly popular investment option among investors due to the
taxation benefit that they offer. These bonds, generally issued by Government backed entities, are
exempt from taxation on the interest income received from such instruments under the Income Tax
Act, 1961. The Central Government, in exercise of its powers conferred under Section 10 (15) (iv)
(h) of the Income Tax Act, 1961, has authorized to issue tax-free, secured, redeemable, nonconvertible bonds. Some of the public undertakings which raises funds through issue of tax free
bonds are IIFCL, IRFC, PFC, NHAI, HUDCO, REC, NTPC, NHPC, Indian Renewable Energy
Development Agency, Airports Authority of India and Cochin Shipyard etc.

Features

Tenure: Choice of 10 years, 15years & 20 years

Such bonds are likely to be listed on NSE / BSE

No lock-in period

Bonds upon trading on NSE/BSE, liquidity is available.

Normally seen as safe investment.

Could be held either in Demat or Physical form

PAN is Mandatory
Tax Advantage

Tax-exempt bonds enjoy a better credit rating and the interest received is tax-free, thus after-tax
returns work out to be higher for the tax-exempt bond.

The biggest draw for the investor is the tax free advantage that these bonds offer. Unlike fixed
deposits, NSCs and other bonds, the interest earned from these bonds is tax free. Assuming a taxfree coupon yield of 8.2%, the implied pre-tax rate will be to the tune of 11.79% for investors in the
30% tax bracket (those earning more than Rs 10 lakh a year).

While short term capital gains from such a sale will be taxed as normal income, long-term capital
gains will be taxed at 10%. The bonds must be held for at least 12 months for the profits to be
treated as long-term gains. Unfortunately for investors, the long-term capital gains from these bonds
are not eligible for indexation benefit which could have cut tax.
How to Invest

Investor may apply in Demat as well as Physical Mode, with required documents as mentioned in
the respective prospectus.

Download Application Forms

Who Can Invest

Retail Individual Investors (RIIs)

High Net worth Individuals (HNIs)

Corporates/Trusts

Qualified Institutional Buyers (QIBs)

Advantages

Tax-Free Income

Low risk, since companies have a better credit rating

Listing of bonds on exchanges provides liquidity

Option of holding bonds in 'Demat Form' makes your investments easy to handle & monitor

Ratings by agencies like CARE, FITCH, CRISIL, ICRA enables you to assess the quality of
instruments
Upcoming Issues

Fixed Deposits

Introducing Company Fixed Deposits

Deposit(s) in Companies that earn a fixed rate of return over a period of time are called Company
Fixed Deposits. Manufacturing Companies, Financial Institutions and Non-Banking Finance
Companies (NBFCs) accept such deposits. Acceptance of deposits by companies are governed by
the applicable provisions contained in the Companies Act, 1956 (soon will be governed by the
Companies Act, 2013) and the Companies Acceptance of Deposit Rules (currently, Companies
(Acceptance of Deposit) Rules, 1975. In due course, the new Rules under the Companies Act, 2013
is expected to be notified). These deposits are currently unsecured in nature. However, there are
certain proposed provisions included in the Companies Act, 2013, wherein it is likely that the said
deposit could be secured
Benefits of investing in Company Fixed Deposits

High interest.
Short-term deposits.

 Minimum lock-in period is 6 months.

No Income Tax is deducted at source if the interest income is up to Rs 5,000 in one
financial year

Bajaj Capital Limited (BCL) only acts as a conduit/facilitator between its client and the respective
Fixed Deposits accepting/inviting Company (Principal Company). Before taking a decision to
invest in the Fixed Deposits of any Principal Company, you are requested to carefully go through
the application form, financial statement/s and other information (Information) of the Principal
Company. BCL, its employees, directors, agents etc., do not endorse and/or certify the Information
provided by the Principal Company and shall not be liable (legally or otherwise) under any
circumstances. The interest rates on the fixed deposit schemes may be revised by the Principal
Company at its sole discretion, without any prior notice.

Insurance

A contract (insurance policy) in which the insurer (insurance company) agrees for a fee (insurance
premiums) to pay the insured party all or a portion of any loss suffered by accident or death.

Types of Insurance

General Insurance comprises of insurance of property against fire, burglary etc,

Life policies are legal contracts and the terms of the contract describe the limitations of the insured

events.

Office Property Insurance

Policy covering fire and other perils can protect your business against a range of unforeseen events
that may threaten your business.

Real Estate

Bajaj Capital Realty, a part of the Bajaj Capital Group is a full services provider of Real Estate
services offering Real estate solutions across its Residencial,Commercial and Retail space . We aim
to give unparalleled service, unbiased advice in helping you make Real Estate investment decisions.

Our lineage of Bajaj Capital which is a pioneer in Financial Planning and Investment Advisory
services over last five decades and having served a million plus Indian Investors across the world ,
put us in a unique position to provide the same to the Real estate Investors. Our focus on
maximizing returns based on your unique requirements , budgets, location etc. make us stand out
from

the

rest.

We do a rigorous evaluation of builders and projects and promote projects by professional and
reputed builders who are focused on timely deliveries and those who hon our these commitments.
"Give us an opportunity and you will see the difference

Other product and Services

Bajaj Capital Group offers various Investment Products & Services such as:

Initial Public Offers (IPOs)

 Fixed Income Schemes

Post Office Schemes (only through select centres)

Structured Products
Financial Assessment Services
DP Services
In house publication(s) for promoting financial literacy amongst our investors;
Pan facilitation Services, etc.
Sale and Purchase of Art and Art effects;
Various certification courses through our Institute, International College of Financial
Planning;
& other specialized/tailor made plans;

Value Added Services

Regular Information Updates Bajaj Capital keeps track on the latest opportunities in the world
of investment

Need Based Advice :

The services of Bajaj Capital are need based. They give customised

services only after understanding investor's financial goals , risk tolerance and other priorities in
life.

Research Based Advice : Their professional research team will help investors with advice i.e
through thoroughly based on the analysis of market dynamics, government policies and a close
monitoring of global developments .

Investment Health Check: They help in achieving investors goal by assessing investors risk
tolerance level and recommending to them a suitable asset allocation

for the investment of

investors.

Door Step Services : We have a vast network of branches all over India helping investors to get
services on their doorstep

Regular Information:

Read Investors India,, Company website bajajcapital.com , Capital Investors India AND Investors
Outlook.

Accessibility: They have branches all over India which enables investors to make access of them.

Tailor Made Solutions : Investors get tailor made solutions through theit Investment Centres even
at a tinkle of a phone.

Specialization in all client segments : We offer Financial Planning for players, housewives,
celebrites politicians etc
After Sales Service
Service with a smile is the Company's motto. The role of Bajaj Capital doesn't end even after
investors make their investment . They feel obliged to solve customer grieveances and queries after
they invest with them
Vast Variety of Schemes: They are a full fledged Financial Supermarket offering advice to our
clients on a large variety of financial products.
Research Based Centre: They have a full fledged Research Centre that constantly monitors and

analysis the industry, economy and various scheme performances, helping the company give
investors unbiased investment advice

Independent Investment Advice: Bajaj Capital is one the few industries in India that gives
Independent Investment Advice to investors . They are not promoted by a bank, a mutual fund or
NBFC and hence they are able to give investors neutral advice.

Sharekhan
Sharekhan is Indias leading online retail broking house. Launched on February 8, 2000 as an online
trading portal, Sharekhan has today a pan-India presence with over 1,529 outlets serving 950,000
customers across 450 cities. It also has international presence through its branches in the UAE and
Oman. Sharekhan offers services like portfolio management, trade execution in equities, futures &
options, commodities, and distribution of mutual funds, insurance and structured products. These
services are backed by quality investment advice from an experienced research team which offers
investment and trading ideas based on fundamental and technical research respectively, market
related news, statistical information on equities, commodities, mutual funds, IPOs and much more.
Sharekhan is a member of the Bombay Stock Exchange, the National Stock Exchange and the
countrys two leading commodity exchanges, the NCDEX and MCX. Sharekhan is also registered
as a depository participant with National Securities Depository and Central Depository Services.
Sharekhan has set category leadership through pioneering initiatives like Trade Tiger, an Internetbased executable application that emulates a broker terminal besides providing information and
tools relevant to day traders. Its second initiative, First Step, is targeted at empowering the first-time
investors. Sharekhan has also set its global footprint through the India First initiative, a series of
seminars conducted by Sharekhan to help the non-resident Indians participate and benefit from the
huge investment opportunities in India.

Indiabulls
In middle of 1999, when e-commerce was just about starting in India, Sameer Gehlaut and his close
IIT Delhi friend Rajiv Rattan got together and bought a defunct securities company with a NSE
membership and started offering brokerage services. A Few months later, their friend Saurabh
Mittal also joined them. By December 1999, the company embarked on its journey to build one of
the first online platforms in India for offering internet brokerage services. In January 2000, the 3
founders incorporated India bulls Financial Services and made it as the flagship company.
In mid 2000, Indiabulls Financial Services received venture capital funding from Mr L.N. Mittal &
Mr Harish Fabiani. In late 2000, Indiabulls Securities, a subsidiary of India bulls Financial Services
started offering online brokerage services and simultaneously opened physical offices across India.
By 2003, India bulls securities had established a strong pan India presence and client base through
its offices and on the internet.
In September 2004, India bulls Financial Services went public with an IPO at Rs 19 a share. In late
2004, India bulls Financial Services started its financing business with consumer loans. In March
2005, India bulls Properties Private Ltd, a subsidiary of Indiabulls Financial Services, participated
in government auction of Jupiter Mills, a defunct 11 acre textile mill owned by NTC in Lower
Parel, Mumbai. India bulls Properties private Ltd won the mill in auction and that purchase started
Indiabulls real estate business. A few months later, Indiabulls Real Estate company pvt ltd bought
Elphinstone mill in Lower Parel, another textile mill auctioned by NTC.
With real estate business gaining size, Indiabulls Financial Services demerged the real estate
business under India bulls Real Estate and each shareholder of India bulls Financial Services
received additional share of India bulls Real Estate through the demerger. Subsequently, India bulls
Financial Services also demerged India bulls Securities and each shareholder of India bulls
Financial Services also received a share of India bulls Securities.
In year 2007, India bulls Real Estate incorporated a 100% subsidiary, India bulls Power, to build

power plants and started work on building Nashik & Amrawati thermal power plants. Indiabulls
Power went public in September 2009.
Today, India bulls Group has a net worth of Rs 19,320 Crore & has a strong presence in important
sectors like financial services, power & real estate through independently listed companies and
Indiabulls Group continues its journey of building businesses with strong cash flows.

KARVY Stock Broking Limited

Karvy Stock Broking Limited provides stock broking and research advisory services in India. The
company offers portfolio analysis, depository participant, and financial planning and management
services for individuals and institutional clients. It also provides a monthly magazine, Finapolis,
which provides up-dated market information on market trends, investment options, and opinions.
The company was founded in 1990 and is based in Hyderabad, India. Karvy Stock Broking Limited
operates as a subsidiary of Karvy Consultants Limited.

Global Trustcapital Finance Private Limited

Formed in 1993, Global Trustcapital Finance Pvt. Ltd., is a full service Investment Bank providing
solutions

and

services

for

financial

and

advisory

needs

of

business

TRUSTCAP as we fondly call it, is a stage and sector independent investment bank providing
global investment banking solutions to public and private companies in India across all industries
irrespective

of

the

stage

of

the

company.

TRUSTCAP delivers venture capital, private equity, structured finance, project finance, M&A
advisory

services

and

stressed

asset

advisory

to

entrepreneurs

and

corporations.

TRUSTCAP centres its working philosophies on being providers of "Complete Financial Solutions"

and building "Unrivaled Partnerships" with its clients. By combining proven processes, industry and
transactional expertise, creative thought, and personalised services, we continue to execute
transactions

that

exceed

the

unique

demands

of

our

clients.

As a long term business partner, TRUSTCAP is a valuable resource and informed advocate, helping
clients tap into the markets continuum of capital.

Sarvamangal Mercantile Co. Ltd

Sarvamangal Mercantile Company Limited is engaged in the trading and investment in securities.
The company was incorporated in 1983 and is based in Mumbai, India

Vivro Financial Services Pvt. Limited

Vivro Financial Services Private Limited is a Private Company incorporated on 29 March 1996. It is
classified as Indian Non-Government Company and is registered at Registrar of Companies,
Ahmedabad. Its authorized share capital is Rs. 35,000,000 and its paid up capital is Rs. 22,620,600.

Vivro Financial Services Private Limited's Annual General Meeting (AGM) was last held on 16
September 2013 and as per records from Ministry of Corporate Affairs (MCA), its balance sheet
was last filed on 31 March 2013. They provide investment banking, corporate advisory, equity, debt
and capital market services to companies and institutions. By applying their knowledge capital and
remaining intensely client-focused, they create innovative solutions. They focus on identifying what
really matters to investors, and are able to help clients implement value creating strategies, policies
and transactions.

They enjoy tremendous confidence from their clients, thereby building long lasting relationships
founded on trust, service and innovation. With a strong team in place, Vivro possesses a talent pool
to deliver knowledge, experience, skill and innovation for client satisfaction.
Harvic Management Services India Ltd:
They are public limited company which was incorporated in the year 1993 at Mumbai, Maharashtra,
India and we are profit making company. Harvic Management Services (India), is expert in capital
market and in expertise in advising companies for their equity related matter.
Companys main business is of investments in shares & securities. The said business is totally relied
on capital market scenario. The said Industry is unpredictable & volatile in nature. Their Directors
are taking maximum efforts to safeguard funds of the company while making investments.
The company has diversified business module initially it was engaged in financial services and
management related services but with the need of hour it diversified itself into three to four other
ventures.
The company has also diversified into media and software and hardware activities since last three to
four years. It has full fledged post production studio at Mumbai. It undertakes feature film, ad films,
soap and documentary for editing and due to state of art our studio is well known in Mumbai.

The company is managed by following person

Hemang D. Jangla
Mr. Hemang D.Jangla is a successful businessman and having wide and rich experience in field of
finance and stock market, he has 14 yrs experience in the field of shares, stock, finance, capital
market, and also having experience in restructuring of the company and undertake turnkey project
work for a company from inception to IPO.
Kalpesh K. Chawalla

Mr Kalpesh K Chawalla is also a member of Ahmedabad Stock Exchange, he is also having 14

years experience in the field of share, stock, finance as well as public relation, he is mainly looking
after outside work of the company.
Dinesh T Jangla
Mr. Dinesh T Jangla is ex manager of a nationalized bank with 38 years banking experience, he
started his career by working in insurance company and joined the bank at the age of 22 yrs, got
promoted as office and then manager in the nationalized bank, during this time he handle various
positions in area like bill advances, NRI deposits etc.,
We have diversified business module initially we were engaged in financial services and
management related services but with the need of hour we have to diversify ourselves in to three to
four venture like
We have also diversified into media and software and hardware activities since last three to four
years. We have full fledged post production studio at Mumbai. We undertake feature film, ad films,
soap and documentary for editing and due to state of art our studio is well known in Mumbai.

Chapter 4: DATA ANALYSIS AND INTERPRETION

Return on Investment Table using Beta
Defensive Portfolio (NSE)

Return on Individual Scripts

First Month

SR

Script

Beta 2.12.13

NO

No of Net
Stock

31.12.13 Profit/loss Returns

Worth

in %

s
1
2

CIPLA ltd
DR.REDDY'S

0.49 391.90

0.55 2,498.60 10

1959 402.00

10.1

2.58

24986 2,534.60 36

1.44

10319 2,075.00 11,20

1,21

LABORATORIES
LTD
3

HERO MOTOCORP 0.74 2,063.80 5

LTD.

INFOSYS LTD.

0.55 3,338.70 2

6677

3,505.00 166.30

4.50

ITC.

0.30 321.50

6059

321.85

0.11

19

Returns can be calculated using the following formula

Where R1= Rate of returns

0.35

EMV= Market value of the asset at the end of the period.

BMV= Market value of the asset at the beginning of the period
So Cipla Ltd has a return of 402.00 392.25 = 9.75/392.25= 2.48 %
Similarly I have calculated the other returns using the formula

Total Portfolio Investment Rs 50,000

Total returns Rs 223.85
Total Return: Rs 50.223.85
Returns In & 2.24

Second Month
SR

Script

Beta

2.12.13

No of Net

28.2.14

Profit/loss Returns

NO
1
2

Stocks
391.90
5
2,498.60 10

Worth

1959 384.30 -7,60

24986 2,895.50 396.90

in %
-1.93
15.88

LTD
HERO MOTOCORP 0.74

2,063.80 5

10319 1,967.15 -96.65

-4.68

4
5

LTD.
INFOSYS LTD.
ITC.

3,338.70 2
321.50
19

6677
6059

14.56
1.91

CIPLA ltd
DR.REDDY'S

0.49
0.55

LABORATORIES

0.55
0.30

3,824.85 486.15
327.65
6.15

Total Portfolio Investment Rs 50,000

Total returns 50 784.95
Total Returns in % 7.84

Moderate Portfolio
Return on Individual Scripts
First Month
SR NO
1

Script
ONGC

Beta
0.91

2.12.13

No

of Net

294.90

Stocks
20

Worth
5898

31.12.2013 Profit/loss Returns

288.90

-6

in %
-2.03

Idea

0.97

175.50

40

7020

166.90

-8.60

-4.90

Cellular
Bharti

0.80

332.60

60

19956

330.25

-2.35

-0.71

Airtel
Tata

0.83

276.90

50

13845

274.90

-2

-0.72

0.97

159.65

20

3281

176.90

17.25

10.80

28.2.2014

Profit/loss Returns

Chemicals
5

Ltd
Bharat
Heavy
Electricals
Ltd

Total Portfolio Investment Rs 50,000

Total returns : 49,998.30
Total Returns in % -0.170

Second Month
SR NO

Script

Beta

2.12.13

No

of Net

1
2

ONGC
Idea

0.91
0.97

294.90
175.50

Stocks
20
40

Worth
5898
7020

291.35
128.90

-3.55
46,60

in %
-1,20
-26.55

Cellular
Bharti

0.80

332.60

60

19956

287.60

-45

-13.53

Airtel
Tata

0.83

276.90

50

13845

267.85

-9.05

-3.27

0.97

159.65

20

3281

167.75

8.1

5.07

Chemicals
5

Ltd
Bharat
Heavy
Electricals
Ltd

Total Portfolio Investment Rs 50,000

Total returns : -49,903.39
Total Returns in % - 0.966

Aggressive Portfolio

First Month
SR

Script

Beta

2.12.13

NO
1
2

Axis Bank
STATE

1.62
1.12

Stocks
1,190.75 5
1,822.15 10

BANK

No

of Net

31.12.2013 Profit/loss

Returns

Worth
5954
18222

1,299.55
1,766.50

108.80
-55.65

in %
9.18
-3.05

13226

665.85

4.55

0.69

5350
7248

1,070.25
895.20

0.2
39.90

0.09
4.67

OF

INDIA
HDFC BANK 1.26

661.30

4
5

LTD.
L&T
RELIANCE

1,070.05 5
855.30
9

1.69
1.11

INDUSTRIES
LTD
Total Portfolio Investment Rs 50,000
Total returns : 50097.80

20

Total Returns in % 0.978

Second Month
SR

Script

NO
1
2

Beta

2.12.13

No of Net

28.2.2014

Profit/loss Returns

Axis Bank
1.62
STATE BANK 1.12

1,190.75
1,822.15

Stocks
5
10

Worth
5954
18222

1,267.05
1,533.25

76.30
-288.90

in %
6.41
-15.85

OF INDIA
HDFC
BANK 1.26

661.30

20

13226

669.60

8.30

5.79

4
5

LTD.
L&T
RELIANCE

1,070.05
855.30

5
9

5350
7248

1,109.65
799.95

3.96
-55.35

3.70
-6.47

1.69
1.11

INDUSTRIES
LTD

Total Portfolio Investment Rs 50,000

Total returns : 49719.79
Total Returns in % -.280

Interpretation of Random Portfolio

According to the Beta theory a beta > 1 is more riskier and gives more return compared to beta< 1
as a person takes more risks and is likely to get more returns but as per my research is concerned I
have found that a defensive portfolio is giving more returns compared to aggressive portfolio.

So it can be easily proven that stock market is subjected to market risk and investors having long
term investment horizon should only enter stock market.

CHAPTER 5: Findings And Conclusion

The Objective of Studying

Portfolio Management

To get the overall knowledge of securities and investment

. To know that investment made in different securities minimizes the risk and maximise the returns
.
. To get the knowledge of different factors that affects the investment decisions of the investors

. To provide investors the knowledge of Beta that would help them in selection of script and
creation of portfolio.

Scope Of Portfolio Mangement

Portfolio management is a continuous process. It is a dynamic activity. The following are the basic
operations of a portfolio management.
a)

Monitoring the performance of portfolio by incorporating the latest market conditions.

b)

Identification of the investors objective, constraints and preferences.

c)

Making an evaluation of portfolio income (comparison with targets and achievement).

Findings
1. Stock Market is subjected to market risk and investors having long term investment horizon

should only enter stock market.

2. Investment is subjected to market risk and chances of return of investments is risker.
3. The more the risk taken by investors the chances of returns are high but if the stock market
comes down the investor has to face to big losses
4. According to the Beta theory a beta > 1 is more riskier and gives more return compared to
beta< 1 as a person takes more risks and is likely to get more returns but as per my research
is concerned I have found that a defensive portfolio is giving more returns compared to
aggressive portfolio.

Conclusions
1. Stock Market is subjected to market risk and investors having long term investment horizon
should only enter stock market.
2. Investment is subjected to market risk and chances of return of investments is risker.
3. The more the risk taken by investors the chances of returns are high but if the stock market
comes down the investor has to face to big losses
4. According to the Beta theory a beta > 1 is more riskier and gives more return compared to
beta< 1 as a person takes more risks and is likely to get more returns but as per my research
is concerned I have found that a defensive portfolio is giving more returns compared to
aggressive portfolio.

CHAPTER 6- RECOMMENDATIONS AND SUGGESTIONS

1. Investors should have a diversified portfolio in order to balance the risk and returns
this will help them t balance their risks and returns and they will get good returns
from their investments.

BIBLEOGRAPHY
Websites:

www.bajajcapital.com

www.investopedia.com

www.yahoofinance.com

www.reuters.com www.adbi.org www.slideshare.com www.scribd.com.

Books: Magazines, Newspapers and factsheets