ALLURI

A PROJECT REPORT ON
PORTFOLIO MANAGEMENT
WITH REFERENCE TO
CALIBER SECURITIES PRIVATE LIMITED,

Hyderabad.
SUBMITED
BY
ALLURI SUDHEER
HT.NO:090-08-120
MASTER OF BUSINESS ADMINISTRATION
AFFILIATED TO OSMANIA UNIVERSITY

HYDERABAD-50000
MOTHER THERESA P.G. COLLEGE

N.F.C NAGAR,GHATKESAR,R.R.DT-501301.
(2008-2010)
1
I A.SUDHEER , here by declare that the project report entitled
“PORTFOLIO MANAGEMENT” is prepared and submitted by me under the
guidance of Mr.SAI RAM. The data collections and suggestions are my own
and have not been submitted to any other University or Institution
(A.SUDHEER )
Place:
Date:
2
ACKNOWLEDGEMENT
The satisfaction that accompanies the successful completion of any tasks would be
incomplete without the mention of the people who made it possible and whose
encouragement and guidance has been a source of inspiration throughout the course of the
project
I would like to thank our respected principal Mr.Prasad, Management Studies and
to our HOD of MBA Mr.Rao and to our professor Mr.Srinivas Rao and to ur Course Co-
ordinater Mr.Sai Ram for giving me support in successful completion of my project
and MBA programme.
I would also like to thank our project coordinator Mr. sai ram , M B A Dept. for having
given me an insight on how a project should be carried out.
I would like to express my sincere gratitude to my project guide

Mr.M RAMA KRISHNA of CALIBER SECURITIES PVT LTD, Hyderabad for the
constant guidance and encouragement at various stages of the study.
I would like to express my gratitude to all the people who have helped me in doing
this project.
(A.SUDHEER)
ABSTRACT OF THE PROJECT
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A Portfolio is collection of Assets. The assets may be physical or financial like
shares, bonds, debentures, preference shares. The investor would not like to put all his
money in the shares of one company that would amount to great risk. He would there fore
follow the principle that one should not put all the eggs in to one basket so that risk may be
diversified and overall risk will reduce to minimum.
Portfolio management has emerged a separate academic discipline in India.
Portfolio theory that deals with the rational investment decision making process has now
become an integral part of financial literature. Investing in securities such as shares,
debentures and bonds is profitable as well as exciting. It is in deed rewarding but involves a
great deal of risk and need artistic skill. Creation of portfolio helps to reduce risk without
sacrificing returns.
According to Securities and Exchange Board of India Portfolio Manager is defined
as: “Portfolio means the total holdings of securities belonging to any person.”
The objective of this project is to study the investment pattern and related risks
and returns, to find out optimal returns at a minimized risk to the investor.
This study covers Markowitz model. The study covers the calculation of
correlations between the different securities in order to find out at what percentage funds
should be invested among the companies in the portfolio. Also the study includes the
calculation of individual standard deviation of securities and ends at the calculation of
weights of individual securities.
For this project study 5 companies taken for which risk and return are calculated.
The companies are INFOSYS, HCL, WIPRO, CMC, I-FLEX
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CONTENTS PAGE NO.
CHAPTER-1
INTRODUCTION 7-15
• INVESTMENTS
• INVESTMENT AVENUES
• CORPORATE SECURITIES
• FUNCTIONS OF PORTFOLIO MANAGEMENT
• STRUCTURE OF PORTFOLIO MANAGEMENT
• CHARACTERISTICS
• IMPORTANCE OF PORTFOLIO MANAGEMENT
• STEPS IN PORTFOLIO MANAGEMENT
• CRITERIA FOR PORTFOLIO DECISIONS
• QUALITIES OF PORTFOLIO MANGER
CHAPTER-2
COMPANY PROFILE 16-26
• ORIGIN
• OBJECTIVES
• FEATURES
1. NETWORK OF INTERMEDIARS
2. ROBUST OPERATING SYSTEM
3. SKILLED AND EXPERIENCED MAN POWER
4. AGGRESSIVE PRICING POLICY
5. TRADING, RISK MANAGEMENT AND SETTLEMENT
SOFTWARE SYSTEMS
6. VIBRANT SUBSIDIARY OPERATIONS
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CHAPTER-3
PORTFOLIO BUILDING 27-35
• RISK AND EXPECTED RETURNS

• TYPES OF RISKS
O SYSTEMATIC RISK
O UNSYSTEMATIC RISK
• PORTFOLIO ANALYSIS
O TRADITIONAL APPROACH
O MODERN APPROACH
• EFFECTS OF COMBINING TWO SECURITIES
CHAPTER-4
PORTFOLIO ANALYSIS 36-41
• APPROACHES
• MARKOWITZ MODEL
• ASSUMPTIONS
• CONCEPT
CHAPTER-5
EVOLUTION OF PORTFOLIO 42-46
• NEED FOR EVOLUTION

• PORTFOLIO REVISION
• FORMULA PLANS
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CHAPTER-6
ANALYSIS, INTERPRETATION 47-84
• INFOSYS
• HCL
• WIPRO
• CMC
• I-FLEX
CHAPTER-7
FINDINGS, SUGGESTIONS AND CONCLUSION 85-88
CHAPTER-8
BIBLIOGRAPHY 89-90
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INTRODUCTION
8
INTRODUCTION
INVESTMENT:
Investment may be defined as an activity that commits funds in

any financial form in the present with an expectation of receiving additional return
in the future. The expectations bring with it a probability that the quantum of return
may vary from a minimum to a maximum. This possibility of variation in the actual
return is known as investment risk. Thus every investment involves a return and
risk.
Investment is an activity that is undertaken by those who have
savings. Savings can be defined as the excess of income over expenditure. An
investor earns/expects to earn additional monetary value from the mode of
investment that could be in the form of financial assets.
The three important characteristics of any financial asset are:
• Return-the potential return possible from an asset.

• Risk-the variability in returns of the asset form the chances of its
value going down/up.
• Liquidity-the ease with which an asset can be converted into cash.
Investors tend to look at these three characteristics while deciding on their

individual performance pattern of investments. Each financial asset will have a
certain level of each of these characteristics.
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Equity shares
Preference shares
Bonds
INVESTMENT AVENUES:
There are a large number of investment avenues for savers in India.

Some of them are marketable and liquid, while others are non-marketable. Some of them
Warrants
are highly risky while some others are almost risk less.
Investment avenues can be broadly categorized under the following head.
Derivatives
1. Corporate securities.
2. Equity shares.
3. Preference shares.
4. Debentures/Bonds.
5. Derivatives.
6. Others.
Corporate securities:
Joint stock companies in the private sector issue corporate securities.
These include equity shares, preference shares, and debentures. Equity shares have variable
dividend and hence belong to the high risk-high return category; preference shares and
debentures have fixed returns with lower risk. The classification of corporate securities that
can be chosen as investment avenues can be depicted as shown below:
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RESEARCH
PORTFOLIO MANAGEMENT OPERATIONS
.g. Security Analysis)
(e.g. Buying and Selling of Securities)
FUNCTIONS OF PORTFOLIO MANAGEMENT
• To frame the investment strategy and select an investment mix to achieve the
CLIENTS
desired investment objectives.
• To provide a balanced portfolio which not only can hedge against the inflation but
can also optimize returns with the associated degree of risk.
• To make timely buying and selling of securities.
• To maximize the after-tax return by investing in various tax saving investment
instruments.
STRUCTURE OF PORTFOLIO MANAGEMENT:
In the small firm, the portfolio manager performs the job of security analyst. In the
case of medium and large sized organizations, job function of portfolio manager and
security analyst are separate.
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CHARACTERISTICS OF PORTFOLIO MANAGEMENT:
Individuals will benefit immensely by taking portfolio management services for the
following reasons:
• Whatever may be the status of the capital market, over the long period capital
markets have given an excellent return when compared to other forms of
investment. The return from bank deposits, units, etc., is much less than from the
stock market.
• The Indian Stock Markets are very complicated. Though there are thousands of
companies that are listed only a few hundred which have the necessary liquidity.
Even among these, only some have the growth prospects which are conductive for
investment. It is impossible for any individual wishing to invest and sit down and
analyze all these intricacies of the market unless he does nothing else.
• Even if an investor is able to understand the intricacies of the market and separate
chaff from the grain the trading practices in India are so complicated that it is
really a difficult task for an investor to trade in all the major exchanges of India,
look after his deliveries and payments. This is further complicated by the volatile
nature of our markets which demands constant reshuffling of portfolios.
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TYPES OF PORTFOLIO MANAGEMENT:
1. DISCRETIONARY PORTFOLIO MANAGEMENT SERVICE(DPMS):
In this type of service, the client parts with his money in favour of the
manager, who in return, handles all the paper work, makes all the decisions and gives a
good return on the investment and charges fees? In the Discretionary Portfolio
Management Service, to maximize the yield, almost all portfolio managers park the funds
in the money market securities such as overnight market, 18 days treasury bills and 90 days
commercial bills. Normally, the return of such investment varies from 14 to 18 percent,
depending on the call money prevailing at the time of investment.
2. NON-DISCRETIONARY PORTFOLIO MANGEMENT SERVICE (NDPMS):
The manager functions as a counselor, but the investor are free to

accept or reject the manager’s advice; the paper work is also undertaken by manager for a
service charge. The manager concentrates on stock market instruments with a portfolio
tailor-made to the risk taking ability of the investor.
IMPORTANCE OF PORTFOLIO MANAGEMENT:
• Emergence of institutional investing on behalf of individuals. A number of

financial institutions, mutual funds and other agencies are undertaking the task of
investing money of small investors, on their behalf.
• Growth in the number and size of ingestible funds – a large part of household
savings is being directed towards financial assets.
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• Increased market volatility – risk and return parameters of financial assets are
continuously changing because of frequent changes in government’s industrial
and fiscal policies, economic uncertainty and instability.
• Greater use of computers for processing mass of data.
• Professionalization of the field and increasing use of analytical methods (e.g.,

quantitative techniques) in the investment decision – making.
• Larger direct and indirect costs of errors or shortfalls in meeting portfolio

objectives – increased competition and greater security by investors.
STEPS IN PORTFOLIO MANAGEMENT:
• Specification and qualification of investor objectives, constraints, and preferences

in the form of an investment policy statement.
• Determination and qualification of capital market expectations for the economy,

market sectors, industries and individual securities.
• Allocation of assets and determination of appropriate portfolio strategies for each

asset class and selection of individual securities.
• Performance measurement and evaluation to ensure attainment of investor

objectives.
• Monitoring portfolio factors and responding to changes in investor objectives,

constrains and/or capital market expectations.
• Rebalancing the portfolio when necessary by repeating the asset allocation,

portfolio strategy and security selection
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CRITERIA FOR PORTFOLIO DECISIONS:
• In portfolio management emphasis is put on identifying the collective importance

of all investor’s holdings. The emphasis shifts from individual assets selection to
a more balanced emphasis on diversification and risk – return interrelationships of
individual assets within the portfolio. Individual securities are important only to
the extent they affect the aggregate portfolio. In short, all decisions should focus
on the impact which the decision will have on the aggregate portfolio of all the
assets held.
• Portfolio strategy should be molded to the unique needs and characteristics of the
portfolio’s owner.
• Diversification across securities will reduce a portfolio’s risk. If the risk and return
are lower than the desired level, leverages (borrowing) can be used to achieve the
desired level.
• Larger portfolio returns come only with larger portfolio risk. The most important
decision to make is the amount of risk which is acceptable.
• The risk associated with a security type depends on when the investment will be
liquidated. Risk is reduced by selecting securities with a payoff close to when the
portfolio is to be liquidated.
• Competition for abnormal returns is extensive, so one has to be careful in

evaluating the risk and return from securities. Imbalances do not last and one has to
act fast to profit from exceptional opportunities.
PORTFOLIO MANAGER means any person who pursuant to a contract or
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arrangement with a client, advises or directs or undertakes on behalf of the client (whether
as a discretionary portfolio manager or otherwise) the management or administration of a
portfolio of securities or the funds of the client.
DISCRETIONARY PORTFOLIO MANAGER means a portfolio manager who

exercises or may, under a contract relating to portfolio management exercises any degree of
discretion as to the investments or management of the portfolio of securities or the funds of
the client.
QUALITIES OF PORTFOLIO MANAGER:
1. SOUND GENERAL KNOWLEDGE: Portfolio management is an exciting and

challenging job. He/She has to work in an extremely uncertain and confliction
environment. In the stock market every new piece of information affects the value of the
securities of different industries in a different way. He/She must be able to judge and
predict the effects of the information he/she gets. He/She must have sharp memory,
alertness, fast intuition and self-confidence to arrive at quick decisions.
2. ANALYTICAL ABILITY: He/She must have his own theory to arrive at the intrinsic
value of the security. An analysis of the security’s values, company, etc. is a continuous
job of the portfolio manager. A good analyst makes a good financial consultant. The
analyst can know the Strengths, Weaknesses, Opportunities and Threats (SWOT) of the
economy, industry and the company.
3. MARKETING SKILLS: He/She must be good salesman. He/She has to convince the
clients about the particular security. He has to compete with the stock brokers in the stock
market. In this context, the marketing skills help him a lot.
4. EXPERIENCE: In the cyclical behaviors of the stock market history is often repeated,
therefore the experience of the different phases helps to make rational decisions. The
experience of the different types of securities, clients, market trends, etc., makes a perfect
professional manager.
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COMPANY
PROFILE
17
INTRODUCTION:
Caliber securities (pvt) ltd. was incorporated during 1999
under the Companies Act, 1956 with registration number 01-32220. This
company has acquired the membership of HSE on July 21st, 2001 with
registration number INB061161031. Subsequently caliber securities
(pvt) ltd has also acquired the membership of Interconnected Stock
Exchange of India ltd on September 21st, 2007 with registration number
INB241164034.
Caliber Securities (Pvt) Ltd is a registered sub-broker
affiliated to HSE Securities Ltd on NSE and BSE segments. This company
is doing broking business besides conducting training programmes for
NCFM and BCSM. The authorized capital of the company is 25 lakhs. Its
clientele number is 600 and average daily turnover is Rs.1 crore.
The company is having a wholly owned subsidiary under
the name and style M/S Subha commodities broking (Pvt) Ltd. with an
authorized capital of 27 lakhs.
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THE OBJECTS INTIDENTEL AND ANCILLARY TO THE ATTINMENT
OF THE MAIN OBJECTS ARE:
 To all acquire all or any party of the business or property and any liabilities of any
person, firm, association, or company possessed of property suitable for any of the
purpose or company of this company or carrying on any business which this
company is authorized to carry on and upon any terms and for any consideration
and in particular for cash or in consideration of the issue of shares, stock or
obligations of the company.
 To apply for purchase, or otherwise acquire, any patents ,licenses, concession and
the like conferring any exclusive or non exclusive or limited right to use, on any
secret or other information relating to the business which mat seem capable of
being used for any for the purpose of the company, or the acquisition of which may
seem calculated directly or indirectly to benefit the company and to use exercise,
develop or grant licenses in respect of or otherwise turn to account the property
rights or information so acquired.
 To payout of the company’s funds, the cost and expenses incurred in connection
with all matters preliminary and incidental to the formation, promotion and
incorporation of this company and the costs and expenses incurred in connection
with all matters preliminary and incidental to formation and incorporation of any
company which may be promoted by this company.
 To remunerate any person or company for services rendered or to be rendered in

placing or assisting to be place or guaranteeing the placing any of the shares in the
company’s capital or debentures, debenture stock or other securities of the company
or the conduct of its business.
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 To borrow or raise money or any terms without security or on the security of land,
buildings, machinery, tools, bills of exchange, promissory notes, bonds, bills of
lading, warrants, stocks, shares, debentures, book debets undertakings of the
company and properties of every description or any one of them.
 To give any guarantee or provide and security in connection with loan made by any
other person, firm or body corporate to any person, firm, body corporate, for any
purpose whatsoever and on any term’s whatsoever.
 To invest and deal with the monies of company not immediately required in such
manner as may from time to time be determined.
 To create, execute, grant or issue any mortgages, debentures, debenture stock or

bonds either at par, premium or discount and either redeemable, irredeemable
secured upon all or any part of the undertaking rights and properties of the company
present and future including uncalled capital or the unpaid calls of the company.
 To amalgamate with any other company having objects altogether or in part similar
to those of this company.
 To promote and aid in promoting constitutes, firm, organize companies, syndicates

or partnerships of kinds of the purpose of acquiring and undertaking any property
and liabilities of the company or of advancing directly or indirectly objects there of,
or for any other purpose for which this company may think expendient.
 To enter into partnership or into any arrangement for sharing profits upon of
20
interests, co-operations, joint venture, reciprocal concession or otherwise with any
person or company carrying on or engaged in or about to carry on or engage in any
business or transactions capable of being conducted so as to directly or indirectly
benefit this company.
 To pay for any properities, rights or privileges acquired by the company either in
shares or debentures of the company or partly in shares and debentures and partly
in cash or otherwise,
 To take otherwise, acquire, and hold shares in any other company having objects
altogether or in part similar to those of this company or carrying on other business
capable of being conducted as to directly or indirectly benefit this company.
 To contribute subject to the provision of low to the funds of any association or to

any individual, firm or body corporate which in the opinion of the company is
beneficial to the company.
 To contribute to charitable and other funds whether directly or indirectly, relating to

business of the company or for welfare of its employees.
 To grant pensions or guarantees to any employee or to his window or children and

generally to provide for welfare of all employees.
 To purchase or take on lease or in exchange, hire or otherwise acquire any movable

or immovable properties and any rights or privileges which company may think
necessary or expedient for the purpose of its business.
 To sell the undertaking of the company or any part there of for such consideration
21
as the company may think fit and in particular for shares, debentures or securities of
any other company having objects altogether or in part similar to those of this
company.
 To sell or sub-let any concession or license obtained or contracts entered in to and

generally to sell the whole or any part of the property and business of the company
for the shares or obligation of any person or persons.
 To improve, manage, cultivate, develop, exchange let in lease, mortgage, sell,

dispose off, turn to accounts, grant rights and privileges in respect of, or otherwise
deal with all or part of the properties and rights of the company.
 To open any kind of account in bank of and to take, accept, endorse and execute
promissory notes bills of exchange and other negotiable instruments.
 To insure all or any of the properties or assets or obligations of the company of

whatsoever nature, against any risk whatsoever.
 To get the company registered or organized in any foreign country.
 To adopt such means for making known the company as may seem expedient and
in particular by all kinds of advertising.
 To do all or any of the above things as principals, agents, contractors, trustees or

otherwise either alone or in conjunction with others, and to do all such other things
as are incidental, or as the company may think conducive ti the attainment of the
above objects or any of them.
 To establish and maintain agencies and branches at any place or places in the
22
dominion of India, or other parts of the world for the conduct of business of the
company.
OTHER OBJECTS:
1.To buy, sell, manufacture, refine, manipulate, import, export, and deal wholesale or retail
in commodities, substances, apparatus, articles and things of all kinds, capable of being
used or which can conveniently be dealt in by the company in connection with any of its
objects.
2.To carry on all kinds of agency business and to take part in the management, supervision
or control of the business or operations of any other company, association, firm or person
and in connection there with to appoint and remunerate any directors, accountants and
other experts or agents.
3.To carry on the business of export, import, distribution, of all merchandise and to act as
agents, stockists, distributors, for firms curve, pave, cement and maintain buildings,
structures, and companies in India and abroad.
4.To enter into brought out deals with other companies in India or abroad.
5.To carry on any where in India or abroad the business as shipping agents, ship managers,
brokers, shippers, tug owners, trawler owners, boat and barge owners, light man,
transporting and forwarding agents for land and waterways, dock owners, warehouse men
and ship stores merchants.
6.To establish and maintain lines of steam and other ships and generallr to transport goods
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and passengers and to purchase, charter hire, build or otherwise acquire ship and vessels or
let out, hire, or charter or otherwise deal with and dispose of any such ships or vessels.
7. To carry on the business of developing of software on internet for various applications

and various organization on internet, development of the internet connectivity design,
implementation and maintenance .
8.To carry in India or anywhere the business of e-commerce, business, internet fax gateway
services or and other type of related business on internet.
9. To carry on the business of providing web sites and also providing technology for
intranet activities and all activities on Internet.
10. To buy, sell, deal in import, export,carry on Research and Development of software and
hardware and any other solutions in India or abroad.
11.To import training conduct seminars, workshops, short term, long term, courses on
computers ,computer maintenance ,software development, soptware exports and to depute
personnel to develop and design software in India or abroad.
12.To purchase, sell, develop, take in exchange, or on lease, hire or otherwise acquire
whether for investment or sale, or working the same, any real or personal estate including
lands, mines, business, building, factories mill, houses, cottages, shops, depots warehouses,
machinery, plant, stock in trade., mineral rights, concessions, privileges, licences,easement
or interest in or with respect of any property or interest in or with respect with respect to
property whatsoever for the purpose of the company in consideration for gross sum or
rent on partly in one way and partly in other or for any other consideration and to carry on
business as proprietors of falts and buildings and to let on lease or otherwise apartments
there in and to provide for the conveniences commonly provided flats, suites and
residential and business quarters.
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THE LIABILITIES OF THE MEMBERS OF THE COMPANY IS LIMITED;
1.The authorized share capital of the company is Rs.10,00,000/- dividend into 1,00,000,
equity shares of Rs.10/- each, with power for company to increase or reduce the said
capital in power for company to increase or reduce the said capital in accordance with the
applicable provisions of the companies act, 1956, and to issue any part of its capital,
originally issued, with or without any preference priority or special privilege, or subject to
any postponement of rights, and to any conditions or restriction, and so that unless the
conditions of issue shall otherwise expressly declare, every issue of share, whether
expressed to be preference or otherwise shall be subject to the powers herin before
contained.
2. the share capital of the company (whether original, increased or reduced may be sub
divided, consolidated or divided into such classes of shares as may be allowed under the
law for the time being in force relating to companies with such privileges or rights as may
be attached and to be held upon such terms as may prescribed by the Articles of association
of the company.
PROMOTERS:
Caliber Securities (Pvt) Ltd is promoted by Mr. M. Rama
Subba Rao and his family. The 100% holding of the company is in the
hands of his family.
The director Mr. M. Rama Subba Rao is having indepth
knowledge of stock markets. He is an investor and investment advisor
since 1993 and attended more than 5, 00, 000 investor grievances. The
director is a graduate from Andhra University and has certifications of
NSE and BSE on six modules.
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PORTFOLIO
BULDING
26
PORTFOLIO BUILDING
Portfolio decisions for an individual investor are influenced by a wide

variety of factors. Individuals differ greatly in their circumstances and therefore, a financial
programme well suited to one individual may be in appropriate for another. Ideally, an
individual’s portfolio should be tailor-mode to fit one’s individual needs.
Investor’s Characteristics:
An analysis of an individual’s investment situation requires a study of

personal characteristics such as age, health conditions, personal habits, family
responsibilities, business or professional situation, and tax status, all of which affect the
investor’s willingness to assume risk.
Stage in the Life Cycle:
One of the most important factors affecting the individual’s investment

objective is his stage in the life cycle. A young person may put greater emphasis on growth
and lesser emphasis on liquidity. He can afford to wait for realization of capital gains as his
time horizon is large.
Family responsibilities:
The investor’s marital status and his responsibilities towards other members
of the family can have a large impact on his investment needs and goals.
Investor’s experience:
The success of portfolio depends upon the investor’s knowledge and

experience in financial matters. If an investor has an aptitude for financial affairs, he may
27
wish to be more aggressive in his investments.
Attitude towards Risk:
A person’s psychological make-up and financial position dictate his ability

to assume the risk. Different kids of securities have different kinds of risks. The higher the
risk, the greater the opportunity for higher gain or loss.
Liquidity Needs:
Liquidity needs vary considerably among individual investors. Investors

with regular income from other sources may not worry much about instantaneous liquidity,
but individuals who depend heavily upon investment for meeting their general or specific
needs, must plan portfolio to match their liquidity needs. Liquidity can be obtained in two
ways:
1. By allocating an appropriate percentage of the portfolio to bank deposits, and

2. By requiring that bonds and equities purchased be highly marketable.
Tax considerations:
Since different individuals, depending upon their incomes, are subjected to

different marginal rates of taxes, tax considerations become most important factor in
individual’s portfolio strategy. There are differing tax treatments for investment in various
kinds of assets.
Time Horizon:
In investment planning, time horizon becomes an important consideration. It

is highly variable from individual to individual. Individuals in their young age have long
time horizon for planning, they can smooth out and absorb the ups and downs of risky
combination. Individuals who are old have smaller time horizon, they generally tend to
avoid volatile portfolios.
Individual’s Financial Objectives:
In the initial stages, the primary objectives of an individual could be to

accumulate wealth via regular monthly savings and have an investment programme to
achieve long term capital gains.
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Safety of Principal:
The protection of the rupee value of the investment is of prime importance

to most investors. The original investment can be recovered only if the security can be
readily sold in the market without mush loss of value.
Assurance of Income:
Different investors have different current income needs. If an individual is

dependent of its investment income for current consumption the income received now in
the form of dividend and interest payments become primary objective.
Investment Risk:
All investment decisions revolve around the trade-off between risk and
return. All rational investors want a substantial return from their investment. An ability to
understand, measure and properly manage investment risk is fundamental to any intelligent
investor of a speculator. Frequently, the risk associated with security investment is ignored
and only the rewards are emphasized. An investor who does not fully appreciate the risks in
security investments will find it difficult to obtain continuing positive results.
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RISK AND EXPECTED RETURN:
There is a positive relationship between the amount of risk and the amount
of expected return i.e., the greater the risk, the larger the expected return and larger the
chances of substantial loss. One of the most difficult problems for an investor is to estimate
the highest level of risk he is able to assume.
• Risk is measured along the horizontal axis and increases from the left to right.
• Expected rate of return is measured on the vertical axis and rises from bottom to top.
• The line from 0 to R (f) is called the rate of return or risk less investments commonly
associated with the yield on government securities.
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RISKS
ATIC RISK UN-SYSTEMATIC RISK
• The diagonal line from R (f) to E(r) illustrates the concept of expected rate of return
increasing as level of risk increases.
TYPES OF RISKS:
Risks consist of two components. They are
1. Systematic Risk
2. Un-systematic Risk
1. Systematic Risk:
Systematic risk is caused by factors external to the particular company and

uncontrollable by the company. The systematic risk affects the market as a whole.
Factors affect the systematic risk are
• Economic conditions
• Political conditions
• Sociological changes
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The systematic risk is unavoidable. Systematic risk is further sub-divided into three
types. They are
a) Market Risk
b) Interest Rate Risk
c) Purchasing Power Risk
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0001254696d6573204e657720526f6d616e000000000000000000000000000000000004000
0002d010100050000000902000000020d000000320a5a0000000100040000000000100e08
0720f22d00040000002d010000030000000000
a) Market Risk:
One would notice that when the stock market surges up, most stocks post higher
price. On the other hand, when the market falls sharply, most common stocks will drop.
It is not uncommon to find stock prices falling from time to time while a company’s
earnings are raising and vice-versa. The price of stock may fluctuate widely within a
short time even though earnings remain unchanged or relatively stable.
b) Interest Rate Risk:
Interest rate risk is the risk of loss of principal brought about the changes in the
interest rate paid on new securities currently being issued.
c) Purchasing Power Risk:
The typical investor seeks an investment which will give him current income and /
or capital appreciation in addition to his original investment.
2. Un-systematic Risk:
32
Un-systematic risk is unique and peculiar to a firm or an industry. The nature and
mode of raising finance and paying back the loans, involve the risk element. Financial
leverage of the companies that is debt-equity portion of the companies differs from each
other. All these factors affect the un-systematic risk and contribute a portion in the total
variability of the return.
 Managerial inefficiently
 Technological change in the production process
 Availability of raw materials
 Changes in the consumer preference
 Labour problems
The nature and magnitude of the above mentioned factors differ from industry to industry
and company to company. They have to be analyzed separately for each industry and firm.
Un-systematic risk can be broadly classified into:
a) Business Risk
b) Financial Risk
33
BUSINESS RISK FINANCIAL RISK
UN-SYSTEMATIC RISK
a. Business Risk:
Business risk is that portion of the unsystematic risk caused by the operating
environment of the business. Business arises from the inability of a firm to maintain its
competitive edge and growth or stability of the earnings. The volatility in stock prices
due to factors intrinsic to the company itself is knows as Business risk. Business risk is
concerned with the difference between revenue and earnings before interest and tax.
Business risk can be divided into
i) Internal Business Risk:
Internal business risk is associated with the operational efficiency of the

firm. The operational efficiency differs from company to company. The efficiency
of operation is reflected on the company’s achievement of its pre-set goals and the
fulfillment of the promises to its investors.
34
ii) External Business Risk:
External business risk is the result of operating conditions imposed on the

firm by circumstances beyond its control. The external environments in which it
operates exert some pressure on the firm. The external factors are social and
regulatory factors, monetary and fiscal policies of the government, business cycle
and the general economic environment within which a firm or an industry operates.
b. Financial Risk:
It refers to the variability of the income to the equity capital due to the debt capital.
Financial risk in a company is associated with the capital structure of the company.
Capital structure of the company consists of equity funds and borrowed funds.
35
PORTFOLIO
ANALYSIS
36
PORTFOLIO ANALYSIS:
Various groups of securities when held together behave in a different manner and
give interest payments and dividends also, which are different to the analysis of individual
securities. A combination of securities held together will give a beneficial result if the yare
grouped in a manner to secure higher return after taking into consideration the risk element.
There are two approaches in construction of the portfolio of securities. They are
∗ Traditional approach
∗ Modern approach
Traditional Approach:
Traditional approach was based on the fact that risk could be measured on each
individual security through the process of finding out the standard deviation and that
security should be chosen where the deviation was the lowest. Traditional approach
believes that the market is inefficient and the fundamental analyst can take advantage of the
situation. Traditional approach is a comprehensive financial plan for the individual. It takes
into account the individual needs such as housing, life insurance and pension plans.
Traditional approach basically deals with two major decisions. They are
a) Determining the objectives of the portfolio

b) Selection of securities to be included in the portfolio
Modern Approach:
Modern approach theory was brought out by Markowitz and Sharpe. It is the
combination of securities to get the most efficient portfolio. Combination of securities can
be made in many ways. Markowitz developed the theory of diversification through
37
scientific reasoning and method. Modern portfolio theory believes in the maximization of
return through a combination of securities. The modern approach discusses the relationship
between different securities and then draws inter-relationships of risk between them.
Markowitz gives more attention to the process of selecting the portfolio. It does not deal
with the individual needs.
MARKOWITZ Model:
Markowitz model is a theoretical framework for analysis of risk and return and their
relationships. He used statistical analysis for the measurement of risk and mathematical
programming for selection of assets in a portfolio in an efficient manner. Markowitz
model theory introduced in 1950, in this he got the Noble prize in 1990. Markowitz
approach determines for the investor the efficient set of portfolio through three
important variables i.e.
 Return
 Standard deviation
 Co-efficient of correlation
Markowitz model is also called as a “Full Covariance Model”. Through this model
the investor can find out the efficient set of portfolio by finding out the trade off
between risk and return, between the limits of zero and infinity. According to this
theory, the effects of one security purchase over the effects of the other security
purchase are taken into consideration and then the results are evaluated. Most
people agree that holding two stocks is less risky than holding one stock. For
example, holdings stocks from textile, banking and electronic companies is better
than investing all the money on the textile company’s stock.
Markowitz had given up the single stock portfolio and introduced diversification.
The single stock portfolio would be preferable if the investor is preferable if the
investor is perfectly certain that his expectation of highest return would like to join
Markowitz rather than keeping a single stock, because diversification reduces the
38
risk.
SSUMPTIONS:
 All investors would like to earn the maximum rate of return that they can achieve
from their investments.
 All investors have the same expected single period investment horizon.
 All investors before making any investments have a common goal. This is the
avoidance of risk because Investors are risk-averse.
 Investors base their investment decisions on the expected return and standard
deviation of returns from a possible investment.
 Perfect markets are assumed (e.g. no taxes and no transaction costs).
 The investor assumes that greater or larger the return that he achieves on his
investments, the higher the risk factor surrounds him. On the contrary when risks
are low the return can also be expected to be low.
 The investor can reduce his risk if he adds investments to his portfolio.
 An investor should be able to get higher return for each level of risk “by
determining the efficient set of securities”.
 An individual seller or buyer cannot affect the price of a stock. This assumption is
the basic assumption of the perfectly competitive marker.
 Investors make their decisions only on the basis of the expected returns, standard
deviation and covariance of all pairs of securities.
 Investors are assumed to have homogenous expectations during the decision-
making period.
 The investor can lend or borrow any amount of funds at the risk less rate of interest.
The risk less rate of interest is the rate of interest offered for the treasury bills or
Government securities.
 Investors are risk-averse, so when given a choice between two otherwise identical
portfolios, they will choose the one with the lower standard deviation.
39
 Individual assets are infinitely divisible, meaning that an investor can buy a fraction
of a share if he or she so desires.
 There is a risk free rate at which an investor may either lend (i.e. invest) money or
borrow money.
 There is no transaction cost i.e. no cost involved in buying and selling of stocks.
 There is no personal income tax. Hence, the investor is indifferent to the form of
return either capital gain or dividend.
THE EFFECT OF COMBINING TWO SECURITIES:
It is believed that holding two securities is less risky than by having only one
investment in a person’s portfolio. When two stocks are taken on a portfolio and if they
have negative correlation then risk can be completely reduced because the gain in one can
offset the loss on the other. This can be shown with the help of following example:
INTER-ACTIVE RISK THROUGH COVARIANCE:
Covariance of the securities will help in finding out the inter-active risk. When the
covariance will be positive then the rates of return of securities move together either
upwards or downwards. Alternatively it can also be said that the inter-active risk is
positive. Secondly, covariance will be zero on two investments if the rates of return are
independent.
Holding two securities may reduce the portfolio risk too. The portfolio risk can be
calculated with the help of the following formula:
CAPITAL ASSET PRICING MODEL (CAPM):
Markowitz, William Sharpe, John Lintner and Jan Mossin provided the basic
structure of Capital Asset Pricing Model. It is a model of linear general equilibrium return.
In the CAPM theory, the required rate return of an asset is having a linear relationship with
asset’s beta value i.e. undiversifiable or systematic risk (i.e. market related risk) because
40
non market risk can be eliminated by diversification and systematic risk measured by beta.
Therefore, the relationship between an assets return and its systematic risk can be
expressed by the CAPM, which is also called the Security Market Line.
Rp = Rf.Xf+Rm (1-Xf)
Rp = Portfolio return
Xf = The proportion of funds invested in risk free assets
1-Xf = The proportion of funds invested in risky assets
Rf = Risk free rate of return
Rm = Return on risky assets
Formula can be used to calculate the expected returns for different situations, like
mixing risk less assets with risky assets, investing only in the risky asset and mixing the
borrowing with risky assets.
THE CONCEPT:
According to CAPM, all investors hold only the market portfolio and risk less
securities. The market portfolio is a portfolio comprised of all stocks in the market. Each
asset is held in proportion to its market value to the total value of all risky assets.
For example, if Satyam Industry share represents 15% of all risky assets, then the market
portfolio of the individual investor contain 15% Satyam Industry shares. At this stage, the
investor has the ability to borrow or lend any amount of money at the risk less rate of
interest.
E.g.: assume that borrowing and lending rate to be 12.5% and return from the risky
assets to be 20%. There is a trade off between the expected return and risk. If an investor
invests in risk free assets and risky assets, his risk may be less than what he invests in the
41
risky asset alone. But if he borrows to invest in risky assets, his risk would increase more
than he invests his own money in the risky assets. When he borrows to invest, we call it
financial leverage. If he invests 50% in risk free assets and 50% in risky assets, his
expected return of the portfolio would be
Rp = Rf.Xf+Rm(1-Xf)
= (12.5 x 0.5) + 20(1-0.5)

= 6.25 + 10
=16.25%
If there is a zero investment in risk free asset and 100% in risky asset, the return is
= 0+20%
= 20%
If -0.5 in risk free asset and 1.5 in risky asset, the return is
= (12.5 x -0.5) + 20(1.5)

= (-6.25) + 30
= 23.75%
42
EVOLUTION OF
PORTFOLIO
43
EVALUATION OF PORTFOLIO:
Portfolio manager evaluates his portfolio performance and identifies the sources of
strengths and weakness. The evaluation of the portfolio provides a feed back about the
performance to evolve better management strategy. Even though evaluation of portfolio
performance is considered to be the last stage of investment process, it is a continuous
process. There are number of situations in which an evaluation becomes necessary and
important.
i. Self Valuation: An individual may want to evaluate how ell he has

done. This is a part of the process of refining his skills and improving his
performance over a period of time.
ii. Evaluation of Managers: A mutual fund or similar organization

might want to evaluate its managers. A mutual fund may have several
managers each running a separate fund or sub-fund. It is often necessary
to compare the performance of these managers.
iii. Evaluation of Mutual Funds: An investor may want to evaluate the

various mutual funds operating in the country to decide which, if any, of
these should be chosen for investment. A similar need arises in the case
of individuals or organizations who engage external agencies for
portfolio advisory services.
iv. Evaluation of Groups: Academics or researchers may want to

evaluate the performance of a whole group of investors and compare it
with another group of investors who use different techniques or who
have different skills or access to different information.
44
NEED FOR EVALUATION OF PORTFOLIO:
 We can try to evaluate every transaction. Whenever a security is brought or sold,

we can attempt to assess whether the decision was correct and profitable.
 We can try to evaluate the performance of a specific security in the portfolio to
determine whether it has been worthwhile to include it in our portfolio.
 We can try to evaluate the performance of portfolio as a whole during the period
without examining the performance of individual securities within the portfolio.
NEED & IMPORTANCE:
Portfolio management has emerged as a separate academic discipline in India.

Portfolio theory that deals with the rational investment decision-making process has now
become an integral part of financial literature.
Investing in securities such as shares, debentures & bonds is profitable well as

exciting. It is indeed rewarding but involves a great deal of risk & need artistic skill.
Investing in financial securities is now considered to be one of the most risky avenues of
investment. It is rare to find investors investing their entire savings in a single security.
Instead, they tend to invest in a group of securities. Such group of securities is called as
PORTFOLIO. Creation of portfolio helps to reduce risk without sacrificing returns.
Portfolio management deals with the analysis of individual securities as well as with the
theory & practice of optimally combining securities into portfolios.
The modern theory is of the view that by diversification, risk can be reduced. The
investor can make diversification either by having a large number of shares of companies
in different regions, in different industries or those producing different types of product
lines. Modern theory believes in the perspective of combinations of securities under
constraints of risk and return.
45
PORTFOLIO REVISION:
The portfolio which is one selected has to be continuously reviewed over a period
of time and the revised depending on the objectives of the investor. The care taken in
construction of portfolio should be extended to the review and revision of the portfolio.
Fluctuations that occur in the equity prices cause substantial gain or loss to the investors.
The investor should have competence and skill in the revision of the portfolio. The
portfolio management process needs frequent changes in the composition of stocks and
bonds. In securities, the type of securities to be held should be revised according to the
portfolio policy.
An investor purchases stock according to his objectives and return risk framework.
The prices of stock that he purchases fluctuate, each stock having its own cycle of
fluctuations. These price fluctuations may be related to economic activity in a country or
due to other changed circumstances in the market.
If an investor is able to forecast these changes by developing a framework for the future
through careful analysis of the behavior and movement of stock prices is in a position to
make higher profit than if he was to simply buy securities and hold them through the
process of diversification. Mechanical methods are adopted to earn better profit through
proper timing. The investor uses formula plans to help him in making decisions for the
future by exploiting the fluctuations in prices.
FORMULA PLANS:
The formula plans provide the basic rules and regulations for the purchase and sale
of securities. The amount to be spent on the different types of securities is fixed. The
46
amount may be fixed either in constant or variable ratio. This depends on the investor’s
attitude towards risk and return. The commonly used formula plans are
i. Average Rupee Plan

ii. Constant Rupee Plan
iii. Constant Ratio Plan
iv. Variable Ratio Plan
ADVANTAGES:
 Basic rules and regulations for the purchase and sale of securities are provided.
 The rules and regulations are rigid and help to overcome human emotion.
 The investor can earn higher profits by adoption the plans.
 A course of action is formulated according to the investor’s objectives.
 It controls the buying and selling of securities by the investor.
 It is useful for taking decisions on the timing of investments.
47
DISADVANTAGES:
 The formula plan does not help the selection of the security. The selection of the
security has to be done either on the basis of the fundamental or technical analysis.
 It is strict and not flexible with the inherent problem of adjustment.
 The formula plans should be applied for long periods, other wise the transaction
cost may be high.
 Even if the investor adopts the formula plan, he needs forecasting. Market
forecasting helps him to identify the best stocks.
48
ANALYSIS
AND
INTERPRETATION
49
AVERAGE RETURNS
INFOSYS
CLOSING
OPENING SHARE
DIVIDEN SHARE PRICE(P1 D+(P1-
YEAR D BONUS PRICE(P0) ) D+(P1-P0) P0)/P0*100
2005-06 45 NIL 2235.85 2981.4 790.55 35.35
2006-07 11.5 2018.65 3142.15 2018.65 906.65 44.91
2007-08 33.25 NIL 1922.95 1439.9 -449.8 -23.39
2008-09 23.5 NIL 1421.35 1324.1 -73.75 -5.18
2009-10 NIL NIL 1375.5 2615.1 1239.6 90.11
TOTAL RETURN 141.8
AVERAGE RETURN = R/N 141.8/5 = 28.36
HCLTECH
OPENING CLOSING
SHARE SHARE D+(P1-
YEAR DIVIDEND BONUS PRICE(P0) PRICE(P1) D+(P1-P0) P0)/P0*100
2005-06 16 NIL 383.55 654.2 286.65 74.73
2006-07 8 291.4 662.15 291.4 -71.35 -10.77
2007-08 9 NIL 272.5 253.25 -10.25 -3.76
2008-09 7 NIL 246.4 101.75 -137.65 -55.86
2009-10 NIL NIL 100.85 357.8 256.95 254.78
TOTAL RETURN 259.12
50
WIPRO
OPENING CLOSING
SHARE SHARE D+(P1-
2005-06 5 559.7 672.65 559.7 451.75 67.15
2006-07 6 NIL 560 559.4 5.4 0.96
2007-08 6 NIL 518.75 432.1 -80.65 -15.54
2008-09 4 NIL 409 245.4 -159.6 -39.02
2009-10 NIL NIL 251.6 706.8 455.2 180.92
TOTAL RETURN 194.47
CMC
OPENING CLOSING
SHARE SHARE D+(P1-
2005-06 5 NIL 623.8 531.4 -87.4 -14
2006-07 8 NIL 575 1211.85 644.85 112.14
2007-08 11 NIL 1163.75 806.3 -346.45 -29.77
2008-09 15 NIL 792.3 319.95 -457.35 -57.72
2009-10 NIL NIL 366.25 1340.3 974.05 265.95
TOTAL RETURN 276.6
51
I-FLEX
OPENING CLOSING
SHARE SHARE D+(P1-
2005-06 5 NIL 594.8 1327 737.2 123.94
2006-07 NIL NIL 1352.3 2081.65 729.35 53.93
2007-08 NIL NIL 2055.05 941.1 -1113.95 -54.2
2008-09 NIL NIL 942.05 741.55 -200.5 -21.28
2009-10 NIL NIL 786 2300.5 1514.5 192.68
TOTAL RETURN 295.07
AVERAGE RETURNS
INFOSYS(IT) 28.36
HCLTECH 51.82
WIPRO 38.89
CMC 55.32
I-FLEX 59.01
52
70
60
50
40
Series1
30
20
10
0
X
)
CH
RO
C
IT
LE
CM
S(
IP
I-F
LT
SY
W
HC
FO
IN
Average Return = (R)/N

(R) = Return of the security for the year T
N = Number of years
Based on the above average return of securities I-FLEX is earning
highest return and CMC is earning lowest return. Other securities are
earning medium range of returns
53
STANDARD DEVIATIONS
INFOSYS
AVG
YEAR RETURN (R ) RET(R) R-R R-R2
(106.4
2005-06 35.35 141.8 5) 11,331.60
(96.8
2006-07 44.91 141.8 9) 9,387.67
(165.1
2007-08 -23.39 141.8 9) 27,287.74
(146.9
2008-09 -5.18 141.8 8) 21,603.12
(51.6
2009-10 90.11 141.8 9) 2,671.86
TOTAL 72,281.99
Variance = 1/n-1 (R-R) 2 = 1/5-1 (72281.99) = 18070.49

Standard Deviation = Variance 18070.49 = 134.4
HCLTECH
RETURN
YEAR (R ) AVG RET(R) R-R R-R2
2005-06 74.73 259.12 (184.39) 33,999.67
2006-07 -10.77 259.12 (269.89) 72,840.61
2007-08 -3.76 259.12 (262.88) 69,105.89
2008-09 -55.86 259.12 (314.98) 99,212.40
(4.34
2009-10 254.78 259.12 ) 18.84
275,17
TOTAL 7.41
Variance = 1/n-1 (R-R) 2 = 1/5-1 (275177.41) = 68794.35

54
WIPRO
RETURN (R AVG
YEAR ) RET(R) R-R R-R2
194.4
2005-06 67.15 7 (127.32) 16,210.38
194.4
2006-07 0.96 7 (193.51) 37,446.12
194.4
2007-08 -15.54 7 (210.01) 44,104.20
194.4
2008-09 -39.02 7 (233.49) 54,517.58
194.4 (13.55
2009-10 180.92 7 ) 183.60
TOTAL 152,461.89
Variance = 1/n-1 (R-R) 2 = 1/5-1 (152461.89) = 38115.47

55
CMC
RETURN (R AVG
YEAR ) RET(R) R-R R-R2
276.6
2005-06 -14 0 (290.60) 84,448.36
276.6
2006-07 112.14 0 (164.46) 27,047.09
276.6
2007-08 -29.77 0 (306.37) 93,862.58
276.6
2008-09 -57.72 0 (334.32) 111,769.86
276.6 (10.65
2009-10 265.95 0 ) 113.42
TOTAL 317,241.31
Variance = 1/n-1 (R-R) 2 = 1/5-1 (317241.31) = 79310.32

I-FLEX
RETURN (R
YEAR ) AVG RET(R) R-R R-R2
2005-06 123.94 295.07 (171.13) 29,285.48
2006-07 53.93 295.07 (241.14) 58,148.50
2007-08 -54.2 295.07 (349.27) 121,989.53
2008-09 -21.28 295.07 (316.35) 100,077.32
2009-10 192.68 295.07 (102.39) 10,483.71
TOTAL 319,984.54
Variance = 1/n-1 (R-R) 2 = 1/5-1 (319984.54) = 79996.13

56
STANDARD DEVIATIN OF COMPANIES
INFOSYS(IT) 131.4
HCLTECH 262.28
WIPRO 195.23
CMC 281.62
I-FLEX 282.83
300
250
200
150 Series1
100
50
0
X
)
CH
RO
C
IT
LE
CM
S(
IP
I-F
LT
SY
W
HC
FO
IN
STANDARD DEVIATION =1/n (R-R) 2
Based on the above calculations Standard Deviation of the I-

FLEX is highest and WIPRO is lowest. Where other securities
are having medium Standard Deviation.
57
CORRELATION COFFICIENT BETWEEN THE SECURITIES
Covariance (COV ab) = 1/n-1 (RA-RA) (RB-RB)
Correlation Coefficient = COV ab/α a*α b
1. INFOSYS (RA) & HCLTECH (RB)
YEAR RA-RA RB-RB (RA-RA)(RB-RB)

2005-06 -106.45 (184.39) 19,628.32
2006-07 -96.89 (269.89) 26,149.64
2007-08 -165.19 (262.88) 43,425.15
2008-09 -146.98 (314.98) 46,295.76
2009-10 -51.69 (4.34) 224.33
TOTAL 135,723.20
Covariance (COV ab) = 1/5-1 (135723.20) =33930.8

α a =131.4; α b =262.28
= 33930.8/ (131.4) (262.28) =0.9845
2. INFOSYS (RA)& WIPRO(RB)

2005-06 -106.45 (127.32) 13,553.21
2006-07 -96.89 (193.51) 18,749.18
2007-08 -165.19 (210.01) 34,691.55
2008-09 -146.98 (233.49) 34,318.36
2009-10 -51.69 (13.55) 700.40
TOTAL 102,012.71
Covariance (COV ab) = 1/5-1 (102012.71) = 25503.17

α a = 131.4; α b =195.23
= 25503.17/ (131.4) (195.23) = 0.994
3. INFOSYS (RA) & CMC (RB)

2005-06 -106.45 (290.60) 30,934.37
2006-07 -96.89 (164.46) 15,934.53
2007-08 -165.19 (306.37) 50,609.26
2008-09 -146.98 (334.32) 49,138.35
2009-10 -51.69 (10.65) 550.50
58
TOTAL 147,167.01

α a = 131.4; α b = 281.62
= 36791.75/ (131.4) (281.62) = 0.99
4. INFOSYS (RA) &I-FLEX (RB)

2005-06 -106.45 (171.13) 18,216.79
2006-07 -96.89 (241.14) 23,364.05
2007-08 -165.19 (349.27) 57,695.91
2008-09 -146.98 (316.35) 46,497.12
2009-10 -51.69 (102.39) 5,292.54
TOTAL 151,066.42

α a = 131.4; α b = 283.8
= 37766.6/ (131.4) (283.8) =1.012
5. HCLTECH (RA) & WIPRO (RB)

2005-06 (184.39) (127.32) 23,476.53
2006-07 (269.89) (193.51) 52,226.41
2007-08 (262.88) (210.01) 55,207.43
2008-09 (314.98) (233.49) 73,544.68
2009-10 (4.34) (13.55) 58.81
TOTAL 204,513.86

α a =262.28; α b = 195.23
= 5112.96/ (262.28) (195.23) = 0.099
6. HCLTECH (RA) & CMC (RB)
2005-06 (184.39) (290.60) 53,583.73
2006-07 (269.89) (164.46) 44,386.11
2007-08 (262.88) (306.37) 80,538.55
2008-09 (314.98) (334.32) 105,304.11
2009-10 (4.34) (10.65) 46.22
TOTAL 283,858.72
59
α a = 262.28; α b = 281.62
= 70964.68/ (262.28) (281.62) = 0.960
7. HCLTECH (RA) & I-FLEX (RB)

2005-06 (184.39) (171.13) 31,554.66
2006-07 (269.89) (241.14) 65,081.27
2007-08 (262.88) (349.27) 91,816.10
2008-09 (314.98) (316.35) 99,643.92
2009-10 (4.34) (102.39) 444.37
TOTAL 288,540.33

α a = 262.28; α b = 283.83
= 72135.08/ (262.28) (283.83) = 0.96
8. WIPRO (RA) & CMC (RB)

2005-06 (127.32) (290.60) 36,999.19
2006-07 (193.51) (164.46) 31,824.65
2007-08 (210.01) (306.37) 64,340.76
2008-09 (233.49) (334.32) 78,060.38
2009-10 (13.55) (10.65) 144.31
TOTAL 211,369.29

α a = 195.23; α b = 281.62
= 52842.32/ (195.23) (281.62) = 0.96
60
9. WIPRO (RA) & I-FLEX (RB)
2005-06 (127.32) (171.13) 21,788.27
2006-07 (193.51) (241.14) 46,663.00
2007-08 (210.01) (349.27) 73,350.19
2008-09 (233.49) (316.35) 73,864.56
2009-10 (13.55) (102.39) 1,387.38
TOTAL 217,053.41

α a = 195.23; α b = 283.83
= 54263.35/ (195.23) (283.83) =0.97
10. CMC (RA) & I-FLEX (RB)

2005-06 (290.60) (171.13) 49,730.38
2006-07 (164.46) (241.14) 39,657.88
2007-08 (306.37) (349.27) 107,005.85
2008-09 (334.32) (316.35) 105,762.13
2009-10 (10.65) (102.39) 1,090.45
TOTAL 303,246.70

α a = 281.62; α b = 283.83
= 75811.67/ (281.62) (283.83) =0.94
CORRELATION COFFICIENT BETWEEN THE SECURITIES
61
Covariance (COV ab) = 1/n-1 (RA-RA)(RB-RB)
I-
SECURITY INFOSYS HCLTECH WIPRO CMC FLEX
INFOSYS 1 0.98 0.99 0.99 1.01
HCLTECH 1 0.09 0.96 0.96
WIPRO 1 0.96 0.97
CMC 1 0.94
I-FLEX 1
FORMULA:
CORRELATION COEFFICIENT (ab) = cov (ab)/σaσb
Where COV (ab) = 1/n-1 (RA-RA) (RB-RB)
CALCULATION OF PORTFOLIO WEIGHTS: :(FORMULA):
Wa = σ b [σ b-(nab*σ a)]
σ a2 + σ b2 - 2nab*σ a*σ b
Wb = 1 – Wa
1. INFOSYS (a) &HCLTECH (b): σ a = 131.4; σ b = 262.28;nab = 0.98
Wa = 262.28 [262.28-(0.98*131.4)]/(131.4) 2 + (262.28) 2 – 2(0.98)*(131.4)*(262.28)
Wa =1.90; Wb = 1- 1.90 = -0.9;
62
2. INFOSYS (a) &WIPRO (b): σ a = 131.4; σ b = 195.23;nab = 0.99
Wa = 195.23 [195.23-(0.99*131.4)]/(131.4) 2 + (195.23) 2 – 2(0.99)*(131.4)*(195.23)
Wa =2.77; Wb = 1- 2.77 = -1.77;
3. INFOSYS (a) &CMC (b): σ a = 131.4; σ b = 281.62;nab = 0.99
Wa = 281.62 [281.62-(0.99*131.4)]/(131.4) 2 + (281.62) 2 – 2(0.99)*(131.4)*(281.62)
Wa =1.83; Wb = 1-1.83 =-0.83
4. INFOSYS (a) &I-FLEX (b): σ a = 131.4; σ b = 283.83;nab = 1.01
Wa = 283.83 [283.83-(1.01*131.4)]/(131.4) 2 + (283.83) 2 – 2(1.01)*(131.4)*(283.83)
Wa =1.933; Wb = 1-1.933 = -0.93;
5. HCLTECH (a) &WIPRO (b): σ a = 262.28; σ b = 195.23; nab =0.09
Wa = 195.23[195.23-(0.09*262.28)]/(262.28) 2+(195.23) 2–2(0.09)*(262.28)*(195.23)

Wa =0.93; Wb = 1- 0.93 = 0.07;
6. HCLTECH (a) &CMC (b): σ a = 262.28; σ b = 281.62; nab =0.96
Wa = 281.62 [281.62-(0.96*262.28)]/(262.28) 2 + (281.62) 2 –2(0.96)*(262.28)*(281.62)

Wa =1.33; Wb = 1- 1.33 = -0.33;
7. HCLTECH (a) &I-FLEX (b): σ a = 262.28; σ b = 283.83; nab = 0.96
Wa = 283.83 [283.83-(0.96*262.28)]/(262.28) 2 + (283.83) 2 – 2(0.96)*(262.28)*(283.83)
Wa =0.26; Wb = 1- 0.26 = 0.74;
8. WIPRO (a) &CMC (b): σ a = 195.23; σ b = 281.62; nab = 0.96

Wa = 281.62[281.62-(0.96*281.62)]/(195.23) 2 + (281.62) 2 – 2(0.96)*(195.23)*(281.62)
Wa =0.26; Wb = 1- 0.26 = 0.74;
9. WIPRO (a) &I-FLEX (b): σ a = 195.23; σ b = 283.83; nab = 0.97
Wa = 283.83[283.83-(0.97*195.23)]/(195.23) 2 + (283.83) 2 – 2(0.97)*(195.23)*(283.83)
Wa =2.39; Wb = 1- 2.39 = -1.39;
63
10. CMC (a) &I-FLEX (b): σ a = 281.62; σ b = 283.83 nab = 0.94
Wa = 283.83 [283.83-(0.94*281.62)]/(281.62) 2 + (283.83) 2 – 2(0.94)*(281.62)*(283.83)
Wa = 0.03; Wb = 1- 0.03 = 0.97;
S.NO PORTFOLIO (A/B) CORRELATION WEIGHT A WEIGHT B

1 INFOSYS & HCL 0.98 1.90 -0.9
2 INFOSYS & WIPRO 0.99 2.77 -1.77
3 INFOSYS & CMC 0.99 1.83 -0.83
4 INFOSYS & I-FLEX 1.01 1.93 -0.93
5 HCLTECH & WIPRO 0.09 0.93 0.07
6 HCLTECH & CMC 0.96 1.33 -0.33
7 HCLTECH & I-FLEX 0.96 0.26 0.74
8 WIPRO & CMC 0.96 0.26 0.74
9 WIPRO & I-FLEX 0.97 2.39 -1.39
10 CMC & I-FLEX 0.94 0.03 0.97
64
PORTFOLIO RISK
CALCULATION OF PORTFOLIO RISK:
RP = σ a2*Wa2 + σ b2*Wb2 + 2nab*σ a*σ b*Wa*Wb
CALCULATION OF PORTFOLIO RISK OF ALL COMPANIES:
1. INFOSYS (a) & HCLTECH (b): σ a = 131.4; σ b = 262.28; Wa= 1.90; Wb= -0.9;
Nab = 0.98;
RP = (131.4)2(1.90)2+ (262.28) 2 (-0.9)2+2(0.98)(131.4)*(262.8)*(1.90)*(-0.9)
= 2313.54 =48.09
2. INFOSYS (a) & WIPRO (b): σ a = 131.4; σ b = 195.23; Wa= 2.77; Wb= -1.77;
Nab = 0.99;
RP = (131.4)2(2.77)2+ (195.23) 2 (-1.77)2+2(0.99)(131.4)*(195.23)*(2.77)*(-1.77)
= 2854.82=53.43
3. INFOSYS (a) & CMC (b): σ a = 131.4; σ b = 281.62; Wa= 1.83; Wb= -0.83;
Nab = 0.99;
RP = (131.4)2(1.83)2+ (281.62) 2 (-0.83)2+2(0.99)(131.4)*(281.62)*(1.83)*(-0.83)
= 1165.805=34.14
4. INFOSYS (a) & I-FLEX (b): σ a = 131.4; σ b = 283.83; Wa= 1.93; Wb= -0.93;
Nab = 1.01;
RP = (131.4)2(1.93)2+ (283.83) 2 (-0.93)2+2(1.01)(131.4)*(283.83)*(1.93)*(-0.93)
= -1231.49=35.09
65
5. HCLTECH (a) & WIPRO (b): σ a = 262.28; σ b = 195.23; Wa= 0.93; Wb= 0.07;
Nab = 0.09;
RP = (262.28)2(0.93)2+ (195.23) 2 (0.07)2+2(0.09)(262.28)*(195.23)*(0.93)*(0.07)
= 60283.93=245.53
6. HCLTECH (a) & CMC (b): σ a = 262.28; σ b = 281.62; Wa= 1.33; Wb=-0.33 ;
Nab = 0.96;
RP = (262.28)2(1.33)2+ (281.62) 2 (-0.33)2+2(0.96)(262.28)*(281.62)*(1.33)*(-0.33)
= 68077.16=260.91
7. HCLTECH (a) & I-FLEX (b): σ a = 262.28; σ b = 283.83; Wa= 0.26; Wb= 0.74;
Nab = 0.96;
RP = (262.28)2(0.26)2+ (283.83) 2 (0.74)2+2(0.96) (262.28)*(283.83)*(0.26)*(0.74)
= 76264.42=276.16
8. WIPRO (a) & CMC (b): σ a = 195.23; σ b = 281.62; Wa= 0.26; Wb= 0.74;
Nab = 0.96
RP = (195.23)2(0.26)2+ (281.62) 2 (0.74)2+2(0.96)(195.23)*(281.62)*(0.26)*(0.74)
= 66316.90=257.52
9. WIPRO (a) & I-FLEX (b): σ a = 195.23; σ b =283.83; Wa= 2.39; Wb= -1.39;
Nab = 0.97;
RP = (195.23)2(2.39)2+ (283.83) 2 (-1.39)2+2(0.97)(195.23)*(283.83)*(2.39)*(-1.39)
= 194802.09=441.36
66
10. CMC (a) & I-FLEX (b): σ a = 281.62; σ b = 283.83; Wa= 0.03; Wb= 0.97;
Nab = 0.94;
RP = (281.62)2(0.03)2+ (283.83) 2 (0.97)2+2(0.94)(281.62)*(283.83)*(0.03)*(0.97)
= 80242.712=283.27
PORTFOLIO RISK
PORTFOLIO
S.NO COMBINATION RISK
1 INFOSYS & HCL 48.09
INFOSYS &
2 WIPRO 53.43
3 INFOSYS & CMC 34.13
INFOSYS & I-
4 FLEX 35.09
HCLTECH &
5 WIPRO 245.53
6 HCLTECH & CMC 260.91
HCLTECH & I-
7 FLEX 276.16
8 WIPRO & CMC 257.52
WIPRO & I-
9 FLEX 441.36
CMC & I-
10 FLEX 283.27
67
CALCULATION OF PORTFOLIO RISK:
RP = σ a2*Wa2 + σ b2*Wb2 + 2nab*σ a*σ b*Wa*Wb

Where σ a = Std deviation of security a
σ b = Std deviation of security b
Wa = weight of security a
Wb = weight of security b
Nab = Correlation Coefficient between security a & b
σ a = Portfolio risk
PORT FOLIO RETURN
FORMULA : Rp = (Ra*Wa)+(Rb*Wb); Where Rp = Portfolio return

Ra = Average return on security a; Rb = Average return on security b
Wa = Weight of security a; Wb = Weight of security b;
CALCULATION OF PORTFOLIO RETURNS
AVERAGE AVERAGE
RETURN WEIGHT RETURN WEIGHT PORTFOLIO
ON OF ON OF RETURN
COMBINATION(A & SECURITY SECURITY SECURITY SECURITY Rp (Ra*Wa)+
S.NO B) (A) (A) (B) (B) (Rb*Wb)
1 INFOSYS & HCL 28.36 1.9 51.82 -0.9 7.246
INFOSYS &
2 WIPRO 28.36 2.77 38.89 -1.77 9.7219
3 INFOSYS & CMC 28.36 1.83 55.32 -0.83 5.9832
INFOSYS & I-
4 FLEX 28.36 1.93 59.01 -0.93 -0.1445
HCLTECH &
5 WIPRO 51.82 0.93 38.89 0.07 50.9149
6 HCLTECH & CMC 51.82 1.33 55.32 -0.33 50.665
HCLTECH & I-
7 FLEX 51.82 0.26 59.01 0.74 57.1406
8 WIPRO & CMC 38.89 0.26 55.32 0.74 51.0482
9 WIPRO & I-FLEX 38.89 2.39 59.01 -1.39 10.9232
10 CMC & I-FLEX 55.32 0.03 59.01 0.97 58.8993
68
PORTFOLIO RISK AND RETURN
COMBINATION(A & PORTFOLIO PORTFOLIO

S.NO B) RETURN RISK
1 INFOSYS & HCL 7.246 48.09
2 INFOSYS & WIPRO 9.72 53.43
3 INFOSYS & CMC 5.98 34.13
4 INFOSYS & I-FLEX -0.14 35.09
5 HCLTECH & WIPRO 50.9 245.53
6 HCLTECH & CMC 50.66 260.91
7 HCLTECH & I-FLEX 57.14 276.16
8 WIPRO & CMC 51.04 257.52
9 WIPRO & I-FLEX 10.92 441.36
10 CMC & I-FLEX 58.89 283.27
PORTFOLIO RISK AND RETURN
500
450
400
350
300
250 PORTFOLIO RETURN
200 PORTFOLIO RISK
150
100
50
0
& I-FLEX
& I-FLEX
& I-FLEX
HCLTECH
HCLTECH
HCLTECH
INFOSYS
INFOSYS
INFOSYS
INFOSYS
& I-FLEX
-50
& CMC
& CMC
& CMC
& HCL
WIPRO
WIPRO
CMC
&
&
1 2 3 4 5 6 7 8 9 10
69
PORTFOLIO SELECTION
Portfolio analysis provided the input for next phase in portfolio management, which is
portfolio selection. The proper goal of portfolio construction is to generate a portfolio that
provided the highest returns at a given level of risk. These inputs from portfolio analysis
can be used to identify the set of efficient portfolios. From this the optimal portfolio in a
disciplined and objective way.
So, out of the various combinations (related to 5 companies), the optimal portfolio is
INFOSYS & CMC, as this portfolio has minimum risk of 34.13% with maximum return of
5.98%. Hence, we can say that it is better to invest in these portfolios.
PORTFOLIO REVISION
Economy and financial markets are dynamic changes take place almost daily. As time
passes securities which were once attractive may lease to be so. New securities with
promises of high return and low risk may emerge. The investor now has to revise his
portfolio in the light of the developments in the market. This leads to purchase of some new
securities and sale of some of the existing securities and their proportion in the portfolio
changes as a result of the revision.
The revision has to be scientifically and objectively so as to ensure
the optimally of the revised portfolio, its important as portfolio analysis and selection.
70
PORTFOLIO EVALUATION
The objective of constructing a portfolio and revising it periodically is to earn maximum
returns with minimum risk. 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. This involves quantitative measurement of actual return realized. Alternative
measures of performance evaluation have been developed by investor and portfolio
managers for their use.
It provides a mechanism for identifying weaknesses in the investment process and
improving them. The portfolio management process is an ongoing process to portfolio
construction, continues with portfolio revision and evaluation. The evaluation provided the
necessary feedback for better designing of portfolio the next time around. Superior
performance is achieved through continual refinement of portfolio management skills
71
CONCLUSIONS & SUGGESTIONS
Before investing in shares you should look at the type of shares, you want to buy and the
way in
Want to deal on the stock market.
Their main routes for investing in shares:
 Invest your capital in a single company.
 Invest your capital in number of different companies, a portfolio of shares.
 Invest indirectly and spread your risk through collective investments such as
investment trusts and unit trust.
INVEST IN SHARES:
Public companies issue shares, which allow investors to buy a part of a particular company
share ownership entitles you to part of the company Profits of dividends are paid.
Shares may be classified in a range from conservative to speculative. Blue
chip is often used to describe the highest quality and shares, as they are shares in
companies with a proven track record, producing profits in good times and bad. They
usually set the level of the market. All shares are affected by share market fluctuation.
Individual share process also vary based on supply and demand from sellers and buyers.
Information about shares listed on the stock exchange is printed largely
daily in news papers.
You can buy and sell shares listed on the stock exchange through a stockbroker.
When you buy a parcel of shares, you receive a CHESS statement of holdings form the
company, showing the number of shares you own and the date you bought them.
As a share holder you have to say in the company’s future through voting rights, you will
be kept informed about the company, through its annual reports and other correspondence.
THINGS TO CONSIDER:
 Share prices fall as well as rise. Large losses may occur, particularly if shares are
sold
when market has dropped.
72
 If you are happy with the gains made with your share and are concerned about their
Future value, you could sell them and realize your profit. If you retain them with a
view
to profit further and the market value drops, it is important to remember this loss is
only on paper unless you sell.
 Incomes from dividends may vary, when profits are low, dividends may be low or
even
Nil.
 Unless you plan to actively trade your shares, you should consider them a long term
investment
 You need to keep careful records, cecause capital gains tax collections can become
complex, especially in a dividend reinvestment paid.
THINGS TO REMEMBER:
 Remember, shares are not short term investment, usually the best returns will be
gained over the medium and long term.
 Past performance is not a reliable guide to future performance.
 As with any investment that offers capital growth, wide fluctuations in value can
occur.
 Spread you share holdings to include different companies across different markets
sectors, such as industry, mining of finance. This helps reduce the risk.
 Ask your stock broker for information about the company’s profile, performance
history and economic forecasts before buying or selling any shares. Much of his
information is also now available on various INTERNET site.
 Balance of the proportion of share in your overall investment portfolio with the
level of risk you are prepared to take. If a company goes into liquidation,
shareholders are the lost to be paid.
73
 Remember that event the most thoroughly research information research
information and advice given with the best intention may still result in a loss.
DO’S and DON’TS:

 The time spent increasing your knowledge will pay dividends later:
At the end of the day, it is your money and you owe it to yourself to know where
and
why it is being invested. Use resource available today, take a couse, read books,
browse
the internet club, read newspapers and company Annual General Meetings.
 Almost the first & last rule( DIVERSIFY):
Make sure your investments are diversified. This means including in your portfolio
different assets classes such as property, shares and fixed interest, different
industries( to shield against economic impact on one category) and different
countries ( to take into account global cycles, economic dynamics and different
exchange rates).
 Start conservatively:
If you are sure just starting out, build a firm base around Blue chip share and gain
experience form this. Investing in reputable managed funds is also as excellent way
to build a diversified portfolio without selecting specific securities.
74
APPENDIX (A)
INFOSYS BALANCE SHEET
Particulars Mar-09 Mar-08 Mar-07 Mar-06 Mar-05

SOURCES OF FUNDS :
Share Capital 286 286 286 138 135

Reserves &
Surplus 17523 13204 10876 6759 5107
Total
Shareholders
Funds 17809 13490 11162 6897 5242
Secured
Loans 0 0 0 0 0
Unsecured
Loans 0 0 0 0 0
Total Debt 0 0 0 0 0
Total
Liabilities 17809 13490 11162 6897 5242
APPLICATION OF FUNDS :
Gross Block 5986 4508 3889 2837 2183
Less: Accum.
Depreciation 2187 1837 1739 1275 1006
Net Block 3799 2671 2150 1562 1177
Capital Work
in Progress 615 1260 957 571 318
Investments 1005 964 839 876 1329

Current Assets, Loans & Advances :
Inventories 0 0 0 0 0
Sundry
Debtors 3390 3093 2292 1518 1253
Cash and
Bank Balance 9039 6429 5470 3279 1481
Loans and
Advances 3303 2804 1278 1308 1030
Total Current
Assets 15732 12326 9040 6105 3764
Current
Liabilities 1163 1095 881 642 461
Provisions 2179 2636 943 1575 885
Total Current
Liabilities 3342 3731 1824 2217 1346
75
Net Current
Assets 12390 8595 7216 3888 2418
Miscellaneous
Expenses not
w/o 0 0 0 0 0
Total Assets 17809 13490 11162 6897 5242

Contingent
Liabilities 2370 2661 1945 1434 1568
P&L A/C

Sales
Turnover 20264 15648 13149 9028 6860
Other Income 874 683 381 227 172
Stock
Adjustments 0 0 0 0 0
Total Income 21138 16331 13530 9255 7032
Raw Materials 0 0 0 0 0
Excise Duty 0 0 0 0 0
Power & Fuel
Cost 125 106 88 62 40
Other
Manufacturing
Expenses 1576.19 1295.37 1163.9 717.46 527
Employee
Cost 9944.48 7791 6293 4257 3177
Selling and
Administration
Expenses 1545.59 1363.09 1298.1 967.03 721.48
Miscellaneous
Expenses 511.74 111.54 65 105.51 68.52
Less:
Preoperative
Expenditure
Capitalised 0 0 0 0 0
76
Profit before
Interest,
Depreciation
& Tax 7435 5664 4622 3146 2498
Interest &
Financial
Charges 2 1 1 1 1
Profit before
Depreciation
& Tax 7433 5663 4621 3145 2497
Depreciation 694 546 469 409 268

Profit Before
Tax 6739 5117 4152 2736 2229
Tax 920 647 369 315 325
Profit After
Tax 5819 4470 3783 2421 1904
Adjustment
below Net
Profit -1 0 -1 0 -4.51
P & L Balance
brought
forward 6642 4844 2195 1428 70.51
Appropriations 2155 2672 1133 1654 542
P & L Bal.
carried down 10305 6642 4844 2195 1428
Equity
Dividend 1345 1902 653 1238 310
Preference
Dividend 0 0 0 0 0
Corporate
Dividend Tax 228 323 102 174 42
Equity
Dividend (%) 470 665 230 900 230
Earning Per
Share (Rs.) 97.74 72.5 64.35 81.41 68.96
Book Value 311.35 235.84 195.14 249.89 194.15
Extraordinary
Items 0.14 0.14 6.11 0 45
77
CASH FLOWS
Particulars Mar-09 Mar-08 Mar-07
Cash and
Cash
Equivalents
at Begining
of the year 7689 5610 3754
Net Cash
from
Operating
Activities 5225 3834 3263
Net Cash
Used In
Investing
Activities -195 -978 -1091
Net Cash
Used In
Financing
Activities -2430 -777 -316
Net Inc/
(Dec) In
Cash And
Cash 2600 2079 1856
Cash And
Cash
Equivalents
At End Of
The Year 10289 7689 5610
78
FINANCIALRATIOS
Particulars Mar-09 Mar-08 Mar-07 Mar-06

Debt-Equity
Ratio 0 0 0 0
Long Term
Debt-Equity
Ratio 0 0 0 0
Current Ratio 3.97 3.85 3.75 2.77
Fixed Assets 3.86 3.73 3.91 3.6

Inventory 0 0 0 0
Debtors 6.25 5.81 6.9 6.52
Interest
Cover Ratio 3370.5 5118 4153 2737
Operating
Profit
Margin(%) 36.69 36.2 35.15 34.85
Profit Before
Interest And
Tax
Margin(%) 33.27 32.71 31.58 30.32
PBDTM (%) 36.68 36.19 35.14 34.84
Cash Profit
Margin(%) 32.14 32.06 32.34 31.35
Adjusted Net
Profit
Margin(%) 28.72 28.57 28.77 26.82
Return On
Capital
Employed(%) 43.07 41.52 45.99 45.09
Return On
Net
Worth(%) 37.18 36.26 41.9 39.89
79
HCL TECH BALANCESHEET
Particulars Jun-09 Jun-08 Jun-07 Jun-06 Jun-05

SOURCES OF FUNDS :
Share Capital 134.05 133.27 132.74 64.69 63.84

Reserves &
Surplus 3354.19 3081.56 3292.28 2511.18 2796.14
Total
Shareholders
Funds 3488.24 3214.83 3425.02 2575.87 2859.98
Secured
Loans 123.81 25.24 40.77 13.17 96.42
Unsecured
Loans 389.92 0.09 0.12 0.21 0.27
Total Debt 513.73 25.33 40.89 13.38 96.69
Total
Liabilities 4001.97 3240.16 3465.91 2589.25 2956.67
Gross Block 1957.86 1599.61 1332.67 1014.08 632.06
Less: Accum.
Depreciation 1100.88 874.32 662.58 488.4 272.11
Net Block 856.98 725.29 670.09 525.68 359.95
Capital Work
in Progress 417.56 419.03 212.86 163.63 71.78
Investments 562.75 1797.34 1988.86 1907.76 2654.66

Inventories 87.01 0 0 0 0
Sundry
Debtors 1489.26 980.02 712.48 645.98 306.41
Cash and
Bank Balance 1365.83 686.88 380.94 106.22 84.53
80
Loans and
Advances 1817.97 893.6 934.44 462.38 217.42
Total Current
Assets 4760.07 2560.5 2027.86 1214.58 608.36
Current
Liabilities 2217.44 1828.85 1003.02 936.35 512.75
Provisions 377.95 433.15 430.74 286.05 225.33
Total Current
Liabilities 2595.39 2262 1433.76 1222.4 738.08
Net Current
Assets 2164.68 298.5 594.1 -7.82 -129.72
Miscellaneous
Expenses not
w/o 0 0 0 0 0
Total Assets 4001.97 3240.16 3465.91 2589.25 2956.67
Contingent
Liabilities
5860.16 198.27 232.52 226.86 508.08
P&L A/C
Particulars Jun-09 Jun-08 Jun-07 Jun-06 Jun-05

Sales
Turnover 4675.09 4615.39 3768.62 3032.92 1447.01
Other Income 265.81 170.4 439.42 83.34 83.02
Stock
Adjustments 87.01 0 0 0 0
Total Income 5027.91 4785.79 4208.04 3116.26 1530.03
Power & Fuel
Cost 100.28 83.49 63.43 52.78 22.11
Other
Manufacturing
Expenses 727.69 905.67 704.55 572.48 357.99
81
Employee
Cost 1919.84 1722.13 1446.36 1168.36 487.7
Selling and
Administration
Expenses 582.37 664.22 606.97 415.66 219.68
Miscellaneous
Expenses 226.05 298.09 17.86 101.61 30.46
Less:
Preoperative
Expenditure
Profit before
Interest,
Depreciation
& Tax 1471.68 1112.19 1368.87 805.37 412.09
Interest &
Financial
Charges 28.09 19.07 12.97 12.74 5.62
Profit before
Depreciation
& Tax 1443.59 1093.12 1355.9 792.63 406.47
Depreciation 251.89 217.87 178.21 138.8 67.56

Profit Before
Tax 1191.7 875.25 1177.69 653.83 338.91
Tax 194.39 94.6 75.87 15.45 9.64
Profit After
Tax 997.31 780.65 1101.82 638.38 329.27
Adjustment
below Net
Profit 0 0 0 363.64 -0.67
P & L Balance
brought
forward 1572.73 1570.44 1185.99 836.2 1109.78
Appropriations 649.07 778.36 717.37 652.23 602.18
P & L Bal.
carried down 1920.97 1572.73 1570.44 1185.99 836.2
Equity
Dividend 469.61 598.58 525.59 516.1 501.16
Preference
Dividend 0 0 0 0 0
Corporate
Dividend Tax 79.73 101.72 81.6 72.29 68.09
Equity
Dividend (%) 350 450 400 800 800
82
Earning Per
Share (Rs.) 13.69 10.19 15.37 17.5 8.18
Book Value 52.04 48.22 51.6 79.64 89.6
Extraordinary
Items 88.38 92.72 72.96 75.11 19.84
CASH FLOWS
Particulars Jun-09 Jun-08 Jun-07
Cash and
Cash
Equivalents
at Begining
of the year 686.88 380.94 106.22
Net Cash
from
Operating
Activities 587.94 1056.84 997.75
Net Cash
Used In
Investing
Activities 306.83 -148.64 -341.46
Net Cash
Used In
Financing
Activities -215.82 -602.26 -381.57
Net Inc/
(Dec) In
Cash And
Cash 678.95 305.94 274.72
Cash And
Cash
Equivalents
At End Of
The Year 1365.83 686.88 380.94
83
FINANCIAL RATIOS
Particulars Jun-09 Jun-08 Jun-07 Jun-06

Debt-Equity
Ratio 0.08 0.01 0.01 0.02
Long Term
Debt-Equity
Ratio 0.08 0.01 0.01 0.02
Current Ratio 1.51 1.24 1.22 0.93
Fixed Assets 2.63 3.15 3.21 3.68

Inventory 107.46 0 0 0
Debtors 3.79 5.45 5.55 6.37
Interest
Cover Ratio 43.42 46.9 91.8 46.33
Operating
Profit
Margin(%) 31.48 24.1 36.32 24.04
Profit Before
Interest And
Tax
Margin(%) 26.09 19.38 31.59 19.46
PBDTM (%) 30.88 23.68 35.98 23.62
Cash Profit
Margin(%) 26.72 21.63 33.97 23.15
Adjusted Net
Profit
Margin(%) 21.33 16.91 29.24 18.57
Return On
Capital
Employed(%) 33.69 26.67 39.33 21.28
Return On
Net
Worth(%) 29.76 23.51 36.72 20.72
84
WIPRO BALANCE SHEET

SOURCES OF FUNDS :
Share Capital 293 346.3 291.8 285.15 140.71

Reserves &
Surplus 12221.9 11264.4 9028.6 6135.3 4751.73
Total
Shareholders
Funds 12514.9 11610.7 9320.4 6420.45 4892.44
Secured
Loans 0 4 23.2 45.06 21.59
Unsecured
Loans 5013.9 3818.4 214.8 5.1 40.5
Total Debt 5013.9 3822.4 238 50.16 62.09
Total
Liabilities 17528.8 15433.1 9558.4 6470.61 4954.53
Gross Block 3179.6 2282.2 1645.9 2364.52 1763.49
Less: Accum.
Depreciation 0 0 0 1246.27 855.53
Net Block 3179.6 2282.2 1645.9 1118.25 907.96
Capital Work
in Progress 1311.8 1335 989.5 612.36 250.24
Investments 6884.5 4500.1 4348.7 3459.2 2859.51

Inventories 459.7 448.1 240.4 148.65 127.37
Sundry
Debtors 4299.2 3646.6 2543.9 1968.07 1386.64
Cash and
Bank Balance 4409.2 3732.1 1849.2 823 536.9
Loans and
Advances 4407.9 4231.3 1773.2 1136.96 595.49
Total Current
Assets 13576 12058.1 6406.7 4076.68 2646.4
Current
Liabilities 5716.4 3361.6 3067.2 559.81 491.67
Provisions 1706.7 1380.7 765.2 2236.07 1217.91
85
Total Current
Liabilities 7423.1 4742.3 3832.4 2795.88 1709.58
Net Current
Assets 6152.9 7315.8 2574.3 1280.8 936.82
Miscellaneous
Expenses not
w/o 0 0 0 0 0
Total Assets 17528.8 15433.1 9558.4 6470.61 4954.53

Contingent
Liabilities 1146.8 408.4 595.5 631.88 788.59
P&L A/C

Sales
Turnover 21612.8 17658.1 13758.5 10264.09 7276.18
Other Income 414.4 421.5 288.7 152.41 93.53
Stock
Adjustments -13.9 27.2 80 24.21 9.29
Total Income 22013.3 18106.8 14127.2 10440.71 7379
Raw Materials 3362.8 2979.5 1969 1350.69 1119.85

Excise Duty 105.5 165.5 74.6 36.97 43.02
Power & Fuel
Cost 0 135.2 98.1 86.46 46.63
Other
Manufacturing
Expenses 260.6 1584.3 1132 847.16 479.26
Employee
Cost 9242.2 7409.1 5768.1 4271.52 3011.16
Selling and
Administration
Expenses 561.1 1369.1 1253.7 997.23 601.24
Miscellaneous
Expenses 4202.7 421.5 288.5 215.61 130.12
Less:
Preoperative
Expenditure
86
Profit before
Interest,
Depreciation
& Tax 4278.4 4042.6 3543.2 2635.07 1947.72
Interest &
Financial
Charges 196.8 116.8 7.2 3.13 5.57
Profit before
Depreciation
& Tax 4081.6 3925.8 3536 2631.94 1942.15
Depreciation 533.7 456.1 359.8 292.26 185.97

Profit Before
Tax 3547.9 3469.7 3176.2 2339.68 1756.18
Tax 574.1 406.4 334.1 319.2 261.36
Profit After
Tax 2973.8 3063.3 2842.1 2020.48 1494.82
Adjustment
below Net
Profit 0 0 0 0 0
P & L Balance
brought
forward 0 0 0 0 0
Appropriations 2973.8 3063.3 2842.1 2020.48 1494.82
P & L Bal.
carried down 0 0 0 0 0
Equity
Dividend 586 876.5 873.7 712.88 351.79
Preference
Dividend 0 0 0 0 0
Corporate
Dividend Tax 99.6 148.9 126.8 99.98 49.34
Equity
Dividend (%) 200 300 300 250 250
Earning Per
Share (Rs.) 19.62 19.94 18.61 13.47 20.55
Book Value 85.42 79.05 63.86 45.03 69.54
Extraordinary
Items 0 68.43 59.22 21.66 12.27
CASH FLOWS
87
Cash and
Cash
Equivalents
at Begining
of the year 3732.1 1849.2 823
Net Cash
from
Operating
Activities 4344.5 715.9 2669.6
Net Cash
Used In
Investing
Activities -3596.7 -1123.9 -1881.9
Net Cash
Used In
Financing
Activities -70.7 2290.9 238.5
Net Inc/
(Dec) In
Cash And
Cash 677.1 1882.9 1026.2
Cash And
Cash
Equivalents
At End Of
The Year 4409.2 3732.1 1849.2
FINANCIAL RATIOS
88
Debt-Equity
Ratio 0.37 0.19 0.02 0.01
Long Term
Debt-Equity
Ratio 0.37 0.19 0.02 0
Current Ratio 2.11 2.15 1.57 1.46
Fixed Assets 7.91 8.99 6.86 4.97

Inventory 47.62 51.29 70.73 74.37
Debtors 5.44 5.7 6.1 6.12
Interest
Cover Ratio 19.03 30.71 442.14 748.5
Operating
Profit
Margin(%) 19.8 22.89 25.75 25.67
Profit Before
Interest And
Tax
Margin(%) 17.33 20.31 23.14 22.83
PBDTM (%) 18.89 22.23 25.7 25.64
Cash Profit
Margin(%) 16.23 19.93 23.27 22.53
Adjusted Net
Profit
Margin(%) 13.76 17.35 20.66 19.68
Return On
Capital
Employed(%) 22.72 28.7 39.72 41.01
Return On
Net
Worth(%)
24.71 29.35 36.11 35.72
CMC BALANCE SHEET
89
SOURCES OF FUNDS :
Share Capital 15.15 15.15 15.15 15.15 15.15

Reserves &
Surplus 367.36 288.38 217.08 195.57 160.4
Total
Shareholders
Funds 382.51 303.53 232.23 210.72 175.55
Secured
Loans 0 0 17.76 52.07 16.72
Unsecured
Loans 34.5 28.93 0 15 65
Total Debt 34.5 28.93 17.76 67.07 81.72
Total
Liabilities 417.01 332.46 249.99 277.79 257.27
Gross Block 159.82 145.04 129.85 129.27 124.66
Less: Accum.
Depreciation 77.76 76.56 75.01 74.82 69.66
Net Block 82.06 68.48 54.84 54.45 55
Capital Work
in Progress 14.87 16.27 28.22 2.08 2.04
Investments 128.06 103.81 8.18 8.18 8.18

Inventories 15.38 19.88 23.07 52.36 32
Sundry
Debtors 227.25 223.53 241.66 233.02 248.39
Cash and
Bank Balance 34.02 23.42 36.08 26.5 13.12
Loans and
Advances 223.46 217.48 333.36 313.16 234.18
Total Current
Assets 500.11 484.31 634.17 625.04 527.69
Current
Liabilities 246.72 278.98 301.55 280.66 217.3
Provisions 61.37 61.43 173.87 131.3 118.34
Total Current
Liabilities 308.09 340.41 475.42 411.96 335.64
Net Current
Assets 192.02 143.9 158.75 213.08 192.05
90
Miscellaneous
Expenses not
w/o 0 0 0 0 0
Total Assets 417.01 332.46 249.99 277.79 257.27

Contingent
Liabilities 110.35 68.04 82.01 182.61 190.45
P&L A/C

Sales
Turnover 820.45 977.19 988.91 828.79 775.67
Other Income 19.94 12.58 5.89 29.36 7.66
Stock
Total Income 840.39 989.77 994.8 858.15 783.33
Raw Materials 222.89 376.6 395.89 365.94 366.41

Power & Fuel
Cost 8.94 7.99 7.23 6.03 5.17
Other
Manufacturing
Expenses 177.03 219.49 219.92 190.57 151.37
Employee
Cost 211.6 192.35 174.42 158.81 141.76
Selling and
Administration
Expenses 58.45 49.53 57.11 46.31 40.71
Miscellaneous
Expenses 22.51 17.79 43.15 17.13 31.24
Less:
Preoperative
Expenditure
Profit before
Interest,
Depreciation
& Tax 138.97 126.02 97.08 73.36 46.67
91
Interest &
Financial
Charges 2.01 1.04 3.96 4.15 4.56
Profit before
Depreciation
& Tax 136.96 124.98 93.12 69.21 42.11
Depreciation 9.29 7.87 8.24 9.1 9.16

Profit Before
Tax 127.67 117.11 84.88 60.11 32.95
Tax 22.1 28.89 20.78 16 9.89
Profit After
Tax 105.57 88.22 64.1 44.11 23.06
Adjustment
below Net
Profit 0 0 -7.86 0 0
P & L Balance
brought
forward 270.53 210.62 174.97 143.91 130.93
Appropriations 37.15 28.31 20.59 13.05 10.08
P & L Bal.
carried down 338.95 270.53 210.62 174.97 143.91
Equity
Dividend 22.73 16.66 12.12 7.58 6.82
Preference
Dividend 0 0 0 0 0
Corporate
Dividend Tax 3.86 2.83 2.06 1.06 0.96
Equity
Dividend (%) 150 110 80 50 45
Earning Per
Share (Rs.) 67.14 56.36 40.95 28.42 14.59
Book Value 252.48 200.35 153.29 139.09 115.87
Extraordinary
Items 0.14 0 -0.33 18.74 0.78
92
CASH FLOWS
Cash and
Cash
Equivalents
at Begining
of the year 119.05 36.08 26.38
Net Cash
from
Operating
Activities 66.38 90.88 147.19
Net Cash
Used In
Investing
Activities -16.92 -4.55 -75.69
Net Cash
Used In
Financing
Activities -14.61 -3.36 -61.94
Net Inc/
(Dec) In
Cash And
Cash 34.85 82.97 9.56
Cash And
Cash
Equivalents
At End Of
The Year 153.9 119.05 35.94
FINANCIALRATIOS
93
Debt-Equity
Ratio 0.09 0.09 0.19 0.39
Long Term
Debt-Equity
Ratio 0.09 0.08 0.12 0.1
Current Ratio 1.52 1.37 1.37 1.35
Fixed Assets 5.38 7.11 7.63 6.53

Inventory 46.54 45.5 26.22 19.65
Debtors 3.64 4.2 4.17 3.44
Interest
Cover Ratio 64.52 113.61 22.43 9.56
Operating
Profit
Margin(%) 16.94 12.9 9.82 5.89
Profit Before
Interest And
Tax
Margin(%) 15.81 12.09 8.98 4.79
PBDTM (%) 16.69 12.79 9.42 5.39
Cash Profit
Margin(%) 14 9.83 7.32 4.16
Adjusted Net
Profit
Margin(%) 12.87 9.03 6.48 3.06
Return On
Capital
Employed(%) 34.61 40.57 33.67 14.84
Return On
Net
Worth(%) 30.78 32.93 28.94 13.14
I-FLEX BALANCE SHEET
94
SOURCES OF FUNDS :
Share Capital 41.88 41.87 41.64 38.14 37.44

Reserves &
Surplus 3467.54 2770.78 2356.84 1324.59 1087.75
Total
Shareholders
Funds 3509.42 2812.65 2398.48 1362.73 1125.19
Secured
Loans 0 0 0 0 0
Unsecured
Loans 0 0 0 0 0
Total Debt 0 0 0 0 0
Total
Liabilities 3509.42 2812.65 2398.48 1362.73 1125.19
Gross Block 500.78 403.02 323.28 281.88 212.78
Less: Accum.
Depreciation 264.17 222.61 173.95 118.49 80.63
Net Block 236.61 180.41 149.33 163.39 132.15
Capital Work
in Progress 101.33 131.02 127.06 58.14 8.56
Investments 720.14 723.41 609.22 41.35 42.54

Inventories 0 0 0 0 0
Sundry
Debtors 1171.04 903.31 1041.94 742.86 620.08
Cash and
Bank Balance 1084.23 640.09 500.75 557.99 539.39
Loans and
Advances 904.1 706.85 598.55 289.55 184.41
Total Current
Assets 3159.37 2250.25 2141.24 1590.4 1343.88
Current
Liabilities 642.14 426.95 593.04 433.65 355.85
Provisions 65.89 45.49 35.33 56.9 46.09
Total Current
Liabilities 708.03 472.44 628.37 490.55 401.94
Net Current
Assets 2451.34 1777.81 1512.87 1099.85 941.94
95
Miscellaneous
Expenses not
w/o 0 0 0 0 0
Total Assets 3509.42 2812.65 2398.48 1362.73 1125.19

Contingent
Liabilities 28.56 0.81 3.94 6.3 0
P&L A/C

Sales
Turnover 2212.62 1792.97 1552.34 1153.82 902.86
Other Income 168.31 48.65 37.08 32.59 29.07
Stock
Total Income 2380.93 1841.62 1589.42 1186.41 931.93
Power & Fuel
Cost 21.4 18.81 12.73 10.07 6.35
Other
Manufacturing
Expenses 123.67 121.94 99.66 71.59 54.7
Employee
Cost 1057.25 882.27 715.99 513.82 394.2
Selling and
Administration
Expenses 292.94 274.04 278.55 225.65 167.56
Miscellaneous
Expenses 110.53 52.72 44.91 40.95 35.42
Less:
Preoperative
Expenditure
Profit before
Interest,
Depreciation
& Tax 775.14 491.84 437.58 324.33 273.7
Interest &
Financial
Charges 0 0 0 0 0
96
Profit before
Depreciation
& Tax 775.14 491.84 437.58 324.33 273.7
Depreciation 42.84 60.31 56.54 38.78 26.59

Profit Before
Tax 732.3 431.53 381.04 285.55 247.11
Tax 36.59 20.66 26.37 44.75 49.47
Profit After
Tax 695.71 410.87 354.67 240.8 197.64
Adjustment
below Net
Profit 0 0 -0.01 0 0
P & L Balance
brought
forward 811.83 400.96 46.42 49.25 44.3
Appropriations 0 0 0.12 243.63 192.69
P & L Bal.
carried down 1507.54 811.83 400.96 46.42 49.25
Equity
Dividend 0 0 0.12 38.26 37.44
Preference
Dividend 0 0 0 0 0
Corporate
Dividend Tax 0 0 0 5.37 5.25
Equity
Dividend (%) 0 0 0 100 100
Earning Per
Share (Rs.) 83.06 49.06 42.59 30.86 25.69
Book Value 418.98 335.88 283.18 178.65 150.27
Extraordinary
Items -46.91 -10.45 -0.42 -0.38 1.66
97
CASH FLOWS
Cash and
Cash
Equivalents
at Begining
of the year 96.75 118.11 79.57
Net Cash
from
Operating
Activities 441.58 395.15 80.99
Net Cash
Used In
Investing
Activities -382.47 -418.63 -674.32
Net Cash
Used In
Financing
Activities -0.14 2.12 631.67
Net Inc/
(Dec) In
Cash And
Cash 58.97 -21.36 38.34
Cash And
Cash
Equivalents
At End Of
The Year 155.72 96.75 117.91
98
FINANCIAL RATIOS

Debt-Equity
Ratio 0 0 0 0
Long Term
Debt-Equity
Ratio 0 0 0 0
Current Ratio 4.58 3.99 3.34 3.29
Fixed Assets 4.9 4.94 5.13 4.67

Inventory 0 0 0 0
Debtors 2.13 1.84 1.74 1.69
Interest
Cover Ratio 0 0 0 0
Operating
Profit
Margin(%) 35.03 27.43 28.19 28.11
Profit Before
Interest And
Tax
Margin(%) 33.1 24.07 24.55 24.75
PBDTM (%) 35.03 27.43 28.19 28.11
Cash Profit
Margin(%) 33.38 26.28 26.49 24.23
Adjusted Net
Profit
Margin(%) 31.44 22.92 22.85 20.87
Return On
Capital
Employed(%) 23.17 16.56 20.26 22.95
Return On
Net
Worth(%) 22.01 15.77 18.86 19.36
99
FINDINGS,
SUGGESTIONS
AND
CONCLUSION
100
FINDINGS:
1. With the reference to the Portfolio investments, the efficient portfolio is a well
diversified investment.
2. INFOSYS & HCL having a risk is 48.09 and the return is 7.246.
3. INFOSYS & WIPRO having a risk is 53.43 and the return is 9.72.
4. INFOSYS & CMC having a risk is 34.13 and the return is 5.98.
5. INFOSYS & I-FLEX having a risk are 35.09 and the return is -0.14.
6. HCLTECH & WIPRO having a risk is 245.53 and the return is 50.9.
7. HCLTECH & CMC having a risk is 260.91 and the return is 50.66.
8. HCLTECH & I-FLEX having a risk is 276.16 and the return is 57.14.
9. WIPRO & CMC having a risk is 257.52 and the return is 51.04.
10. WIPRO & I-FLEX having a risk is 441.36 and the return is 10.92.
11. CMC & I-FLEX having a risk is 283.27 and the return is 58.89.
101
\
SUGGESTIONS:
1. Indian regulatory system and role of SEBI should be increased for

securing interest of investors and other plays.
2. Government should implement various measures to improve financial system.
3. When different assets are added to the Portfolio, the total risk tends to decrease.
4. Investor decision is solely depends on the expected return & variance of return only.
5. ISE should expand the investor market, broker’s network, for long benefit.
6. For given level of risk investor prefers higher return to lower return. Likewise for a
given level of return investor prefers lower risk than higher risk.
7. In constructing Portfolio less correlated sectors selection will reduce the risk i.e., less
correlation between two companies will reduce risk.
8. For better results minimum risk portfolio weights should be implemented.
CONCLUSION:
From above study we can conclude the following things.
In the above calculations, the two portfolio’s INFOSYS & CMC contains LOW
RISK (34.13) HIGH RETURN (5.98).
For any investment the factors to be consider are return in investment and risk
associated that investment diversified in the investment in to different assets can
reduced the risk by following Modern Portfolio Theorem Risk can be reduced for a
required return.
102
BIBLOGRAPHY
103
BIBLOGRAPHY:
1. SECURITY ANALYSIS AND PORTFOLIO MANAGEMENT

- Donald. E. Fisher, Ronald. J. Jordan
2. INVESTMENTS
- William. F. Sharpe, Gordon, J. Alexander and Jeffery, V.
Baily.
3. PORTFOLIO MANAGEMENT
- Strong R.A.
WEB REFFERENCES
http;//www.nseindia.com
http;//www.bseindia.com
http;//www.economictimes.com
http;//www.answers.com
http;//www.investsmartindia.com
104

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A PROJECT REPORT ON

CALIBER SECURITIES PRIVATE LIMITED,

AFFILIATED TO OSMANIA UNIVERSITY

MOTHER THERESA P.G. COLLEGE

I would like to express my sincere gratitude to my project guide

ABSTRACT OF THE PROJECT

COMPANY PROFILE 16-26

PORTFOLIO BUILDING 27-35

• RISK AND EXPECTED RETURNS

PORTFOLIO ANALYSIS 36-41

EVOLUTION OF PORTFOLIO 42-46

• NEED FOR EVOLUTION

ANALYSIS, INTERPRETATION 47-84

FINDINGS, SUGGESTIONS AND CONCLUSION 85-88

Investment may be defined as an activity that commits funds in

• Return-the potential return possible from an asset.

Investors tend to look at these three characteristics while deciding on their

There are a large number of investment avenues for savers in India.

STRUCTURE OF PORTFOLIO MANAGEMENT:

1. DISCRETIONARY PORTFOLIO MANAGEMENT SERVICE(DPMS):

2. NON-DISCRETIONARY PORTFOLIO MANGEMENT SERVICE (NDPMS):

The manager functions as a counselor, but the investor are free to

IMPORTANCE OF PORTFOLIO MANAGEMENT:

• Emergence of institutional investing on behalf of individuals. A number of

• Greater use of computers for processing mass of data.

• Professionalization of the field and increasing use of analytical methods (e.g.,

• Larger direct and indirect costs of errors or shortfalls in meeting portfolio

STEPS IN PORTFOLIO MANAGEMENT:

• Specification and qualification of investor objectives, constraints, and preferences

• Determination and qualification of capital market expectations for the economy,

• Allocation of assets and determination of appropriate portfolio strategies for each

• Performance measurement and evaluation to ensure attainment of investor

• Monitoring portfolio factors and responding to changes in investor objectives,

• Rebalancing the portfolio when necessary by repeating the asset allocation,

• In portfolio management emphasis is put on identifying the collective importance

• Competition for abnormal returns is extensive, so one has to be careful in

PORTFOLIO MANAGER means any person who pursuant to a contract or

DISCRETIONARY PORTFOLIO MANAGER means a portfolio manager who

QUALITIES OF PORTFOLIO MANAGER:

1. SOUND GENERAL KNOWLEDGE: Portfolio management is an exciting and

Caliber securities (pvt) ltd. was incorporated during 1999

registration number INB061161031. Subsequently caliber securities

(pvt) ltd has also acquired the membership of Interconnected Stock

Exchange of India ltd on September 21st, 2007 with registration number

Caliber Securities (Pvt) Ltd is a registered sub-broker

is doing broking business besides conducting training programmes for

clientele number is 600 and average daily turnover is Rs.1 crore.

The company is having a wholly owned subsidiary under

authorized capital of 27 lakhs.

 To remunerate any person or company for services rendered or to be rendered in

 To create, execute, grant or issue any mortgages, debentures, debenture stock or

 To promote and aid in promoting constitutes, firm, organize companies, syndicates

 To contribute subject to the provision of low to the funds of any association or to

 To contribute to charitable and other funds whether directly or indirectly, relating to

 To grant pensions or guarantees to any employee or to his window or children and

 To purchase or take on lease or in exchange, hire or otherwise acquire any movable

 To sell or sub-let any concession or license obtained or contracts entered in to and

 To improve, manage, cultivate, develop, exchange let in lease, mortgage, sell,

 To insure all or any of the properties or assets or obligations of the company of

 To get the company registered or organized in any foreign country.

 To do all or any of the above things as principals, agents, contractors, trustees or

7. To carry on the business of developing of software on internet for various applications

Caliber Securities (Pvt) Ltd is promoted by Mr. M. Rama