cccccc

c
EXECUTIVE SUMMARY
The project titled ³ Comparative Analysis of Sectoral Mutual Funds´ being carried out at
Way2Wealth STOCK BROKING LTD. Today an investor is interested in tracking the value of his
investments, whether he invests directly in the market or indirectly through Mutual Funds.

Way2Wealth is one of India¶s µPremier Investments Consultancy Firms¶, known for

making investing simpler, more understandable and profitable for the investors. It offers a wide
range of products & services viz: Equity, Derivatives, Currency Futures, Commodities Trading,
IPO's, Insurance (Life/Non-Life), Mutual Funds, Portfolio Management Services & Depository
Services all under one roof, for the convenience and benefit of their customers . Way2Wealth is not
a manufacturer and hence does not have any products of its own. However, it brings a whole
range of investment options in the primary and secondary markets, essentially Mutual Funds, Life
Insurance, Debt and Trading of Equity & Derivati ve on NSE. It provides trading, investment and
advisory products and services to its customers.

This project has been carried out with an objective of analysing the performance of Sect
oral Mutual Fund. For the project top five sectors ranked by ?
  
 has been selected.
Banking, IT, pharma, FMCG and power sectors are considered for the study. In each sector two
schemes and their five year returns based on the net asset value is collected through
mutualfundsnav.india.co.in

The tools used for the study are beta, R-Square, standard deviation, alpha, Sharpe
ratio, Treynor ratio and rank correlation. By using these tools analysis and interpretation has been
made on the mutual funds schemes of the considered five sectors.

The five sectors have given good returns from last five years except last year. Reliance
Diversified Power fund has been found has the best option by considering both risk and returns of
the fund and even the BSE Power index has performed well than other sector index in the market.

All the four sectors except power sector has beta value more than 1indicating risk is above
average and the power sector has beta value less than 1 indicating risk is below average.

Power sector has given good average returns in last five years against sen sex and even its
respective sector index as benchmark. There is positive correlation between the average returns
and the total risk of banking sector funds.

c cc
c c
c
cc
 cccccc
c

CHAPTER - 1
INDUSTRY PROFILE

The financial service industry includes a wide range of companies and institutions involved with
money, including businesses providing money management, lending, investing, and insuring and
securities issuance and trading services. The following institutions are a part of the financial
industry:

½ Banks
½ Credit card issuers
½ Insurance companies
½ Investment bankers
½ Securities traders
½ Securities exchanges
½ Financial planners

Financial Service Industry: History

The term "financial services" became more prevalent in the United States partly as a result
of the Gramm-Leach-Bliley Act of the late 1990s, which enabled different types of companies
operating in the U.S. financial services industry at that time to merge. Companies usually have two
distinct approaches to this new type of business. One approach would be a bank which simply
buys an insurance company or an investment bank, keeps the original brands of the acquired firm,
and adds the acquisition to its holding company simply to diversify its earnings. Outside the U.S.
(e.g., in Japan), non-financial services companies are permitted within the holding company. In this
scenario, each company still looks independent, and has its own customers, etc. In the other style,

c cc
c c
c
cc
 cccccc
c
a bank would simply create its own brokerage division or insurance division and attempt to sell
those products to its own existing customers, with incentives for combining all things with one
company.

The major events that have shaped the modern finance industry are:

½ The Great Depression (1929): The Great Depression originated in the US with the Wall Street
crash in October 1929. The effects of the depression spread across the world, especially in the
heavy industries. Capital requirements regulation, financial industr y oversights and the
insurance of deposit accounts sprang out of this tumultuous period.
½ Black Monday (1987): On October 19, the stock markets across the world witnessed a huge
crash. This was the largest one day decline in the stock market history. The crash started in
Hong Kong, spreading to Europe and the US. Analysts blamed computer trading systems for
magnifying the losses.
½ Asian Financial Crisis (1990s): The Asian Financial Crisis was triggered by the collapse of Thai
baht as the government of Thailand decided to float the national currency. The nation had a
huge foreign debt at that point, driving it to the verge of bankruptcy. The crisis rippled across the
whole of Southeast Asia and has led to many emerging market countries to reduce debts and
build up foreign currency reserves.
½ Stock Market Downturn (2002): Stock exchanges around the world witnessed a significant
decline in March 2002. It was attributed to the bursting of the µDot -com Bubble¶, which saw major
Internet companies going bankrupt.
½ Sub-prime Crisis (2007): Credit markets faced major crunch due to large scale default on loans.
It led to the Financial Crisis of 2008 ± 2009 and resulted in the bankruptcy, fire -sale acquisition
and government bailouts of finance industry giants such as Le hman Brothers, Bear Stearns,
AIG, Fannie Mae, Freddie Mac, Merrill Lynch, Wachovia, Northern Rock, Lloyds TSB, HBOS,
RBS and the entire banking system of Iceland. The world economy can expect reduced growth
rates and tighter regulations as a result of this crisis.

Banking services:

Primary functions

½ Accepting deposits from the public

½ Lending or investing the deposits.

Foreign exchange services:

c cc
c c
c
cc
 cccccc
c
Foreign exchange services are provided by many banks around the world. Foreign exchange
services include:

½ Currency exchange ± where clients can purchase and sell foreign currency bank notes.
½ Wire transfer ± where clients can send funds to international banks abroad
½ Foreign currency ± banking transactions are done in foreign currency.

Investment services:

Asset management ± the term usually given to describe companies which run collective
investment funds.

Hedge fund management ± hedge funds often employ the services of ³prime brokerage´ divisions
at major investment banks to execute their trades.

Custody services - the safe-keeping and processing of the world's securities trades and servicing
the associated portfolios.

Other financial services :

½ Insurance
½ Advisory services
½ Venture capital
½ Private equity

CHAPTER ± 2
COMPANY PROFILE
Way2Wealth today has established itself as one of India¶s µPremier Investments Consultancy
Firms¶, known for making investing simpler, more understandable and profitable for the investors. It
offers a wide range of products & services viz: Equity, Derivatives, Curre ncy Futures, Commodities
Trading, IPO's, Insurance (Life/Non-Life), Mutual Funds, Portfolio Management Services &
Depository Services all under one roof, for the convenience and benefit of their customers. It
services its customer relationships through a team of over 1000 wealth managers spread across
100 easily accessible 'Investment Outlets' in almost all major towns and cities in India.

History of the company:

Way2Wealth legacy dates back to Sivan Securities, 1984 a premier financial intermediary
and incubator for IT start ±up firms, spun off its securities broking and investment banking arm as
µWay2Wealth¶ in 2000 and its venture capital division came to be known as µGlobal Technology
Ventures(GTV)¶.

c cc
c c
c
cc
 cccccc
c

Sivan Securities

Venture Funding Investment

Consultancy

Global Technology Ventures WAY2WEALTH

It was started off as an investment Banker and Stockbroker named as SIVAN SECURITIES,
excelled in the sector to be strong brand preferred by inve stors, primarily in South India. Its
research division, which started since inception proved to be the backbone of the company,
propelling it to new heights of success.

Sivan securities was one among the India¶s top 10 fund mobilisers in 1995 in the Primar y Market.
The mobilization was to the tune of nearly 20 crores. In 1995 we realized the potential for funding
technology companies and forayed into Venture Capital Funding. Hence in 2000 Sivan was hived
off into two Divisions- Way2Wealth and Global Technol ogy Venture.

Sivan securities started in 1984, has a long and illustrious track record of being amongst the
premier financial intermediaries in the country as well as being an incubator for IT start -up firms. It
has funded companies such as Kshema Technolo gies, Mind Tree etc. The venture capital division
came to be known as Global technology ventures and the financial intermediary division was spun
off as Way2Wealth in the year 2000.

Over the years, Sivan has developed a strong reputation for navigating its investors through all the
ups and downs in the market. Way2wealth has inherited these same values in addition to a base
of 75,000 individual customers, over 300 corporate/institutional clients and a very credible
management team, who have well over 100 ma n years of experience amongst themselves.

c cc
c c
c
cc
 cccccc
c
Management:
Mr. V.G. Siddhartha, its chairman is the visionary behind Way2Wealth. He has been involved in
the Indian Capital Markets since 1984. His business interests spreads across Coffee retailing,
Plantations, Real estate, Venture Capital and Financial Services. Some of his large in vestments
include: MindTree, Kshema Technologies, I -Vega Consulting, and Ittiam etc. Mr. V.G.
Siddhartha was awarded the µEntrepreneur of the yea r¶ ± 2003 by The Economic Times for
µcrafting a successful pan Indian brand for a commodity business and giving Indian consumers a
new lifestyle experience that is within reach of the common man.¶ He is now actively involved with
Way2Wealth and is committed in realizing its vision, making Way2Wealth 'set new standards in
the retail financial services in India'.

Key People:

Way2Wealth has a very credible management team, with well over 100 man-years of
experience amongst themselves. A strong leadership, respected within industry circles and
recognized among competitors as being formidable and strong, demonstrates hi gh quality and a
visionary management style.

Mr. M R Shashibhushan - Chief Executive Officer

Mr.Shashibhushan has over 18 years experience in Capital markets . In his last

assignment with IL&FS Invest smart Ltd . for over 9 years, he started as Head - Retail Business
(Karnataka Region) and subsequently moved to its Corporate Office in Mumbai to head their Retail
Equities Business, which included the Branch Network, Alternate Channels, Private Clients Group
and Investments Advisory.

Mr. Ketan Sheth - Director(Research)

He is on the Board of Way2Wealth Securities Private Limited . Having over 25 years of

experience in the Indian capital markets . A postgraduate and ICWA by qualification, he has
nearly 2 decades of experience in the Capital Markets.

Mr. Sunil Ramrakhiani - Chief Operating Officer

Sunil, aged 35, has over 11 years of professional experience across diversified
asset classes such as Commodities, Equity, FX markets and Treasury management. He is a BE
(Mechanical) and a management graduate fro m ICFAI Business School. He is one of the earliest
base metal and equity derivatives traders in the country.

Mr. Kishore Kumar, Head - Primary Markets Division & Online Trading

Kishore has over 20 years experience in the domestic capital markets . Prior to
joining Way2Wealth he was the proprietor of Swagath Securities ± a brokerage firm having a
significant share of HNI & IPO segment.

c cc
c c
c
c c
 cccccc
c
Parentage and group companies:

It is a part of the µCoffee Day Holdings¶ a billion $ group, more popularly known for creating
businesses such as µ Amalgamated Bean Coffee Trading Company Ltd ¶ and µ Café Coffee Day ¶

Global Technology Ventures (GTV) - A company that identifies invests and

mentors companies engaged in cutting edge technologies. GTV provides access to
capital and resources to companies with global market leadership potential.

Amalgamated Bean Coffee Trading Company Ltd. (ABCTCL) - India's largest

coffee conglomerate and green coffee exporter, ABCTCL is perhaps one of the two
fully integrated coffee companies of Asia, involved in all sectors of Coffee from
plantations to retailing to exports.

Café Coffee Day - India¶s largest retail chain of coffee cafes.

Tanglin Developers - The real estate company that develops world-class

infrastructure facilities for Technology enterprises, such as µGlobal Village¶ on the
outskirts of Bangalore, housing companies like EDS, Mindtree, and µTechBay¶ on
the oceanfront at Mangalore.

Vision:
³Setting new standards in the retail financial services in India.´

Mission:
³To be the pre ± eminent destination for personalized financial solutions helping individuals create
wealth.´

Philosophy:
It believes that, their knowledge combined with their investors trust and involvement will
lead to the growth of wealth and make it an exciting experience".

Top quality team:

The company have top calibre professionals from diverse fields and working experiences
spanning physical Markets, agricultural research, futures trading and commodities Exchanges both
in India as well as abroad. It provides fully integrated services in all major commodities, including
precious metals, base metals and agricultural products.

c cc
c c
c
c
c
 cccccc
c

The logo of Way2Wealth stands for,

½ Blue symbolizes Knowledge.

Knowledge is limitless, so is the sky and sea, both of which are blue in colour. Knowledge applied
leads to creation in wealth for the investors.

R Red symbolizes Trust.

Red is the colour of blood and the heart. Trust is a matter of the heart. Our knowledge bears fruit
only when the investor places his trust in us.

R Yellow symbolizes excitement and involvement of the investor.

The company strives to make investing an exciting and involving experience for our
investors.
R Green symbolizes Growth.

Growth in nature is visible in the form of plants and trees; all of which are green.

³Knowledge, Trust and Excitement should ultimately lead to grow th of the investors¶ wealth.´

Awards won by Way2Wealth are:

R Rated TXA2 by CRISIL.
R Pruchairman Award ± Outstanding sales

c cc
c c
c
cc
 cccccc
c
R HDFC AMC Recognition Award ± Outstanding mobilization.
R Templeton Certificate of Excellence ± Outstanding Performance.
R TATA MF Certificate of Appreciation ± Outstanding Mobilization.
R Birla Sun Life AMC Certificate of Excellence ± Outstanding Mobilization.

CHAPTER ± 3
PRODUCT AND SERVICE PROFILE
PRODUCTS OFFERED:
Way2Wealth is not a manufacturer and hence does not have any products of its own. However, it
brings a whole range of investment options in the primary and secondary markets, essentially
Mutual Funds, Life Insurance, Debt and Trading of Equity & Derivative on NSE.

c cc
c c
c
cc
 cccccc
c

1. Trading products:
Way2Wealth is a full services broking and advisory house combining the best of
tradition with technology offering traditional broker assisted trading to HNI¶s, Individuals and
Corporate along with Online Trading facility to the new generation self -directed customer.

It is a member with all major national exchanges in the country i.e. NSE, BSE, MCX as well as
NCDEX, in their respective segments, enabling it to offer trading in:

½ Equity.
½ Equity derivatives.
½ Commodity derivatives.
½ Currency derivatives.

At Way2Wealth trading goes one step beyond plain execution being backed by sound
research, specialized desks for Arbitrage and premium broking solutions for customer to choose
from. Trade execution is supported by in -house depository services to ensure smooth and speedy
settlement of post-trade activities.

2. Advisory products:
It has significant experience of advising investors through various market cycles. Its team
comprises of high quality professionals with experiences spanning assignments in Asset
Management companies, private banking and distributors.
Its wealth managers are trained to offer Financial Planning and end -to-end personalized
investment management services for Wealth Generation, Retirement Planning and Capital Build -
up at different stages of life .

3. Investment products:
It has relationships with all major AMCs in the country and leveraging on its network of
wealth managers, and channel partners, distribution of Mutual Funds and Insurance is a key
strength of Way2Wealth.

c cc
c c
c
c c
 cccccc
c
a) Mutual funds:

Advising retail individuals, HNIs and Corporate Treasuries, it offers a choice of mutual funds
spanning all investment objectives and asset classes and has a systematic 4-step advisory
process comprising Background Profiling, Risk Profiling, Model Portfolio Creation, Review &
Rebalancing.
It has a dedicated team of research analysts specializing in mutual funds. Its research
output includes daily performance reports, weekly and monthly updates, special focus articles
as well as quarterly portfolio updates.

b) Corporate Advisory :
c cWay2Wealth today services over 200 SMEs and Corporate for their Treasury
Management, Hedging Programs, ESOP structuring and employee tax planning. c
c) Insurance:
cIt offers both Life and General Insurance products making the company a one -stop shop
when it comes to Insurance and risk management solutions. Way2Wealth services clients
from a variety of backgrounds including retail investors, HNIs and corporate though a
systematic approach adopted by its 300+ well qualified relationship managers specially
trained in insurance advisory.
d) Portfolio management :
c Its Portfolio Management Services is an exclusive offering from Way2Wealth that
specializes in providing risk managed investment solutions to discerning High Networth
Individuals, Non Resident Indians (NRIs), Overseas Corporate Bodies (OCBs) and
Corporate.
Its Discretionary Portfolio Management Service gives investors the benefit of unbiased
investment advice designed to achieve their financial objectives. In addition to managing
client portfolios, it undertakes all operational activities such as custody, accounting and
reporting making it completely hassle free for the customer. c

Specific services offered by the Company:

1. 
 c?



W2W advises Institutional and Wholesale investors for their investments in various asset
classes to help manage their Treasuries and optimize the portfolio yields. A structured
methodology is employed for assessment, portfolio modelling, performance measurement
and periodic review.

2. 

c
c



cc




W2W has a specialized team, with vast experience in domestic and global markets,
advising corporate and SMEs in their hedging programs. It helps cli ents to roll out their
hedging policies, define optimum hedge scenarios with due scenario analysis and risk
controls.
3. c
cc
 

c cc
c c
c
cc
 cccccc
c

ESOP planning, structuring and plan execution are important tasks for corporate planning to
issue ESOPs to its employees. It extends comprehensive assistance in the entire process.
Further, it also assists corporate employees in sourcing ESOP loans through its tie -ups.

4. c

cc

c
c
c



An employee welfare initiative by corporate, the company assists this initiative by rolling out
temporary kiosks at work sites during the tax filing season. Corporate employees get spot
advice and assistance in filing and submission of their Income Tax Re turns through qualified
chartered accounts.

SERVICES AT W2W

Custodial Segment:

Since its commencement in 1984, W2W has been providing Custodial Services of international
standards to Domestic Mutual Funds, Financial Institutions and Foreign Institutional Investors.

With almost 70% of the Institutional business in its fold, W2W has evolved over the times to meet
the changing requirements of dynamic markets and demanding clients .

Depository participants:

Its Depository Participant services address its individual investment needs. With a parentage of
leading financial institutions and insurance majors and a proven track record in the Custodian
business, it has reiterated its past success by establishing the mselves as the first ever and largest
Depository Participant in India. From a tentative foray in 1998 into the individual investor arena to
servicing around seven lakh accounts, it has endeavored to constantly add and innovate to make
business a pleasure for its customers.

Over 100 of its networked branches ensure they are available where we look out for them.
Across the country, fourteen Depository Participant Machines (DPMs) connected to NSDL and
seven connected to CDSL ensure fast and direct processing o f instructions.

Its customer-centric account schemes have been designed keeping in mind the investment
psyche of its clients. Their DP account with them takes care of their depository needs like
dematerialization, rematerialization and pledging of shares. Matching of its clients scanned
signature on every debit instruction with a digitally scanned original in their system makes all the

c cc
c c
c
cc
 cccccc
c
clients trading transactions absolutely secure. Proactive backup of its client¶s instructions prior to
execution in the Depository makes it oblivious to system crashes.

At W2W, they place a very high premium on client reporting. Periodic statements sent to the
client keep them informed of their account status. Dedicated Customer Care lines manned by
trained staff answers their queries on de-mat / trades / holdings. The latest in client response at
W2W is Interactive Voice Response (IVR) system for round the clock information on their account.
Registration on its website, W2W Interactive, enables us to check our account -related information,
stock market reports and statistics, corporate benefits declared by companies, real -time quotes of
scrip¶s on BSE and NSE and so much more online.

„
c

 c

W2W long-standing association with Clearing Members has enabled it to develop services based
on an understanding of their working and their requirement for timely and accurate information.
They accept deposits of base capital and additional base capital requirements stipulated by NSE
for clearing members trading on its capital marke t segment. It currently offers Depository services
to more than 680 clearing members of various exchanges connected with NSDL and CDSL. Its
Customer Care lines answer all the DP queries while the Interactive Voice Response (IVR) system
gives information on client¶s account and other valuable data like CC calendar details, tariff, ISIN
information, etc. via telephone, fax and e -mail.

c


c

W2W is a Custodian/Professional Clearing Member of derivative segment at the Bombay Stock

Exchange and at the Futures & Options Segment of the NSEIL respectively. It has developed in -
house Back Office systems and procedures to cater to the needs of various entities in the
segment. A dedicated team of professionals handle derivative operations and assist its clients.

W2W performs the following functions as a professional clearing member:

Clearing - Computing obligations of all TM¶s i.e. determining positions to settle.

Settlement - Performing actual settlement.

Collateral Management - Collection of collateral (cash/cash equivalents and securities), valuation

on a regular basis and setting up exposure limits for TMs and Institutional clients.

Risk Management - Setting position limits based on upfront deposits/margins for each TM and
monitoring positions on a continuous basis.

c cc
c c
c
cc
 cccccc
c
CHAPTER ± 4
Mc KINSEY 7-S MODEL
The 7-S model is better known as Mc Kinsey 7-S. This is because the two persons who
developed this model, Tom Peters and Robert Waterman, have been consultants at Mc Kinsey &
Co, at that time. They published their 7 -S model in their article ³Structure Is Not Organisation´
(1980) and in their books, ³The Art of Japanese Management´ (1981) and ³In Search of
Excellence´ (1982).

The model starts on the premise that an organization is not just structure, but consists of
seven elements.


 


c c


   





 
  

c
c
 
  

 
The Mc Kinsey 7-S model is a widely discussed framework for viewing the inter-relationship of
strategy formulation and implementation.

½ It helps to focus manager¶s attention on the importance of linking the chosen strategy to a
variety of activities that can affect the implementation of that strategy.
½ Originally developed as a way of thinking more broadly about the problem of organizing
effectively, the 7-S framework provides a tool for judging the ³do ability´ of strategies.

According to one of its developers, Robert H. Waterman Jr, the framework suggests that it is not
enough to think about strategy implementation as a matter only of strategy and structure, as has
been the traditional view.

c cc
c c
c
cc
 cccccc
c
The conventional wisdom used to be that if you first get right, the right organization follows.
And when most people in western cult ures think about organization, they think structure. We find in
practice, however, that these notions are too limiting.

To think comprehensively about a new strategy and the problem with carrying in out, a manager
must think of his company as a unique culture and must think about the ability of the company to
get anything really fundamental (i.e., not tactical) accomplished as a matter of moving the whole
culture.

Structure:
The organizational structure is designed to support business goals, and is flexible
while at the same time ensuring effective control and supervision and consistency in standards
across the business groups. The organizational structure is divided into 7 principal groups as ±
Trades department, marketing department, and account op ening department, demat department,
finance department, automation department and customer relationship department.

ORGANISATION STRUCTURE:

CHAIRMAN

M
c

CEO

COO
SOUTH HEAD
NATIONAL HEAD

 cc
M  c
 c

STATE HEAD

REGIONAL MANAGER

BRANCH MANAGER

c cc
c c
c
cc
 cccccc
c


c




 



c



 

   


  

The i i

i ll t iti ill t t E ti tt i ill

i l t i li t. ti i f l i it t
i t t ti l li t l t i t I t t ll
l ti i . E ti l ti i i t i i l.
A t. t S. i t i i l l l
t ilit i ilit . At t i l l it i t l t f i li t .
A i t Vi P i tt E ti Vi P i ti t i i l l l ill
ll t l f ti l i i i i i .

£
c

G
G lt i  ti  f Si  S iti, it  l 

 fl it
f
 i
t  it t  f iii l,   t  ititti .

It  i t  l t  f        j t   iti i t

 t
. It    it li   t   t  l   iti  f it ff i
. All
G
G lt tlt  t  il
i l l  ti ,   it t l   t i  t
t t  f 
it i  t   f  fi   f t.

pepartments:

a) ?t l 
) I 
) E it
 li
f t il, I  P i t lit 
)  i ti  li
f t il, I  P i t lit 
e)   All  t     i
i

B  ffi t    i   ti  f ll t     , i il

fi li ti  f  t i l t  t ll t  tt.



c  c c

c  c
c c
c
 cccccc
c
Support functions; do play their role in helping achieve results, which is the pre -dominant goal of
every business, in a very congenial and systematic manner. These are:
- Marketing
- Finance
- Human Resources

Staff:
Efficient and sincere employees play an important role in the development of an
organization, and even the employees are also responsible for the failure of the organization.

Way2Wealth has a very credible management team, with well over 100 man-years of experience
amongst themselves. A strong leadership, respected within industry circles and recognized among
competitors as being formidable and strong, demonstrates high quality and a vis ionary
management style.

The company is currently a ³100 offices & 1,000 employees´ organization. Its team, is from varied
and diverse professional, educational, or demographic backgrounds, continuously strives and
contributes to its customer needs and Company¶s growth.

Human Resources Team :

Operates from its head office in Bangalore and involved with activities like, Recruitment,
Induction, Training and Development, Compensation and Benefits, Employee relations, etc.
Administration too comes as an activity under the team. There are respective regional HR teams
operating in all regions as a one -point contact for any HR issues in the region.

Research Desk:

Is a dedicated team of people operating from Mumbai and aimed at providing content,
helping individuals making investment decisions.

Finance:

Team is another critical department centralized at Bangalore controlling finance, handling

payroll calculation and crediting salaries, maintaining complete books of accounts and internal
auditing.

Marketing:

c cc
c c
c
c
c
 cccccc
c
Team centralized at Bangalore, conceptualizes various activities towards increasing our
visibility through Communications, advertising, promotions, public relations and other events. They
co-ordinate press releases, publications, etc.

Information Technology:

This support service in the company ensures that systems and software application in the
organization are well maintained. The ensure networking and VSAT connectivity between
Way2Wealth and the National Stock Exchange through a stock trading application functions well. c

Research Cell:

Its research cell takes a special mention. As seen earlier they work towards providing information
so as to help customers take good investment decision. They help in publishing contents on the
Way2Wealth website, the publication release by the company called Wealth Compass and
Wealth Creators.

Recruitment process:

The recruitment takes place through two ways, one is through campus recruitment and the other is
through the interviews by call or walk in. There is a lot of scope for those individuals who are ready
to think out of the box, have a passion for meeting people and developing long -term relationships.
Such individuals will feel contented, as they will make a big difference.

Skills:
Way2Wealth puts a lot of effort to ensure the skill of employees. Even the executives
are also in need to have strong verbal communication and writing skills and especially the
brokerage service skills, as in most of times they need to communicate effectively. And various
skill development program or training as of NCFM training, AMFI training and even from IRDA are
provided to its employees.

Systems:
The clearing systems are the formal process and procedures used to manage the
organization, including the management control system , performance management measurement
and reward systems, planning, budgeting, resource allocation systems.

The system within the organization can range from management intuition to
structured computer system to complex expert system and artificial intelli gence. And the
automation department deals with the following as:

c cc
c c
c
cc
 cccccc
c
½ W2W has Browser¶ based trading system, ideal for beginners and investors.
½ It has got W2W Direct, which is a convenient ready to use online trading system , it
integrates your banking, trading and demat accounts, enabling you to trade in shares
without going through the hassles of tracking the settlement cycle, writing cheques,
transferring your shares, following up for pay -outs etc.
½ µApplication¶ based trading terminal, ideal for the active traders. W2W Pro is a desktop
software trading terminal, providing speed, additional analytical features and priority
access to relationship managers making it ideal for the active traders.
½ And even offers an its customers an integrated market watch for BSE Cash, NSE Cash &
NSE Derivatives, giving you the ease and benefit of tracking and trading in various
categories on a single screen.

Style:
Style refers to the employees shared and common way of thinking and let the
individuals pursue creative and innovative approaches to their work. It consists of two components.

½ Organization culture.
½ Management style.

In Way2Wealth the organization culture is based on some dominant values and beliefs, and
norms. It encourages the individuals to do their work in creative and innovative approaches and
even with freeness and in comfort. It has a participative style of involving the employees in
decision making activities of the firm.

And Way2wealth has got a visionary management style is in stead of compelling it

creates way to encourage and it is the basic responsibility of managers and to bring out the talents
and to motivate to stay in organization.

Strategy:

The liberalization and rapid growth of the Indian economy has provided firms wi th
the significant opportunities to provide superior financial products and services to the clients and
clearing members.

It plans to be the pre -eminent destination for personalized financial solutions helping individuals
create wealth".

Shared Values:

c cc
c c
c
cc
 cccccc
c
Way2Wealth has some dominant values and beliefs, and norms. It encourages the individuals to
do their work in creative and innovative approaches and even with freeness and in comfort.

It gives importance to both its customers and employees to fulfil its mi ssion statement.

SWOT ANALYSIS:

Strengths:

M The company has got rich heritage - the kind of business they have done, brand created
over several years of trust and experience built over 20 years of being in the Industry.

M Proven track record of the management- the top brass has seen through and managed
several market cycles, proved their stability to the organization and has been successful in
expanding the organization.

M From a mere Broking house to a fully fledged Investment Consultancy and is on i ts way to
be an Investment Advisory .

M An infrastructure being one of its kinds in the sector.

M A dedicated research team, which has been the backbone of stability for its business.

M A highly qualified, young charged up team bubbling with ideas and energy to b urn up. The
average age in the company is about 29.

c cc
c c
c
c c
 cccccc
c
M A working environment, which is very transparent, congenial, and co -operative, which
encourages knowledge up gradation through periodic training programs.

Weakness:

M Use of telephonic and mail service for the promotion of their financial services. As most of
their customers will be corporate people and business ones they will be busy to attend the
phone calls or to check through mail.
M The lack of availability of all financial and advisory services at all branches of the company.
M The noon availability of opening demat and trading account at any branch during the
working hours.c

Opportunities:

M Way2Wealth has an exciting opportunity to find new segments of market for its offerings.
M After experiencing the recession people are again interested in financial services and it
has got an opportunity to attract and retain them by its good service.
M Opportunity to enter interest rate derivatives.

Threats:

M The regulations passed by SEBI as of minimum commission charges and no front

load.
M Regulations from government and through SEBI.
M Increasing financial service providers and their competition.

CHAPTER ± 5

c cc
c c
c
cc
 cccccc
c
GENERAL INTRODUCTION
Introduction:
The project is to know about the growth and performance of mutual fund s with special
reference to Way2Wealth, Stock Broking Company. And this part deals with comparative analysis
of Sectoral Mutual Funds.

Statement of the Problem:

The study is to analyze the performance of sectoral mutual funds. The sector analysis
serves to provide an investor with an idea of how well a group of companies are expected to
perform as a whole. Investors are interested in identifying the promising sectors for their
investment as sectoral mutual funds are performing well in this turbulent peri od.

Objectives of the Study:

w To know the growth of mutual funds in India.

w To analyze the risks and returns involved in different sectoral mutual funds.

w To evaluate the relationship between systematic risk and returns of sectoral mutual funds.

w To evaluate the relationship between total risk and returns of sectoral mutual funds.

w To compare the risks and returns of selected sectors.

w To identify the sector suitable for investment during this turbulent times.

Scope of the study:

w The study is to make comparative analysis of risks and returns associated with each sector.

w The study covers 5 sectors of mutual funds. And from each sector 2 mutual funds schemes
are considered.

w Open ended equity mutual funds are considered for the study.

w The study covers the period of past 5 years from April 1, 2004 to March 31, 2009.

METHODOLOGY:

c cc
c c
c
cc
 cccccc
c
  jt i ,  ll ti
ti    l ti
t  t  f   f
t l f . S t t   f i
t l t l f    

÷

 


   lt f t t
.

S 
 t i i  f t t
 it¶ t
  t     t

At  l i i  llt t 
 ÷

 



 


Tools sed or anal sis:

M Bt

M St   i ti 

M Al

M   

M S  ti

M 
 ti

M   l ti 

 t    lt f t t
:

imitation:

c c c

c
c
c cc
 cccccc
c
w The study considers only open- ended equity mutual funds.

w Only five sectors are considered for the evaluation.

w The study is limited to the extent of finding risks and returns of sectoral mutual funds.

w It is concluded based on past 5 year data.

w The performance of sectors is evaluated using few measures.

ccc

CHAPTER ± 6
THEORITICAL BACKGROUND
MUTUAL FUNDS:

?
[

A mutual fund is trust that pools the savings of a number of savings of a number of
investors who share a common financial goal. The money thus collected is then invested in capital
market instruments such as shares, debentures and other securities.
Mutual fund is defined by securities an d exchange board of India (mutual funds) regulations,
1003 as ³a fund established in the form of a trust by a sponsor, to raise monies by the trustees
through the sale of units to the public, under one or more schemes, for investing in securities in
accordance with these regulations.´
MUTUAL FUND PRODUCTS

Mutual fund product includes mainly corporate,

M Securities, viz., Equity shares and Debentures,
M Government sponsored loan bonds for carrying out specific infrastructural and other
projects.
M Other approved securities such as money market instruments like Treasury Bills,
Commercial Papers etc«
Each mutual fund will design its own marketing plan for its products. However elements of
marketing are helpful in developing a good marketing plan. The products cited above are sold
to the investors with different schemes.
3 Closed ± end mutual funds.
3 Open ± end mutual funds.

c cc
c c
c
cc
 cccccc
c
3 Large cap funds.
3 Mid cap funds.
3 Equity mutual funds.
3 Balanced fund.
3 Growth funds.
3 No load mutual funds.
3 Exchange traded funds.
3 Value funds.
3 Money market mutual funds.
3 International mutual funds.
3 Regional mutual fund.
3 Sector mutual funds.
3 Index funds.
3 Fund of funds.

1. Closed- end mutual funds :

A closed end mutual fund has a set number of shares issued to the public through an
initial public offering. These funds have a stipulated maturity period generally ranging from 3 to 15
years.The fund is open for subscription only during a specified period . Investors can invest in the
scheme at the time of the initial public issue and thereafter they can buy or sell the units of the
scheme on the stock exchanges where they are listed.
2. Open- end funds:
An open end mutual fund is a fund that does not have a set number of shares. It continues
to sell shares to investors and will buy back shares when investors wish to sell units are bought
and sold at their current asset value.
Open end funds keep some portion of their assets in short term and money market se curities to
provide available funds for redemptions. A large portion of most mutual funds is invested in highly

c cc
c c
c
cc
 cccccc
c
liquid securities, which enables the fund to raise money by selling securities at prices very close to
those used for valuations.
3. Large cap funds:
Large cap funds are those mutual funds, which seek capital appreciation by investing
primarily in stocks of large blue chip companies with above -average prospects for earning growth.
Different mutual funds have different criteria for classifying c ompanies as large cap.
Generally, companies with a market capitalization in excess of Rs.1000 crore are known large cap
companies.

4. Mid cap funds:

Mid cap funds are those mutual funds, which invest in small/medium sized companies. As
there is no standard definition classifying companies as small or medium, each mutual fund has its
own classification for small and medium sized companies. Generally companies with a market
capitalization of up to Rs. 500 crore are classified as small. Those companies that have a market
capitalization between Rs. 500 crore and Rs.1000 crore are classified as medium sized.
5. Equity mutual funds :
Equity mutual funds are also known as stock mutual funds. It invests pooled amounts of
money in the stocks of public companies. St ocks represent part ownership, or equity, in
companies, and the aim of stock ownership is to see the value of the companies increase over
time. Stocks are often categorized by their market capitalization and can be classified in to 3 basic
sizes as small medium and large.
6. Balanced fund :
Balanced fund is also known as hybrid fund. It is a type of mutual fund that buys
combination of common stock, preferred stock, bonds and short term bonds, to provide both
income and capital appreciation while avoiding e xcessive risk.
7. Growth funds:
Growth funds are those mutual funds that aim to achieve capital appreciation by investing in
growth stocks. They focus on those companies, which are experiencing significant earnings or
revenue growth, rather than companies that pay out dividends. Growth funds look for the fastest
growing companies in the market.

8. No load mutual funds :

c cc
c c
c
c c
 cccccc
c
Mutual funds can be classified in to two types - load mutual funds and no load mutual funds.
Load mutual funds are those funds that charge commission at the time of purchase or redemption.
They can be further classified in to,
(a) Front end load funds. (b) Back end load funds.
Front end load funds charge commission at the time of purchase and back end load funds at the
time of redemption
9. Exchange traded funds :
Exchange traded funds represent a basket of securities that are traded in an exchange. An
ETF will invest in either all of the securities or a representative sample of the securities included in
the index. The investment objective o f an ETF is to achieve the same return as a particular market
index.
10. Value funds:
Value funds are those mutual funds that tend to focus on safety rather that growth, and
often choose investments providing dividends as well as capital appreciation.

11. Money market mutual funds :

A money market mutual fund is a mutual fund that invests solely in money market
instruments. Money market instruments are forms of debt that mature in less than one year and
are very liquid. Treasury bills make up the bulk of money market instruments. Securities in the
money market are relatively risk free.

12. International mutual funds :

International mutual funds are those mutual funds that invest in non -domestic securities
markets throughout the world. Investing in international markets provides greater portfolio
diversification and let you capitalize on some of the world¶s best opportun ities. If investments are
chosen carefully, international mutual fund may be profitable when some markets are rising and
others are declining.
13. Regional mutual fund:
Regional mutual fund is a mutual fund that confines itself to investments in securitie s from a
specified geographical area, usually, the fund¶s local region. A regional mutual fund generally looks
to own a diversified portfolio of companies specified geographical area.
14. Sector mutual funds :
Sector mutual funds that restrict their investments to a particular segment or sector of the
economy. These funds concentrate on one industry such as infrastructure, health care, utilities,

c cc
c c
c
c
c
 cccccc
c
pharmaceuticals etc. the idea is to allow investors to place bets on specific industries or sectors,
which have strong growth potential. These funds tend to be more potential. These funds volatile
than funds holding a diversified portfolio of securities in many industries. Such concentrated
portfolios can produce tremendous gains or losses, depending on whether the chosen sector is in
or out of favor.
15. Index funds:
An index fund is a type of mutual fund that builds its portfolio by buying stock in all the
companies of a particular index and thereby reproducing the performance of an entire section of
the market. The most popular index of stock index funds is the standard & Poor¶s 500. An S & P
stock index fund owns 500 stocks- all the companies that are included in the index.
16. Fund of funds:
A fund of fund is a type of mutual fund that invests in other mutual funds. Just as mutual
fund invests in a number of different securities, a fund of funds holds shares of many different
mutual funds.
FOF are designed to achieve greater diversification than traditional mutual funds. But on the
flipside, expense fees on fund of funds are typically higher than those on regular funds because
they include part of the expense fees charged by the underlying funds.
MUTUAL FUNDS INDUSTRY IN INDIA
History of the mutual funds:
The emergence of the concept of mutual funds dates back to the very emergence
commercial activity in this world. When Egyptians and Phoenicians started carrying the cargo on
sea, they were exposed to greater risk. There was no insurance concept at that time. In order to
minimize the risk of carrying the cargo during rough weather and to minimize pirates on sea, they
were selling their shares in vessels and caravans. But actual mutual fund was started by Foreign
and colonial government trust of London in 1868. This was followed by the promotion of number of
closed-end mutual funds in the USA. In 1930s, it spread to Europe, Far East and Latin American
countries. Both open-end and closed-end mutual funds were popular in these countries.
Mutual fund with respect to India:

The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at
the initiative of the government of India and Reserve Bank. The history of mutual funds in India can
be broadly divided into four distinct phases.

First Phase ± 1964-1987:

c cc
c c
c
cc
 cccccc
c
Unit Trust of India (UTI) was established on 1963 by an act of Parliament. It was set up by
the Reserve Bank of India and functioned under the regulatory and administrative control of the
Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial Development
Bank of India (IDBI) took over the regulatory and administrative control in place of RBI. The first
scheme launched by UTI was Unit scheme 1964. At the end of 1988 UTI had Rs. 6700 crores of
assets under management (AUM).
Second Phase ± 1987-1993 (Entry of public sector funds):

1987 marked the entry of non-UTI, public sector mutual funds set up by public sector banks
and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC),
SBI mutual fund was the first non-UTI mutual fund established in 1987 followed by Canbank
mutual fund (Dec. 87), Punjab national bank mutual fund (Aug. 89), LIC established its mutual fund
in June 1989 while GIC had set up its mutual funds in December 1990. At the end of 1993, the
mutual fund industry had assets under management of Rs. 47,004 crores.
Third phase ± 1993-2003 (Entry Of Private Sector Funds):

With the entry of private sector funds in 1993, a new era started in the Indian mutual fund
industry, giving the Indian in vestors a wider choice of fund families. Also 1993 was the year in
which the first mutual fund regulations came into being.
In 1995, the RBI permitted private sector institutions to set up money market mutual funds
(MMMFs). They can invest in treasury bills, call and notice money, commercial paper, commercial
bills accepted/co-accepted by banks, certificates or deposit and dated government securities
having unexpired maturity up to one year. The 1993 SEBI (mutual fund) regulations were
substituted by a more comprehensive and revised mutual fund regulations in 1996. The industry
now functions under the SEBI (mutual fund) regulation 1996.
As at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1,
21,805 crores. The unit trust of India with Rs. 44, 541 crores of assets under management was
way ahead of other mutual funds.

The diagram below shows the three segments and some players in each segment :

c cc
c c
c
cc
 cccccc
c
c

Fourth Phase ± February 2003:

In February 2003, following the repeal of the Unit Trust of India act 1963, UTI was
bifurcated into two separate entities. One is the specified undertaking of the Unit trust of India with
assets under management of Rs. 29, 835 crores as at the end of January 2003, representing
broadly, the assets of US 64 scheme, assured return and certain other schemes.
The second is the UTI mutual fund ltd., sponsored by SBI, PNB, BOB and LIC. It is
registered with the SEBI and functions under the mutual fund regulations. As at the end of
September, 2004, there were 29 funds, which manage assets of Rs. 1, 53, 108 crores under 421
schemes. On 31st march 2006, India¶s MF assets stood at Rs. 2, 31,862 crores.
Fifth Phase - 2004 Onwards
The industry has also witnessed several mergers and acquisitions recently, examples of
which are acquisition of schemes of Alliance Mutual Fund by Birla Sun Life, Sun F&C Mutual
Fund and PNB Mutual Fund by Principal Mutual Fund. Simultaneously, more intern ational
mutual fund players have entered India like Fidelity, Franklin Templeton Mutual Fund etc. There
were 29 funds as at the end of March 2006. This is a continuing phase of growth of the industry
through consolidation and entry of new international and private sector players.

c cc
c c
c
c c
 cccccc
c

GRAPH-1

Association of Mutual Funds in India (AMFI)

With the increase in Mutual Fund players in India, a need for Mutual Fund Association in
India was generated to function as a non -profit organization. Association of Mutual Funds in India
(AMFI) was incorporated on 22nd August, 1995.
AMFI is an apex body of all Asset Management Companies (AMC) which has been
registered with Securities Exchange Board of India (SEBI). Till date all the AMCs that have
launched mutual fund scheme s are its members. It functions under the supervision and Guidelines
of SEBI. Association of Mutual Funds in India has brought the Indian Mutual Fund Industry to a
professional and healthy market with ethical lines enhancing and maintaining standards. It f ollows
the principle of both protecting and promoting the interests of mutual funds as well as their unit
holders.
The objectives of Association of mutual funds in India:

The Association of Mutual Funds of India works with 30 registered AMCs of the country.

c cc
c c
c
cc
 cccccc
c
M This Mutual Fund Association of India maintains high professional and ethical standards in
all areas of operation of the industry.

M It also recommends and promotes the top class business practices and code of conduct.

M AMFI interacts with SEBI and works according to SEBIs guidelines in the Mutual Fund
industry.

M Represents to the Government of India, the Reserve Bank of India and other related bodies
on matters relating to the Mutual Fund Industry.

M It develops a team of well qualified and trained Agent distributors.

M It implements a programme of training and certification for all intermediaries and other
engaged in the mutual fund industry.

M AMFI undertakes all India awarenes s programmes for investors in order to promote proper
understanding of the concept and working of Mutual Funds.

At last but not the least Association of Mutual Fund of India also disseminate information on
Mutual Fund Industry and undertakes studies and re search either directly or in association with
other bodies.

The Sponsors of Association of Mutual Funds in India

Banks

M SBI Fund Management Ltd.

M BOB Asset Management Co. Ltd.
M Can bank Investment Management Services Ltd.
M UTI Asset Management Company Pvt. Ltd. Institutions
M GIC Asset Management Co. Ltd.
M Jeevan Bima Sahayog Asset Management Co. Ltd.

Private Sector

c cc
c c
c
cc
 cccccc
c
Indian:-

M Benchmark Asset Management Co. Pvt. Ltd.

M Cholamandalam Asset Management Co. Ltd.
M Credit Capital Asset Management Co. Ltd.
M Escorts Asset Management Ltd.
M JM Financial Mutual Fund
M Kotak Mahindra Asset Management Co. Ltd.
M Reliance Capital Asset Management Ltd.
M Sahara Asset Management Co. Pvt. Ltd
M Sundaram Asset Management Company Ltd.
M Tata Asset Management Private Ltd.

Predominantly India Joint Ventures: -

M Birla Sun Life Asset Management Co. Ltd.

M DSP Merrill Lynch Fund Managers Limited
M HDFC Asset Management Company Ltd.

Predominantly Foreign Joint Ventures: -

M ABN AMRO Asset Management (I) Ltd.

M Alliance Capital Asset Management (India) Pvt. Ltd.
M Deutsche Asset Management (India) Pvt. Ltd.
M Fidelity Fund Management Private Limited
M Franklin Templeton Asset Mgmt. (India) Pvt. Ltd.
M HSBC Asset Management (India) Private Ltd.
M ING Investment Management (India) Pvt. Ltd.
M Morgan Stanley Investment Management Pvt. Ltd.
M Principal Asset Management Co. Pvt. Ltd.
M Prudential ICICI Asset Management Co. Ltd.
M Standard Chartered Asset Mgmt Co. Pvt. Ltd.

c cc
c c
c
cc
 cccccc
c
Association of Mutual Funds in India Publications:

AMFI publishes mainly two types of bulletin. One is on the monthly basis and the other is
quarterly. These publications are of great support for the investors to get intimation of the
knowhow of their parked money.

SEBI Regulations on Mutual Funds:

c cc
c c
c
cc
 cccccc
c

BRIEF VIEW OF THE SELECTED SECTORS

SECTOR ANALYSIS:
A review and assessment of the current condition and future prospects of a given sector of
the economy.

Sector analysis serves to provide an investor with an idea of how well a given group of companies
are expected to perform as a whole. And sectors are as,

Î Banking - Health care

Î FMCG - Power
Î Infrastructure - Auto
Î Pharmacy - IT

The 5 sectors taken in the study are Banking, IT, Pharmacy, FMCG, Power

BANKING:

The banking industry in India has helped the economy to bounce back to a positive growth level.
According to the Reserve Bank of India (RBI), the banking sector in India is sound, adequately
capitalized and well-regulated. Indian financial and economic conditions a re much better than in
many other countries of the world. Credit, market and liquidity risk studies show that Indian banks
are generally resilient and have withstood the global downturn well.

According to RBI's 'Quarterly Statistics on Deposits and Credit of Scheduled Commercial Banks:
March 2009', nationalized banks, as a group, accounted for 49.5 per cent of the aggregate
deposits, while State Bank of India and its Associates accounted for 24.1 per cent. The shares of
other scheduled commercial banks, foreign banks and regional rural banks in aggregate deposits
were 18.2 per cent, 5.2 per cent and 3.0 per cent, respectively. Nationalized banks held the
highest share of 50.5 per cent in the total bank credit followed by State Bank of India and its
associates at 23.1 per cent and other scheduled commercial banks at 18.2 per cent. Foreign
banks and regional rural banks had slightly lower share in the total bank credit at 5.9 per cent and
2.3 per cent, respectively.

According to the RBI in March 2009, number of all Scheduled Commercial Banks (SCBs) was 171
of which, 86 were Regional Rural Banks and the number of Non -Scheduled Commercial Banks
including Local Area Banks stood at 5. Taking into account all banks in India, there are overall
56,640 branches or offices, 893,356 employees and 27,088 ATMs. Public sector banks made up a

c cc
c c
c
cc
 cccccc
c
large chunk of the infrastructure, with 87.7 per cent of all offices, 82 per cent of staff and 60.3 per
cent of all automated teller machines (ATMs).

Also, growth of aggregate deposits of all Scheduled Commercial Banks (SCBs) including Regional
Rural Banks (RRBs) up to March 27, 2009 stood at 19.8 per cent while overall nationalised banks
was at 24.7 per cent, foreign banks at 7.8 per cent and private sector banks about 8.0 per cent.

The country's largest bank ± the State Bank of India's (SBI) branch network, increased by 470 to
over 11,900 branches. Based on March-end 2009 figures, SBI's deposits increased by US$ 6
billion to US$ 152.32 billion and advances US$ 4.57 billion to US$ 120 bil lion.

INFORMATION TECHNOLOGY:

The Indian information technology industry has played a key role in putting India on the global
map. Thanks to the success of the IT industry, India is now a power to reckon with. According to
the National Association of Software and Service Companies (NASSCOM), the apex body for
software services in India, the revenue of the information technology sector has risen from 1.2 per
cent of the gross domestic product (GDP) in FY 1997 -98 to an estimated 5.8 per cent in FY 2008 -
09.

As per NASSCOM's latest findings:

½ Indian IT-BPO sector grew by 12 per cent in FY 2009 to reach US$ 71.7 billion in aggregate
revenue (including hardware). Of this, the software and services segment accounted for
US$ 59.6 billion.
½ IT-BPO exports (including hardware exports) grew by 16 per cent from US$ 40.9 billion in
FY 2007-08 to US$ 47.3 billion in FY 2008 -09.

India's IT growth in the world is primarily dominated by IT software and services such as Custom
Application Development and Maintenance (CADM), System Integration, IT Consulting, Application
Management, Infrastructure Management Services, Software testing, Service -oriented architecture
and Web services.

The government expects the exports turnover to touch US$ 80 billion b y 2011, growing at an
annual rate of 30 per cent per annum, from the earlier few million dollars worth exports in early
1990s.

The Indian information technology sector continues to be one of the sunshine sectors of the Indian
economy showing rapid growth and promise.

PHARMACY:

The Indian pharmaceutical industry is driving product development and breaking new grounds in
medicine research worldwide.

c cc
c c
c
c c
 cccccc
c
The Indian domestic pharmaceutical market was estimated to be US$ 10.76 billion in 2008 and is
expected to grow at a high compound annual growth rate (CAGR) of 9.9 per cent till 2010 and
thereafter at a CAGR of 9.5 per cent till 2015.

Currently, the Indian pharmaceutical industry is one of the world's largest and most developed,
ranking 4th in volume terms and 13th in value terms. The country accounted for 8 per cent of
global production and 2 per cent of world markets in pharmaceuticals in 2008.

The Indian pharmaceutical offshoring industry is slated to become a US$ 2.5 billion opportunity by
2012, thanks to lower R&D costs and a high-talent pool in India.

Exports

India exported drugs worth US$ 4.15 billion in 2007 -08. Between April to December 2008, India
exported pharmaceutical products worth US$ 3.77 billion.

A report by industry research firm, RNCOS forecasts that pharmaceutical exports will grow at a
CAGR of 18.5 per cent between 2007 -08 and 2011-12. This growth will be fuelled by multi -billion
dollar patent expirations and growth in the global generics market.

Growth

India's pharmaceuticals market is expected to grow by about 12-13 per cent in 2009, says a study
by consulting firm IMS.

The domestic Pharma retail market posted a healthy growth of 10 per cent in May over the
previous month. On a moving annual total basis (April 2008 to May 2009), the organised P harma
retail market grew by 10.4 per cent to US$ 7.40 billion, which was slightly higher than the previous
month's value of US$ 7.32 billion, according to consulting company, ORG -IMS.

FMCG:

c cc
c c
c
c
c
 cccccc
c

The Indian FMCG sector is the fourth largest sector in the economy with a total market size in
excess of US$ 13.1 billion. It has a strong MNC presence and is characterised by a well
established distribution network, intense competition between the organised and unorganized
segments and low operational cost. Availability of key raw materials, cheaper labour costs and
presence across the entire value chain gives India a competitive advantage.

The FMCG market is set to treble from US$ 11.6 billion in 2003 to US$ 33.4 billion in 2015.
Penetration level as well as per capita consumption in most product categories like jams,
toothpaste, skin care, hair wash etc in India is low indicating the untapped market potential.
Burgeoning Indian population, particularly the middle class and the rural segments, presents an
opportunity to makers of branded products to convert consumers to branded products.

Growth is also likely to come from consumer 'upgrading' in the matured product categories. With
200 million people expected to shift to processed and packaged food by 2010, India needs around
US$ 28 billion of investment in the food -processing industry.

Automatic investment approval (including foreign technology agreements within specified norms),
up to 100 per cent foreign equity or 100 per cent for NRI and Overseas Corporate Bodies (O CBs)
investment, is allowed for most of the food processing sector.

POWER:

The power sector has registered significant progress since the process of planned development of
the economy began in 1950. Hydro -power and coal based thermal power have been the main
sources of generating electricity. Nuclear power development is at slower pace, which was
introduced, in late sixties. The concept of operating power systems on a regional basis crossing
the political boundaries of states was introduced in the ear ly sixties. In spite of the overall
development that has taken place, the power supply industry has been under constant pressure to
bridge the gap between supply and demand.

Growth

Power development is the key to the economic development. The power Secto r has been
receiving adequate priority ever since the process of planned development began in 1950. The
Power Sector has been getting 18-20% of the total Public Sector outlay in initial plan periods.
Remarkable growth and progress have led to extensive use of electricity in all the sectors of
economy in the successive five years plans. Over the years (since 1950) the installed capacity of
Power Plants (Utilities) has increased to 89090 MW (31.3.98) from meagre 1713 MW in 1950,

c cc
c c
c
cc
 cccccc
c
registering a 52d fold increase in 48 years. Similarly, the electricity generation increased from
about 5.1 billion units to 420 Billion units ± 82 fold increase. The per capita consumption of
electricity in the country also increased from 15 kWh in 1950 to about 338 kWh in 1997 -98, which
is about 23 times. In the field of Rural Electrification and pump set energisation, country has made
a tremendous progress. About 85% of the villages have been electrified except far -flung areas in
North Eastern states, where it is difficult to extend the grid supply.

º

cc 

c


c  

The Working Group on Power, constituted by Planning Commission, in its report of December
1996 had formulated, a need based capacity addition programme of 57,735 MW for the Ninth Plan
which would by and large meet the power requirements projected in 15 th Electric Power Survey
Report. However, it was felt that this capacity addition of 57,735 MW is not feasible and a target for
capacity addition of 40245 MW was fixed for Ninth Five -year plan. The above target was finalised
after considering the status of Sanctioned/ongoing schemes, new projects in pipeline, likely
gestation period for completion of the projects and likely availability of funds.

OPERATIONAL DEFINITIONS OF THE CONCEPT

RISK:

The dictionary meaning of risk is the possibility of loss or injury. Any rational investor, before
investing his/her investible wealth in the security, analyzes the risk associated with a particular
security. The actual return he receives from a security may vary from his expected return and the
risk is expressed in term of variability of return. The down side of risk may be caused by several
factors, either common to all securities or specific to a particular security. Investor in general would
like to analyze the risk factors and a thorough knowledge of a risk helps him t o plan his portfolio in
such a manner so as to minimize risk associated with the investment.

Risk consists of two components:

The systematic risk.

The unsystematic risk.

Systematic Risk:

The systematic risk affects the entire market. The economic conditions, political situations
and the sociological changes affect the security market. These factors are beyond the control of
the corporate and the investor. The investor cannot avoid them. This is subdivided into:

1. Market Risk
2. Interest Rate Risk

c cc
c c
c
cc
 cccccc
c
3. Purchasing Power Risk.
Unsystematic Risk:

The unsystematic risk is unique and peculiar to a firm or an industry. Unsystematic Risk
stems from managerial inefficiency, technological ch ange in the production process, availability of
raw material, changes in the customer preference, and labour problems. The nature and
magnitude of the above -mentioned factors differ from industry to industry, and company to
company. They have to be analyzed separately for each industry and firm.

Broadly, unsystematic risk can be classified into:

1. Business Risk
2. Financial Risk
Risk Measurement:

Understanding the nature of risk is not adequate unless the investor or analyst is capable of
expressing it in some quantitative terms. Measurements cannot be assured of cent percent
accuracy because risk is caused by numerous factors such as social, political, economic and
managerial efficiency. The statistical tools used to quantify risk are:

I. Standard Deviation:
3 A measure of the dispersion of a set of data from its mean. The more spread apart the data
is, the higher the deviation.
3 In finance, standard deviation is applied to the annual rate of return of an investment to
measure the investment's volatility (risk).

A volatile stock would have a high standard deviation. In mutual funds, the standard deviation tells
us how much the return on the fund is deviating from the expected normal returns. Standard
deviation can also be calculated as the square root of the variance.

Beta:
Beta describes the relationship between the securities return and the index returns
M Beta = + 1.0
One percent change in market index returns causes exactly one percent change in the security
return. It indicates that the security moves in tandem with the market.

M Beta = + 0.5

c cc
c c
c
c c
 cccccc
c
One percent changes in the market index return causes 0.5 percent change in the security return.
The security is less volatile compared to the market.

M Beta = + 2.0
One percent change in the market index return causes 2 percent change in the security return.
The security return is more volatile. When there is a decline of 10% in the market return, the
security with beta of 2 would give a negative return of 20%. The security with more than 1 beta
value is considered to be risky.

M Negative Beta
Negative beta value indicates that the security return moves in the opposite direction to the market
return. A security with a negative beta of -1 would provide a return of 10%, if the market return
declines by 10% and vice-versa.

RATE OF RETURN:

The compounded annual return on a mutual fund scheme represents the return to investors from a
scheme since the date of issue. It is calculated on NAV basis or price basis. On NAV basis it
reflects the return generated by the fund ma nager on NAV. On price basis it reflects the return to
investors by way of market or repurchase price.

Net Asset Value (NAV):

The net asset value of the fund is the cumulative market value of the assets fund of its liabilities.
In other words, if the fund is dissolved or liquidated, by selling off all the assets in the fund, this is
the amount that the shareholders would collect ively own. This gives rise to the concept of net
asset value per unit, which is the value, represented by the ownership of one unit in the fund.

It is calculated simply by dividing the net asset value of the fund by the number of units. However,
most people refer loosely to the NAV per unit as NAV, ignoring the ³per unit´. We also abide by the
same convention.

Computation of Net Asset Value

The Net Asset Value (NAV) of the units will be determined as of every working day and for such
other days as may be required for the purpose of transaction of units.

c cc
c c
c
cc
 cccccc
c
The NAV shall be calculated in accordance with the following formula, or such other formula as
may be prescribed by SEBI from time to time.



      
 
      
     
  
    
!"  
 #
 $
±
 c
±  %
 

&

CORRELATION:

Correlation is the statistical tool with the help of which relationships between two or more than
two variables can be studied.

Rank correlation is a method of finding out covariability or lack of it between two variables.
Here in this project to fix quantitative measure of different sectors rank correlation is used. The
schemes within the sectors can be arranged in order thereby obtaining for each scheme a number
indicating its rank in the sector. The rank correlation is applied to a set of ordinal rank numbers
with 1 for the scheme ranked first in returns or risk.

CHAPTER ± 7
DATA ANALYSIS AND INTERPRETATION

c cc
c c
c
cc
 cccccc
c
The analysis and interpretation is done on the secondary data that is returns based on Net Asset
Value of the equity mutual fund schemes of the different mutual funds companies.

The project requires, calculating ratios and evaluating the past performance of mu tual funds
schemes. So the top performing sectoral mutual funds and schemes ranked by 
 


has been selected for the study.

Secondary data used for the study is the 5 years returns based on Net Asset value
which is collected through 
 

 
 c By using NAV returns the risk involved in
each scheme is found using various risk measures and the relation between the risk and return of
individual schemes is analyzed by using rank correlation.

Tools used for analysis:

M Beta

M Standard deviation

M Alpha

M R square

M Sharpe ratio

M Treynor ratio

M Rank Correlation

TOOLS AND TECHNIQUES USED FOR THE STUDY:

To analyse the data in the project various statistical tools are used. They are:

(1) BETA:

'()*  ( )$(*$
Ó 
+() ,  - ()$, 
Where,

 = Beta of the fund

N = Number of observations.

X = Yearly return of Index.

Y = Yearly return of the sector average.

c cc
c c
c
cc
 cccccc
c
(2) R2

'()* ( )$(*$
Ó 
.+() ,  -  ()$, / 0 .+ ( * ,  - ( *$, /
Where,

R2 - Co ± efficient of determination.

N = Number of observations.

X = Yearly return of Index.

Y = Yearly return of the sector average.

(3) STANDARD DEVIATION:

12
Ð
 45 - 67895$2
3

Where,

N = Number of observations.

Y = Yearly return of funds

(4) ALPHA:
ä   :;<=*$ - :;<=)$
Where,

X = Yearly return of Index.

Y = Yearly return of the sector average.

(5) SHARPE RATIO:

Ð  > - >? $Ð

Where,

Ri ± Return on fund

c cc
c c
c
cc
 cccccc
c
Rf ± Risk free rate of return.

S.D ± Standard deviation.

(6) TREYNOR RATIO:

Ð  > - >?$Ó
Where,

Ri ± Return on fund

Rf ± Risk free rate of return.

œ - @;A<.

(7) Rank Correlation:

C (
,
>  B-
'' , - B$
Where,

R ± Rank co-efficient of correlation

D ± Difference of ranks in two series.

N ± number of schemes.

Growth of mutual funds in India:

c cc
c c
c
cc
 cccccc
c
The mutual funds industry in India has come a long way since 1963, when the UTI was set up at
the initiative of the GOI and Reserve bank. The industry was opened up to public sector entities
such as government owned banks, Life Insurance companies and GIC between 1987 and 1993
and to private sector players in 1993. For ov er decade, with a view to broadening in the range of
investors participation, promoting equity culture and spreading the benefits of a deep and liquid
capital market, policy makers in India encouraged mutual fund companies a safe vehicle of
investment for retail or small investors.

Resource mobilization by Mutual Funds:

NET MOBILIZATION: Rs in Crores

SECTOR ^
 c ^  c ^  c ^  c ^  c
PRIVATE 7600 42977 79038 133304 -34018
PUBLIC -2677 6379 14947 20498 5721
TOTAL 4923 52780 93985 153802 -28297
SOURCE: RBI ANNUAL REPORT































M













Î





Î
 

Î


Î
 

Î
 

Î


Î




Î

GRAPH -

NET ASSETS: Rs in Crores

 „c ^
 c ^  c ^  c ^  c ^  c
PRIVATE 117487 181515 262079 415621 335527
PUBLIC 11374 20829 64213 89531 81772
TOTAL 128861 202344 326292 505152 417299
TABLE - SOURCE: RBI ANNUAL REPORT

c cc
c c
c
c c
 cccccc
c



























 




























Î
 

Î


Î
 

Î
 

Î


GRAPH -

2008- 09

During the first 8 months of 2008 -09 how ever with down trend in stock markets and in view of the tight
liquidity conditions precipitated a variety of reasons including advance tax outflows, suppliers credit
withdrawal party on account of freezing of external credit markets and drying up money market liquidity
mutual fund industry faced un precedent level of stress.

The decline in the net resource mobilization was especially pro nounced in the months of June, Sept, Oct
2008 and March 2009

Net assets managed by mutual fund also decline by 17.4% during 2008 -09 RB announced some quick
measures in Oct 2008 to make available liquidity support to m utual fund through banks. During Nov 2008 to
Feb 2009 net resource mobilization by mutual fund turns positive, this reversed with considerable outflows
during March 2009.

2007-08

Net resources mobilsed by mutual fund increased by 63.6% to Rs. 153802 crore during 2007 -08 net assets
managed by mutual funds also increased by 54.8% to Rs. 505152 crore during 2007 -08

Compared to previous year both net resources and net assets managed have increased. Net Mobilization
of funds under growth/ equity oriented schemes also have increased during the year .

2006-07

Net resources mobilised has increased by 78.1% to Rs.93985 crore during 2006 -07 net assets by 40.7 to
Rs. 326292 crore at the end of March.

2005-06

Increased sharply by higher inflows net asset by 55% during 2005 -06 as compared with 7.2% during 2004-
05. Net assets increased by 4.8% of GDP at the end of March 2005 to 6.6% of GDP at end of March 2006.

c cc
c c
c
c
c
 cccccc
c

BANKING SECTOR FUNDS SNAPSHOT:

Scheme Name 2009 2008 2007 2006 2005 AVG Category Structure
Reliance Banking Fund Open
-37.84 76.95 18.63 29.19 57.92 28.97 Equity
- Growth Ended
UTI Banking Sector Open
-45.81 66.49 31.46 25.2 19.2 19.3 Equity
Fund - Growth Ended
Average performance of
-45.56 79.17 23.76 27.59 57.92 28.57 -- --
similar category funds

BSE Bankex -52.23 61.14 39.44 36.53 32.97 -- -- --

TABLE - Source:

In banking sector Reliance banking fund and UTI banking fund has been considered for the study
and in these funds except in year 2009 in all other years¶ positive returns is seen.

IT SECTOR FUNDS SNAPSHOT:

TABLE - Source:

c cc
c c
c
cc
 cccccc
c Structur
Scheme Name 2009 2008 2007 2006 2004 AVG Category
e
Franklin Infotech Fund - Open
(50.34) (15.38) 42.17 43.75 30.23 10.08 Equity
Growth Ended
DSP BlackRock
Open
Technology.com Fund - (60.03) 58.02 46.62 54.2 26.99 25.16 Equity
Ended
Reg - Growth
Average performance of
(58.48) 11.19 46.29 50.32 23.43 -- --
similar category funds
26.48
BSE IT (50.81) (14.09) 40.87 42.75
-- -- --
-
In IT Sector Franklin IT fund and DSP Blackrock Tech fund has been selected for the study
Franklin shows negative returns in 2008 and 2009 and DSP Blackrock shows negative returns in
2009 compared to last five years.

PHARMA SECTOR FUNDS SNAPSHOT:

Scheme Name 2009 2008 2007 2006 2005 AVG Category Structure

Reliance Pharma Open

-34 49.8 16.73 29.4 15.48 Equity
Fund - Growth Ended

Franklin Pharma Open

-32.87 16.52 21.74 1.84 22.64 5.974 Equity
Fund - Growth Ended

Average
performance of
-32.87 16.52 21.74 1.84 22.64 5.974 -- --
similar category
funds

BSE-PHARMA -34.74 20.09 13.81 25.16 34.64 -- --

TABLE - Source:

In pharma sector Reliance Pharma fund and Franklin Pharma fund has been considered for the
study and in pharma sector it shows except the year 2009 all other four years show positive
returns.

FMCG SECTOR FUNDS SNAPSHOT

Categor
Scheme Name 2009 2008 2007 2006 2005 AVG Structure
y

ICICI FMCG fund -44.92 42.75 24.6 94.26 30.12 29.36 Equity Open Ended

Franklin FMCG
-26.7 23.05 16.1 65.95 13.32 18.34 Equity Open Ended
fund

c cc
c c
c
cc
 cccccc
c

Average
performance of
-35.24 32 17.39 71.72 22.69 21.71 -- --
similar category
funds

BSE-FMCG -14.33 19.94 17.4 55.57 -4.58 -- --

TABLE - Source:

In FMCG sector ICICI FMCG fund and Franklin FMCG fund has been selected for the study and
both the funds shows positive returns except the year 2009 compared to last five years.

POWER SECTOR FUNDS SNAPSHOT:

Scheme Name 2009 2008 2007 2006 2005 AVG Category Structure

Reliance Diversified Open

-50.39 124.4 58.78 81.37 53.55 Equity
Power Fund - Growth Ended

Sahara Power &

Open
Natural Resources -56.32 72.01 61.48 57 25.9 11.52 Equity
Ended
Fund - Growth

Average performance
of similar category -55.06 59.2 34.73 46.58 26.38 40.29 -- --
funds

BSE Power Index -49.32 62.01 51.58 47 22.9 -- -- --

TABLE - Source:

In power sector Reliance Diversified Power fund and Sahara Power and Natural resources fund
has been selected for the study and these two funds shows positive returns except in the year
2009

FUNDS RETURN:

FUNDS 2009 2008 2007 2006 2005

Reliance Banking fund -37.84 76.95 18.63 29.19 57.92
UTI Banking fund -45.81 66.49 31.46 25.2
Franklin IT fund -50.34 -15.78 42.17 43.75 30.23
DSPBR IT fund -60.03 58.02 46.62 54.2 26.99
Reliance Pharma fund -34 49.8 16.73 29.4
Franklin Pharma fund -32.87 16.52 21.74 1.84 22.64

c cc
c c
c
c c
 cccccc
c
ICICI FMCG fund -44.92 42.75 24.6 94.26 30.12
Franklin FMCG fund -26.7 23.05 16.1 65.95 13.32
Relince diversified Power fund -50.39 124.42 58.78 81.37
Sahara Power and natural gas -56.32 72.01 61.48 57 25.9
fund
TABLE -

The table includes the data of returns of funds of various sectors. From each sector two top
performing funds from past 5 years are considered. And their returns from past 5 years are
graphed below. By taking top performing funds of different sectors in on e graph and next to top
performing funds of sectors in the other.

GRAPH:



cc





cc



c c

  c
c


 



 

 


Î

c !c
c
Î

The graph shows the first top performing funds of various sectors.

GRAPH:

c cc
c c
c
cc
 cccccc
c



cc


 cc



c  c

Î


 



 

 



c

c
Î

Î
"c cc
#c!c
Î

The graph shows the second top performing funds of various sectors.

CATEGORY RETURNS:

SECTOR 2009 2008 2007 2006 2005

BANKING -45.56 79.17 23.76 27.59 57.92
IT -58.48 11.19 46.29 50.32 23.43
PHARMA -34.74 20.09 13.81 25.16 34.64
FMCG -35.24 32 17.39 71.72 22.69
POWER -55.06 59.2 34.73 46.58 26.38
TABLE -

The table shows the average returns in each different sector obtained in the last five years
from 2005 to 2009.

GRAPH:

c cc
c c
c
cc
 cccccc
c

CA G Y N

 
 
 
 






Î     
$
Î
Î


   t 
 t  i    t

 f i B i
, I , P  , ?

 P  f   t .

£SE SE TOR I pEX RETURNS:

SE TOR
£ NKEX Î. . . . .
£SE IT Î. Î
.
. 
. .

£SE P RM Î. .  .
.
.

£SE MCG Î
. .
.
. Î
.
£SE POWER Î
. .  .
 .
AB E
 t l   t B 
St  E 
 I t  i iff t t  f  t

  t .  I t i   
ti t  i t
    ti
 i   ll t t     iti t  t i t
 .

AP :


c  c c

c  c
c cc
 cccccc
c









! c"#$ 


! c


% c&

Î


 



 

 

 % c

Î

%% &

Î

Î


Î

The graph shows that there is steep fall in return BSE Power index return though it has shown
good returns in the previous four years of 2009 than all other BSE Index returns.

c
INDEX RETURNS:
INDEX 2009 2008 2007 2006 2005
SENSEX -52,45 47.15 46.7 42.33 13.08
NIFTY -51.79 54.77 39.83 36.34 10.68
TABLE-

GRAPH:

INDEX RETURNS
  & 
'

 
 


    








 



 

 



Î 

c cc
c c
c
cc
 cccccc
c
The graph shows that there is fall in returns in the year 2009 both in BSE index Sensex and
NSE index Nifty.


c
c ccc „c?c
 c

2
FUNDS FUND CAT'Y BSE NIFTY   SHARPE R MEAN S.D
RET'N RET'N

RELIANCE 30.17 28.14 26.56 23.42 9.36 0.81 0.66 0.94 31.44 40.18
BANKING
UTI 26.11 28.14 26.56 23.42 3.71 0.83 0.52 0.98 26.37 40.72
BANKING

FRANKLIN IT 14.87 18.17 15.31 23.42 -0.38 0.96 -0.01 0.98 4.66 33.69
DSPBR IT 25.38 18.17 15.31 23.42 15.52 0.84 0.43 0.66 20.56 36.2

RELIANCE 25.1 16.63 10.98 23.42 17.16 1.07 0.56 0.75 24.7 35.03
PHARMA
FRANKLIN 17.01 16.63 10.98 23.42 5.95 0.85 0.3 0.8 12.97 26.62
PHARMA

ICICI FMCG 29.37 23.83 25.12 23.42 1.11 0.96 0.22 0.68 11.24 27.34
FRANKLIN 24.48 23.83 25.12 23.42 0.71 0.78 0.23 0.76 9.87 20.91
FMCG

RELIANCE 45.79 23.2 24.63 23.42 21.94 1.06 0.87 0.91 39.18 39.08
DIV POWER
SAHARA 29.93 24.84 24.63 23.42 2.59 1 0.39 0.93 19.12 36.25
POWER
TABLE ±

The table shows the individual fund return, category return, index returns as of sensex and Nifty
and various risk measures as of alpha, beta, Sharpe, R square, Standard deviation.

c cc
c c
c
cc
 cccccc
c

Market Volatility:
Period Reaction Sensex

From May 2003 to Jan

Doubled From 3000 to 6000
2004

When BJP lost elections 25 % drop 4500

Within 6 months , by end

Increase 6000
of 2004

Up to May 2006 One way journey 12000

June 2006 dip 9000

Jan 2008 recovery 21000

Since then sharp fall, due to recession in US, as decreased inflow of foreign
funds in India,
This had been responsible for booming stock market.

Ruling UPA won in Lok

Rush forward 14000
Sabha elections

Budget ( as not up to
Sink Decrease by 850
expectations of investors)

TABLE ±

The table shows a view of volatility of the market in the last five years in India and some
reasons for this volatility in the market.

COMPARISION OF SECTOR RETURNS WITH THE RESPECTIVE SECTOR

INDEX RETURNS AS BENCHMARK:

c cc
c c
c
c c
 cccccc
c

SECTOR AVERAGE RETURNS V/S

SECTOR INDEX RETURNS
*
 c  c )



 

  
  
 

   


 

%
 

 

GRAPH -

This graph shows the comparison between the individual sectors average returns against the BSE
sector index returns. In all the sectors index returns is more than their sector average returns. And among
these Power index return is more and even its sector average return and then stands the banking sector
and then others follow.

CALCULATION OF RISK INVOLVED IN DIFFERENT SECTORS BASED ON

PAST 5 YEARS RETURNS:
'
X
'
EAR BANKING BANKEX cc
SECTOR
( ( (
RETURNS(%) RETURNS(%) X* X*X *
2009 Î  c Î  c   c   c 
 c
2008  c  c 
c   c   c
2007   c  c  
c  c     c

c cc
c c
c
c
c
 cccccc
c
2006  c  c 

  c   c   
c
2005  c  c 
 c 

c   c
TOTAL 142.88 117.85 11074.63 10443.05 20414.69
AVG   c  c cc cc cc
єX2 cc 

c cc cc cc
 1.005431
 cc 4.878001 cc cc cc
R2 0.688812 0.474462
Sharpe 0.5136
Treynor 21.67

TABLE -

By considering Bankex as independent return and banking sector return as the dependent
return the various risk measures have been calculated.

+
X
+
EAR IT SECTOR BSE IT cc
+ + +
RETURNS(%) RETURNS(%) X* X*X *
2009 Î c Î
c  c   c  c
2008  c Î
c Î c  c   c
2007  c 
c  c  
c   c
2006 
c  c  c   c   
c
2005   c  c 
 c 
 
c   c
TOTAL 72.75 45.2 7477.18 6979.294 8768.958
AVG  c 
c cc cc cc
єX2 cc  c cc cc cc
 1.03787 cc cc cc
 cc 5.167652 cc cc cc
R2 0.958095 0.917947 cc cc

c cc
c c
c
cc
 cccccc
c
Sharpe 0.1997
Treynor 7.48

TABLE ±

This table shows that by considering BSE IT index returns as independent returns and IT
sector returns as the dependent variable the various risk measures has been calculated with
regard to IT sector.

c
,
X
,
EAR PHARMASECTOR BSE cc
PHARMA
, , ,
RETURNS(%) RETURNS(%) X* X*X *
2009 Î  c Î  c  
c 

 c 
 c
2008 

c  c   c  
c 

c
2007  c  c

c   c 
 c
2006   c  c  c  c
 c
2005  c  c   c    c   c
TOTAL 58.96 29.87 2604.564 2341.93 3634.147
AVG  c  c cc cc cc
2
єX cc    c cc cc cc
 1.041068
 5.572659
2
R 1.032919 1.066921
Sharpe 0.0610
Treynor 4.80
c

 c(c

c cc
c c
c
cc
 cccccc
c
c
This table shows that by considering BSE Pharma index returns as independent returns and
Pharma sector returns as the dependent variable the various risk measures has been calculated
with regard to Pharma sector.

c
-
X
-
EAR FMCG BSE FMCG cc
SECTOR
- - -
RETURNS(%) RETURNS(%) X* X*X *
2009 Î  c Î c 
 c 
 c  c
2008 c  c 
c 
c 
c
2007  c  c
  c
  c
 c
2006  c  c  c

c  c
2005  c Î c Î
c 
 c   c
TOTAL 108.56 74 5327.215 4014.714 8226.864
AVG  c  c cc cc cc
2
єX cc 
 c cc cc cc
 1.274365 cc cc
 2.851392 cc cc
2
R 0.898747 0.807745 cc cc
Sharpe 0.4379 c c
Treynor 11.75 c c
c

 Îc

c cc
c c
c
c c
 cccccc
c
c This table shows that by considering BSE FMCG index returns as independent returns and
FMCG sector returns as the dependent variable the various risk measures has been calculated
with regard to FMCG sector.

c
.
X
.
EAR POWER BSE POWER cc
SECTOR
. . .
RETURNS(%) RETURNS(%) X* X*X *
2009 Î
c Î c  c 
c

c
2008  c 
c 
c  c 
 c
2007   c  c   c 
 c 
 c
2006  c c   c 
c    c
2005  c  c
 
c  c  
c
TOTAL 111.83 134.19 10970.19 11669.64 10608.02
AVG  c   c cc cc cc
2
єX cc   c cc cc cc
 0.987686 cc cc cc
 -4.14151 cc cc cc
2
R 0.985333 0.970881 cc cc
SHARPE 0.3889 c c
Treynor 15.89 c c
c

 Îc

c cc
c c
c
c c
 cccccc
c
c c This table shows that by considering BSE Power index returns as independent
returns and Power sector returns as the dependent variable the various risk measures has been
calculated with regard to Power sector.

RISK MEASURES:

BETA:

BETA
  



  
 


 

/  01
 023 

GRAPH ±

The FMCG sector with highest Beta value of 1.27 shows more volatility or the systematic
risk against the benchmark index.

ALPHA:

c cc
c c
c
c c
 cccccc
c

AL A
    




9  :
;

;
 $

Î

AP

   t it i
t l  l   it i l ti t  t.

R S U RE:

- Q A









9  :
;

;
 $

AP

 P  t   t i
t  t
 f itt  t t t 
tt it l t  t i it   i.

S RPE R TIO:

8
4c5 6 c c

c 7 c
c c
c
 cccccc
c

 A A



 

 







A   B
C

C
 $

AP Î

  i
t it i
t S  ti  l    i i jt
 f  .

ST Np Rp pEVI TION:


AN A V A
N

  
  
 
 


D  E
F

F
 $

AP


   t t t P  t it   t   i ti   l ii t
t   itt¶ i ti  f  t t   l 
 t .

TREYNOR R TIO:

@
<c= > c c

c ? c
c c
c
 cccccc
c

YNA


 

 O





L  M
N

N
 $

AP :

  i
t   t i jt t  it t t 
t ti i.

SECTOR¶S RISK ME SURES:

SECTOR SYSTEM TIC RISK TOT
RISK

£ NKING . .

IT . .

P RM . .

MCG . .

POWER . .

AB E:

P  t it l t  l   l 
t ti i  it l t  
i ti   l ?
t   l t t l i t  t lt t .

K
GcH I c c

c J c
c c
c
 cccccc
c

CORRELATION :

Correlation between funds average returns and systematic risk.

RANK BASED ON

FUNDS
AVG RETURNS BETA

Reliance Banking fund 4 9

UTI Banking fund 6 8

Franklin IT fund 9 4

DSPBR IT fund 5 7

Reliance Pharma fund 8 1

Franklin Pharma fund 10 6

ICICI FMCG fund 3 5

Franklin FMCG fund 7 10

Reliance diversified Power fund 1 2

Sahara Power and natural gas fund 2 3

Rank correlation co-efficient = 0.1636

There is positive correlation between average returns of funds and their systematic risk.

c cc
c c
c
c c
 cccccc
c
Correlation between funds average returns and total risk:

RANK BASED ON

FUNDS
AVG
S.D
RETURNS

Reliance Banking fund 4 2

UTI Banking fund 6 1

Franklin IT fund 9 7

DSPBR IT fund 5 5

Reliance Pharma fund 8 6

Franklin Pharma fund 10 9

ICICI FMCG fund 3 8

Franklin FMCG fund 7 10

Reliance diversified Power fund 1 3

Sahara Power and natural gas

2 4
fund

Rank correlation co-efficient = 0.5151

Interpretation:
There is positive correlation between average returns of funds and their total risk .

Correlation between funds average returns and Sharpe ratio:

RANK BASED ON

FUNDS
AVG
SHARPE
RETURNS

c cc
c c
c
c
c
 cccccc
c
Reliance Banking fund 4 1

UTI Banking fund 6 2

Franklin IT fund 9 8

DSPBR IT fund 5 3

Reliance Pharma fund 8 9

Franklin Pharma fund 10 10

ICICI FMCG fund 3 6

Franklin FMCG fund 7 5

Reliance diversified Power fund 1 4

Sahara Power and natural gas

2 7
fund

Rank correlation co-efficient = 0.5272

Interpretation:
There is positive correlation between average returns of funds and their Sharpe ratio.

Correlation between funds average returns and Treynor ratio:

RANK BASED ON

FUNDS
AVG
Treynor
RETURNS

Reliance Banking fund 4 10

UTI Banking fund 6 2

Franklin IT fund 9 6

DSPBR IT fund 5 3

Reliance Pharma fund 8 9

c cc
c c
c
c c
 cccccc
c
Franklin Pharma fund 10 7

ICICI FMCG fund 3 4

Franklin FMCG fund 7 1

Reliance diversified Power fund 1 5

Sahara Power and natural gas

2 8
fund

Rank correlation co-efficient = 0.0060

Interpretation:
There is positive correlation between average returns of funds and their Treynor ratio

COMPARISON OF EACH FUND WITH SECTOR INDEX AND MARKET INDEX:

RETURNS

FUNDS
SECTOR MARKET
FUND REMARKS
INDEX INDEX

Reliance Banking fund 28.97 23.57 19.36 A

UTI Banking fund 19.39 23.57 19.36 C

Franklin IT fund 10.08 9.04 19.36 B

DSPBR IT fund 25.16 9.04 19.36 A

Reliance Pharma fund 15.48 5.974 19.36 B

Franklin Pharma fund 5.94 5.974 19.36 D

ICICI FMCG fund 29.36 14.8 19.36 A

Franklin FMCG fund 18.34 14.8 19.36 B

Reliance diversified Power fund 53.55 26.83 19.36 A

Sahara Power and natural gas

11.52 26.83 19.36 D
fund

 ?
 A- Better

c cc
c c
c
c c
 cccccc
c
B-Better than sector index not market

C-Better than market index not sector

D ± Unfavorable Return

CHAPTER ± 8
FINDINGS, SUGGESTIONS AND CONCLUSION
w It is found that there is positive correlation between average returns and systematic risk of
the Banking and IT funds. That is with less risk there is more returns.

w The positive correlation between average returns and the total risk of funds of banking
funds. That¶s the banking funds are less deviating from the expected returns.

w Through Sharpe ratio the risk adjusted performance has been shown by FMCG funds.

w There is positive correlation between returns and Treynor ratio in Banking, Pharma and
FMCG that is the risk adjusted return with respect to systematic risk.

w From past 5 years performance it is found that Banking funds have high a verage returns.

w Power sector has less systematic risk than others and FMCG is found with less total risk.

w Reliance Div. Power fund has better performed than the sector index return and market
index return in last 5 years and then stands ICICI FMCG fund.

w It is found that all the funds in the sector do not perform in the same level.

SUGGESTIONS:

c cc
c c
c
c
c
 cccccc
c
The findings of the study relating to mutual funds need some recommendations for further
development and to attract more number of investors.

3 A review and assessment of the current condition and future prospects of sectors is very
important for the investors concentrating in particular sector.
3 Sector analysis serves to provide an investor with an idea of how well a given group of
companies are expected to perform as a whole.
3 When compared to all sectors it is advisable to diversify the investment of the funds so that
they can yield better returns.
3 It is advisable to go for good portfolio management service for the investors concentrating
on sector funds.
3 It is good to practice sector- rotation strategy.
3 It is advisable to use top-down approach to invest, that is of identifying most promising
sectors at first and then to review the companies within the sector to determine which
individual stocks ultimately be pur chased.
3 As the holdings of sector funds are in the same industry, there will be lack of diversification
so try to diversify as much possible within the sector.
3 Sectoral mutual funds investors need to follow top ± down investing, that involves looking at
the "big picture" in the economy and financial world and then breaking those components
down into finer details.

c cc
c c
c
c
c