Project Report

Basics Of Finance In Stock Market And Portfolio Management At Reliance Securities
1. Executive Summary
The situation of the stock market is very dynamic and it changes every moment so, its very difficult for the investors to decide which stock is a growth stock and profitable for investment. Fundamental analysis is done for long term investment and it analyzes the financial health, competitors and efficiency of management of the company. In order to keep investors safe from market fluctuations and provide them good return by minimizing the risk, Portfolio Management is done. It is the selection of the securities and their continuous shifting in the portfolio to optimize returns. The aim of our project is to find out the scripts through the fundamental analysis which is to be added in the portfolio and to prepare an optimum portfolio, which will provide maximum return at a given level of risk to the investor. Ten securities of CNX Midcap was considered on the basis of fundamental analysis out of 14 securities to prepare the portfolio. The companies are:- Amtek Auto, Apollo Hospitals Enterprises, Aurobindo Pharma, Cummins India Ltd, Educomp Solutions, Exide Industries, LIC Housing Finance, Lupin, Indraprastha Gas, IFCI, IDBI Bank, Power Finance Corporation, Punj Llyod and Titan Industries. Both primary data and secondary data was considered. The data analysis was carried out with the help of MS EXCEL. After analyzing the portfolio it was found that Portfolio developed is not optimum because riskreturn ratio of portfolio is greater than some of the securities but according to the Jensen ratio done for evaluating portfolio shows that the portfolio will perform good in the market. Portfolio beta is near about one. This means my portfolio is as volatile as the market. Investors are recommended to analyze the shareholding pattern of different companies and then invest. Companies having FII and mutual fund holdings are considered to be financially good companies. While preparing the portfolio, the investors should consider Midcap companies also, if they are providing good returns as they are in their growth stage and have chances of having good return in the future.
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2. Introduction
2.1 Purpose
We can say that finance is something related to management of money and other assets. A financial market can be defined as the market in which financial assets are created or transferred. It facilitates raising of capital in the capital market, transfer of risk in the derivative market and international trade in the currency market. The capital market is designed to finance the longterm investments. The transactions taking place in this market will be periods over a year. Capital market consist of stock markets, which provide financing through the issuance of shares or common stock and enable the subsequent trading thereof. Stock exchange acts as a financial intermediary. Indian stock markets are one of the oldest in Asia. There are 23 stock exchanges out of which Bombay Stock Exchange and National Stock Exchange are important. Investment in securities such as shares, debentures, and bonds is profitable as well as risky. Investors feel insecure in managing their investment in the stock market because it is difficult for an individual to identify companies having better growth prospect for investment. Therefore, investors do not invest their entire funds or savings in a single security. Instead, they tend to invest in a group of securities. Such a group of securities is called a Portfolio. Portfolio creation helps to reduce risk without sacrificing returns. Fundamental analysis is done by the analysts for the long term investment. Portfolio management is an art of putting money in fairly safe, quite profitable and liquid form of securities. Portfolio management helps investors to make an intelligent and informed choice for investment securities.
2.2 Company profile

Reliance Securities Limited is a Reliance Capital company and part of the Reliance Anil Dhirubhai Ambani Group. Reliance Securities is a permitted user of the brand "Reliance Money" for promoting its various products and services. Reliance Securities endeavors to change the way investors transact in equities markets and avails services. It provides customers with access to Equity, Derivatives, Portfolio Management Services, Investment Banking, Mutual Funds & IPOs. It also offers secured online share trading platform and investment activities in secure, cost effective and convenient manner. To enable wider participation, it also provides the convenience
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of trading offline through variety of means, including Call & Trade, Branch dealing Desk and its network of affiliates. Reliance Money through its pan India presence with 6,233 outlets, has more than 3.5 million customers. Reliance Capital is one of India's leading and fastest growing private sector financial services companies, and ranks among the top 3 private sector financial services and banking groups, in terms of net worth.
2.3 Reliance Money product range

Refer Annexure I- Page 35
2.4 Reliance Money organizational hierarchy
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3. Objectives Of The Project

The market has very volatile nature and it is very difficult for the individuals to identify which company is growing and in which stocks investments should be made. Investors want to have minimum risk without sacrificing the return in the long term investment. So, the objectives of our project are:1. To provide basic idea of different stock market investment instruments to investor. 2. To provide investor, knowledge about P\E, P\BV, EPS and Dividend payout ratio that would help them in selection of script. 3. To prepare optimum portfolio, which will provide maximum return at a given level of risk to the investor. 4. To evaluate the portfolio by different means, to find out whether it is performing good or bad.
4. Study Scope
To understand the behavior of the Indian stock market To analyze the different securities from different sectors by the fundamental factors To provide the valuable insight about portfolio and portfolio management.
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5. Theoretical Perspective
5.1 Financial market
Financial market is a mechanism that allows people to buy and sell financial securities (such as stock and bonds), commodities (such as precious metals or agricultural goods), and other fungible items of value at low transaction cost and at prices that reflect the efficient- market hypothesis. Financial markets facilitate: The raising of capital (in the capital markets) The transfer of risk (in the derivatives market) International trade (in the currency market)
5.2 Types of financial market

Financial markets can be divided on different basis: 1. Nature of claim : Debt / Equity Market 2. Maturity of claim : Money / Capital Market 3. Seasoning of claim : Primary / Secondary Market 4. Timing of delivery : Cash OR Spot / Derivative Market 5. Organized structure : Exchange traded / OTC Market
5.3 Indian financial system

A financial system is a composition of various institutions, markets, regulations and laws, practices, money manager, analysts, transactions and claims and liabilities. Indian financial system consists of financial market, financial instruments and financial intermediation. 1. Financial Market It can be defined as the market in which financial assets are created or transferred. As against a real transaction that involves exchange of money for real goods or services.
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2. Financial Instrument- It represents a claim to the payment of a sum of money sometime in the future and/ or periodic payment in the form of interested or dividend. Equity/ Share Bonds/ Debenture Preference share Treasury/ bills Commercial papers Certificate of deposit Mutual fund Financial derivatives 3. Financial Intermediaries Financial intermediaries came into existence to serve as a proper channel within the system to transfer adequate information of the issue, issuer and the security. Financial intermediation in the organized sector is conducted by wide range of institutions functioning under the surveillance of the RBI and SEBI. Some of the important intermediaries operating in the financial market include; investment bankers, underwriters, stock exchange, registrars, portfolio manager, financial consultants, primary dealers, self regulatory organizations.
5.4 Stock market

The market in which shares are issued and traded either through exchanges or over-the-counter markets. It is also known as the equity market. It provides companies with access to capital and investors with a slice of ownership in the company and the potential of gains based on the companys future performance. This market can be split into two main sections: the primary and secondary market. The primary market is where new issues are first offered, with any subsequent trading going on in the secondary market.
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5.4.1 Stock exchange - The stock exchange is basically a marketplace for shares and
securities. That is why it is also called a stock market just like any other market. It brings together the potential buyer and seller of the securities. Unlike other markets, no one is permitted to buy or sell shares directly in a stock exchange. According to the stock exchange rules, anyone has to do so through a licensed member of stock exchange called stockbroker, or through his registered sub-broker. The stockbroker is authorized to buy or sell shares on behalf of others on a commission basis. Trading in recognized stock exchange in India is confined only to listed securities. In India there are twenty three stock exchanges. In this only two are major stock exchanges: Bombay stock exchangeThe Bombay Stock Exchange (BSE) is a stock exchange located on Dalal Street, Mumbai and is the oldest stock exchange in Asia. The equity market capitalization of the companies listed on the BSE was US$1.63 trillion as of December 2010, making it the 4th largest stock exchange in Asia and the 8th largest in the world. The base year of Bombay stock exchange is 1978-79. Major indices- BSE Sensex (base year 1978-79=100), BSE 100 Index, BSE 200 Index, BSE 500 Index, BSE Midcap Index, BSE Smallcap Index, BSE Largecap Index. National stock exchangeThe National Stock Exchange of India limited has genesis in the report of the high powered study group on establishment of new stock exchange, which recommended promotion of a national stock exchange by financial institution to provide access to investors from all part of the country. NSE was promoted by government of India and was incorporated in November 1992 as a tax- paying company unlike other stock exchanges in the country. Its index is Nifty50. Major indices -S&P CNX Nifty (Nov 3, 1996 =1000, base market cap = Rs.2.06 tri), CNX Nifty Junior, S&P CNX 500
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5.4.2 Few important aspect of stock market Need for Stock Market Index Serves as an important lead indicator of the movements in the level of economic activity Provides benchmark for the evaluation of performance of stocks/portfolios Enables rational allocation of funds based on the relationship of prices of individual stocks to the movements in the market Utility of Stock Market Index Investors use to determine timing for buy or sell securities Prices of individual stocks are dependent on stock market index Characteristics of well defined stock market index Sample should be representative of population Various elements in the sample should be assigned weights Should be stated in unit that is easy to understand Method of constructing stock market index Value weighted- NSE & BSE Equal weighted (arithmetic mean) - ET index Geometric mean Combination of two or more of the above
5.5 Shares - Ownership of the company to the extent of someone investments. There are two
categories of shares: Preference share Preference share is considered as a hybrid security since it has many features of both ordinary shares and debentures. Similarity to Ordinary Shares: 1. Non payment of dividends does not force company to insolvency. 2. Dividends are not deductible for tax purposes.
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3. In some cases, it has no fixed maturity dates. Similarity to Debentures: 1. Dividend rate is fixed. 2. Do not share in residual earnings. 3. Preference shareholders have claims on income and assets prior to ordinary shareholders. 4. Usually do not have voting rights
Features of preference share: Claim on income and assets- Preference share is a senior security as compared to an ordinary share. It has prior claim on the companys income over equity shareholder in payment of dividend. It also has a prior claim on the companys assets in the case of liquidation of the company. Thus, in terms of risk preference share is less risky than the equity share. Fixed dividend- The dividend rate is fixed in the case of a preference share, and preference dividend is not tax deductible. The preference dividend rate is expressed as a percentage of the par value. Preference share is also called the fixed- income security Cumulative dividends- Most preference shares in India carry a cumulative dividend feature, requiring that all past unpaid dividend are to be paid before any ordinary dividends are paid. Redemption- Theoretically, both redeemable and perpetual preference shares can be issued. Perpetual preference share does not have a maturity date. Types of preference share Cumulative preference share Non cumulative preference share Redeemable preference share Irredeemable preference share
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Equity share On the other hand this type of share dont carry a fixed rate of dividend. Equity shareholder cannot claim as a matter of right since equity shareholders are the owners of the company, they are entitled to all the residual profits and accumulated reserves of the company after all its obligations to its creditors. In growing and expanding companies, an equity shareholder gets a much higher rate of return on his investment than does a preference shareholder. Features of ordinary shares Claim on income- Ordinary shareholders have a residual ownership claim. They have a claim to the residual income, which is, earning available for ordinary shareholders, after paying expenses, interest charges, taxes and preference dividend, if any. Dividends paid on ordinary shares are not tax deductible for the company. Claim on assets- Ordinary shareholders also have a residual claim on the companys assets in the case of liquidation. Out of the realized value of assets, first claims of debtholders and then preference shareholders are satisfied, and then the remaining balance, if any, is paid to ordinary shareholders. Right to control- Ordinary shareholders have the legal power to elect directors on the board. If the board fails to protect their interests, then they can replace directors. Ordinary shareholders are able to control the management of the company through their voting rights and right to maintain proportionate ownership. Voting rights- Ordinary shareholders are required to vote on a number of important matters. The most significant proposal include: election of directors and change in the memorandum of association. Each ordinary share carries one vote. Pre-emptive rights- The pre-emptive right entitle a shareholder to maintain his proportionate share of ownership in the company. The laws grant shareholders right to purchase new shares in the same proportion as their current ownership. Limited liability- Ordinary shareholders are the true owners of the company, but their liability is limited to the amount of their investment in shares.
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Some other term in equity shareRight shares- Companies often require additional funds for their working capital, or for their expansion and diversification program. They sometimes raise these funds by the sale of additional equity shares on a right basis to its shareholder. Such shares are called right shares because the companys shareholders have a prior right to buy these shares by virtue of their existing shareholding .the number of right shares offered to each shareholder is directly proportionate to the number of equity shares he owns rights shares could either be offered at par, or at a premium. when such shares are offered for sale at their face value, they are said to be .offered at par ,and when the sale price is higher, they are said to be offered at a premium. Premium is the difference between the issue price of a share and its face value. In order to make the issue attractive, the price of rights shares is invariably fixed at a level below, the prevailing market price of the companys share. The issue of rights shares increases the equity capital of the company but does not dilute an existing shareholders proportionate ownership in the company, if he subscribes to his rights entitlement in full.
Fundamental analysis is done for long term investment and this will help the investor to select the proper scripts for making the portfolio.
5.6 Fundamental analysisA method of evaluating a security by attempting to measure its intrinsic value by examining related economic, financial and other qualitative and quantitative factors. Fundamental analysts attempt to study everything that can affect the securitys value, including macroeconomic factors and individually specific factors. The end goal of performing fundamental analysis is to produce a value that an investor can compare with the securitys current price in hopes of figuring out what sort of position to take with that security (underpriced=buy, overpriced= sell) There are three dimensions under Fundamental Analysis 1. Economy analysis 2. 3. Industry analysis Company analysis
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5.6.1 Economic analysis

Research Findings: Stock price changes can be attributed to the following factors Economy-wide factors: 30-35 percent Industry-wide factors: 15-20 percent Company factors: 30-35 percent Other factors: 10-15 percent Economic forecasting Short-term Medium-term Long-term Forecasting approaches Anticipatory surveys approach Model building Barometric/indicator approach Characteristics of various stages of economy Boom stage Excess capacity creation Excess demand for fund Rising interest rates Full employment Intensive competition Price cuttings High GNP growth rate Recession stage Sectoral recession Marginal firms face liquidity problems Firms scale down operations Rising unemployment Falling income Falling GNP growth rate
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Depression Closure of several units Total lack of liquidity Massive unemployment Negative GNP growth rate Recovery Adjustment of demand-supply equilibrium due to closures Reduction in interest rates Revival of healthy units New employment opportunities Rising GNP growth rate Prior to Boom Stage Revival of sick unit Rise in employment Increase in income with people Rise in demand Rise in GNP growth rate Leading Economic Indicators Monsoons GDS &GDI New orders for plant & equip No of new building permits issued Avg weekly hrs of mfg prod workers Ave weekly initial unemployment claims Index of stock market prices Money supply Coincident Indicators Employees on non-agricultural payrolls Personal income Industrial production Mfg and trade sales
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Lagging indicators Avg duration of unemployment Ratio of trade inventories to sales Change in index of labour cost /unit Average prime rate charged by banks Commercial and industrial loans outstanding Ratio of consumer credit to personal income Change in consumer price index of services Economic Outlook GDP Growth rate Revised Target for 11th FY plan: 8-9 percent Expected growth during 2011-12: 8.5 percent Savings rate: 32.4% of GDP Investment rate: 33.8% of GDP Higher growth together with the demographic dividend (from growing proportion of the population in the working age group) is likely to lead to a rise in the savings rate to finance more investments and hence reinforce growth itself.
5.6.2 Industry analysis

Structural Analysis of Industry: Porters Framework Bargaining power of suppliers Large and few suppliers, many buyers No substitutes Buyer industry not important customer Sellers product important input Differentiation of products/switching costs Forward integration threat
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Bargaining power of buyers Concentration/large purchases relative to seller sales Purchased products account for significant portion of buyers costs/purchases Standard products Fewer switching costs Threat of backward integration Buyer has full cost information Threat of new entrants: entry/ exit barrier Economies of scale/capital Product differentiation Switching costs Access to distribution channels Access to tech., raw materials, etc Govt policy Threat of retaliation Substitute product Intensity of competition Numerous/equally balanced competitors Slow industry growth Lack of switching costs Capacity augmentation in large increment Low entry barriers and high exit barriers
5.6.3 Company analysis

There may be situations where the industry is very attractive but a few companies within it might not doing well; similarly there may be one or two companies which may be doing exceedingly well while the rest of the companies in the industry might in the doldrums. An investor will have to consider both the financial and non-financial aspect of the company. Analysing Financial Statements Check for Correctness Completeness
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Consistency Comparability Look for Earnings from regular operations Financial performance analysis NPM ROA ROE EPS CEPS PE or EP ratio Dividend payout ratio Leverage ratios D/E ratio Interest coverage ratio ROA Analysis ROA = (NS/TA)(EBIT/NS) ROE Analysis ROE = (PBT/NS)(PAT/PBT)(NS/TA)(TA/NW)
5.7 PortfolioA combination of securities with different risk & return characteristics will constitute the portfolio of the investor. Thus, a portfolio is the combination of various assets and/or instruments of investments. The combination may have different features of risk & return, separate from those of the components. 5.7.1 Portfolio designBefore designing a portfolio one will have to know the intention of the investor or the returns that the investor is expecting from his investment. This will help in adjusting the amount of risk. This becomes an important point from the point of view of the portfolio designer because if the investor will be ready to take more risk at the same time he will also get more returns. From the above discussion we can conclude that the investors can be of the following three types: 1. Investors willing to take minimum risk and at the same time are also expecting minimum returns. 2. Investors willing to take moderate risk and at the same time are also expecting moderate returns.
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3. Investors willing to take maximum risk and at the same time are also expecting maximum returns.
5.7.2 Portfolio age relationship

AGE Below 30 PORTFOLIO 80% in equity 10% in cash 10% in fixed income
30 to 40
70% in equity 10% in cash 20% in fixed income
40 to 50
50 to 60
Above 60
These aren't hard and fast allocations, just guidelines to get you one think about how his/her portfolio should look.
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5.7.3 Portfolio management:

Portfolio management is an art of putting money in fairly safe, quite profitable and reasonably in liquid form. An investors attempt to find the best combination of risk and return is the first and usually the foremost goal. In choosing among different investment opportunities the following aspects risk management should be considered: a) The selection of a level or risk and return that reflects the investors tolerance for risk and desire for return, i.e. personal preferences. b) The management of investment alternatives to expand the set of opportunities available at the investors acceptable risk level. There are two ways of portfolio management1. Traditional portfolio management 2. Modern portfolio management
Traditional Portfolio Analysis Intuition and insight Improper method of quantifying risk and return Combination of securities was portfolio Objective of portfolio was to spread risk Attempt to spread risk by not putting all eggs into one basket Portfolio consisting of two stocks is less risky than one holding either stock alone
Modern Portfolio Analysis Conceived by Harry Markowitz Efficient diversification Diversification involves combining securities with less than positive correlation in order to reduce risk in the portfolio without sacrificing any of the portfolios return Lower the correlation of securities in the portfolio, the less risky the portfolio is It is not enough to invest in many securities; it is necessary to have the right securities
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There are two theories of portfolio management under modern portfolio-
1. MARKOWITZ THEORY: Markowitz has suggested a systematic search for

optimal portfolio. According to him, the portfolio manager has to make probabilistic estimates of the future performances of the securities and analyze these estimates to determine an efficient set of portfolios. Then the optimum set of portfolio can be selected in order to suit the needs of the investors. The following are the assumptions of Markowitz Theory: Investors make decisions on the basis of expected utility maximization. In an efficient market, all investors react with full facts about all securities in the market. Investors utility is the function of risk and return on securities. The security returns are co-related to each other by combining the different securities. The combination of securities is made in such a way that the investor gets maximum return with minimum of risk. An efficient portfolio exists, when there is lowest level of risk for a specified level of expected return and highest expected return for a specified amount of portfolio risk. The risk of portfolio can be reduced by adding investments in the portfolio.
2. SHARPES THEORY: William Sharpe has suggested a simplified method of

diversification of portfolios. He has made the estimates of the expected return and Variance of indexes which are related to economic activity. Sharpes Theory assumes that Securities returns are related to each other only through common relationships with basic underlying factor i.e. market return index. Individual securities return is determined solely by random factors and on its relationship to this underlying factor with the following formula: Ri = ai + Bi I + ei Where, Ri refers to expected return on security ai = the intercept of a straight line or alpha coefficient Bi = slope of straight-line or beta coefficient I = level of market return index ei = error, i.e. residual risk of the company.
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There are two ways of portfolio selection in modern portfolio theory1. Markowitz Approach Risk penalty = Variance/Risk tolerance Utility = Expected return Risk penalty Optimal portfolio for the investor would be one from the efficient frontier that maximizes utility Utility indifference curves and types of investors
2. Sharpe Approach Desirability of any stock is directly related to its excess return-to-beta ratio If the stocks are ranked by excess-return-to-beta ratio, the ranking represents the desirability of any stocks inclusion in a portfolio The number of stocks selected depends on a unique cut-off rate such that all stocks with higher ratios of excess return-to-beta will be included and all stocks with lower ratio excluded Following is the process of determining which stocks are to be included in the optimum portfolio: Calculate the excess return-to-beta ratio for each stock under review and the rank them from highest to lowest. Calculate the cutoff point; optimum portfolio consists of all the stocks for which excess return-to-beta ratio is greater than the cut-off point Consideration of new securities Any new security having excess returns-to beta ratio greater than the cut-off value can be added to the portfolio Any new security having excess returns- to beta ratio of less than the cut-off value is not to be considered
6. Methodology
6.1 Sample
We have mainly concentrated on convenience sampling. I have taken 14 securities of CNX Midcap on the basis of fundamental analysis. The selected companies are:Page 20
Table.1 List of the CNX Midcap companies
S. No. 1 2
Company Name Amtek Auto Apollo Hospitals Enterprises
Industry Automobile Miscellaneous
3 4 5 6 7 8 9 10 11 12
Aurobindo Pharma Cummins India Ltd Educomp Solutions Exide Industries LIC Housing Finance Lupin Indraprastha Gas IFCI IDBI Bank Power Finance Corporation
Pharmaceuticals Automobile Computer Automobile Financial Pharmaceuticals Petrochemicals Financial Bank Financial
13 14
Punj Llyod Titan Industries
Construction Watch
6.2 Data collection

Primary data : - Primary data are collected by my regularly tracking the stock price of various script selected.
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Secondary data :- Secondary data are collected from various journals , websites and financial news paper.
6.3 Data analysis method

I have done data analysis with the help of MS EXCEL.
7. Procedure Of Work
The project was carried out in a pre-planned manner and completed on time. The procedure of work during the project is as follows: Introduction about the company Study the financial market as a whole Get the knowledge about the basic types of securities in the financial market and types of shares in stock market Understanding the working of NSE and BSE Understanding the working of demat account Understand about the fundamental analysis. Then selected scripts from the CNX Midcap with the help of the fundamental analysis Understanding of the portfolio management Talk to the investors who want to invest in the portfolio and suggested the scripts which should be added in their portfolio. Then prepared the final portfolio for the investor. Finally, evaluate the portfolio whether it will perform good or bad
8. Analysis
As the basics of finance, the stock picking is done with the help of the fundamental analysis which includes economy analysis, industry analysis and company analysis. First the economic conditions of the country is analyzed which influences the stock market a lot then industry
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analysis is done to analyze the strength and weakness of particular industry and then the company analysis of the 14 companies is done out of which 10 companies are selected as a financially sound companies for portfolio. I have given more emphasis on the company analysis to forecast the management performance and financial strength and used the following ratios NPM, ROA, ROE, P/E ratio, EPS, Debt/Equity ratio, Interest coverage ratio, quick ratio, current ratio, dividend payout ratio. I have done the time series analysis of the ratios in which ratios of a particular year is compared with the ratios of the previous years of the same company. Disclosure All the calculations are in the Appendix II
Now the companies which I have selected, are they really going to offer the investor a good return or not, for that we should have to find out the risk and return profile of each security, how they are moving as the change in CNX Midcap index. So once it found then the investor must evaluate such securities by Sharpe portfolio model, which will say what should be the size of your portfolio as well as weight of investment for particular securities. So Risk and return of such securities are as follows. Risk free rate of return=8% Market return= 38.28% Table2. Risk and Return of the Securities selected for Portfolio
EXCESS STOCK APOLLO HOSPITALS AUROBINDO CUMMINS EDUCOMP EXIDE IDBI LIC HOUSING LUPIN PUNJ LLYOD TITAN 2.45 2.26 3.16 -2.57 1.27 0.02 1.27 3.08 -7.75 4.99 0.45 1.32 0.67 0.59 0.97 1.09 1.14 0.48 1.64 0.66 19.676 11.676 25.94667 0.2 988.8 191.1195 797.6805 1644.477 1488.60288 423.6718 534.04818 328.5368 1421.42322 888.0214 521.01858 1121.329 839.71122 1226.562 907.27752 217.4515 603.94848 2538.444 2481.15552 411.1193 491.28072 Page 23 ALPHA BETA E RET(ER) ER/BETA RSQ VARIANCE SYS RISK UNSYS RISK
52.7896 44.7896 28.8076 20.8076 20.0152 12.0152 38.4016 30.4016 41.7452 33.7452 44.9092 36.9092 21.4544 13.4544 55.0292 47.0292 30.2548 22.2548
33.93152 0.52 3133.08 31.05612 0.44 957.72 20.36475 0.18 1749.96 31.34186 0.63 1409.04 30.9589 0.57 1961.04
32.37649 0.58 2133.84 28.03 0.27 821.4 5019.6
28.67634 0.5
33.71939 0.45 902.4
Disclosure Above all data are calculated on the basis of prices of each securities from 1st April 2009 to31st March 2011 Cov. to Market indicates covariance between securities and CNX Midcap index. All the above details are shown in the annexure
8.1 Simple Sharpe portfolio optimization

The construction of an optimal portfolio is simplified if a single number measures the desirability of including a stock in the optimal portfolio. The desirability of any stocks directly related to its excess return-to-beta ratio. If stocks are ranked by excess return to beta (from highest to lowest), the ranking represents the desirability of any stocks inclusion in a portfolio. The number of stocks selected depends on unique cut-off rate such that all stocks with higher ratio of {(Ri Rf)/ i} will be included and all stocks with lower ration excluded. Step 1 Ranking Securities Excess return to beta ratio= (Ri Rf)/ i Ri = Expected return on stock i Rf = Return on a riskless asset BETA = Expected change in the rate of return on stock i associated with a 1% change in the market return Current Risk Free Rate 8%
Table3. Ranking of the Securities on the basis of Excess Return to Beta

UNSYS STOCK AUROBINDO TITAN ER/BETA BETA 33.93 33.72 1.32 0.66 E 52.79 ER 44.7896 RISK 1488.6029 491.28072 Page 24
30.255 22.2548
LIC HOUSING EXIDE CUMMINS IDBI PUNJ LLYOD LUPIN APOLLO HOSPITAL EDUCOMP
32.38 31.34 31.06 30.96 28.68 28.03 25.95 20.36
1.14 0.97 0.67 1.09 1.64 0.48 0.45 0.59
44.909 36.9092 38.402 30.4016 28.808 20.8076 41.745 33.7452 55.029 47.0292 21.454 13.4544 19.676 11.676 20.015 12.0152
907.27752 521.01858 534.04818 839.71122 2481.1555 603.94848 797.6805 1421.4232
As shown in the above table, excess returns to beta ratio are already ranked from highest to lowest. So selecting the optimal portfolio involves the comparison of (Ri Rf)/ i with C*(cutoff rate). Here we have to find out cut-off rate, which will help in selecting securities for our optimum portfolio. Securities whose excess return to beta ratio is lower than the cut-off rate are excluded from the portfolio.
Step 2 Establishing Cut-off Rate
For a portfolio of i stock, C is given by
i 2m i=0 Ci = i 1+
2 m
(Ri-Rf)i 2ei (1) i / i=0

2 2
where 2m = variance in the market index 2ei = variance of a stocks movement that is not associated with the movement of
ei
the market index; that is the stocks unsystematic risk.
Table4. Cut-Off Value of the Securities

(ER)B/U STOCK ER/BETA BETA R 0.03971 AUROBINDO 33.93 1.32 7 0.00117 0.039717 0.00117 Bsq/UR SUM(ER)B/U R SUM(BSQ/UR ) C 17.8098 2 Page 25
0.02989 TITAN 33.71939 0.66 8 0.04637 LIC HOUSING 32.37649 1.14 7
0.00088 7 0.00143 2 0.00180 0.115991 0.00349 0.069614 0.002057
22.3358 9 25.4974 6 27.1582 0.172591 0.005295 4 27.6135 0.198695 0.006136 8 28.1632 0.242499 0.007551 9 28.2206 0.273584 0.008635 6 28.2134 0.284277 0.009016 4 28.1577 0.290864 0.00927 3 27.9772 0.295852 0.009515 6
EXIDE
31.34186
0.97
0.0566 0.02610
6 0.00084 1 0.00141 5 0.00108 4 0.00038 1 0.00025 4 0.00024 5
CUMMINS
31.05612
0.67
5 0.04380
IDBI
30.9589
1.09
3 0.03108
PUNJ LLYOD
28.67634
1.64
5 0.01069
LUPIN APOLLO HOSPITAL
28.03
0.48
3 0.00658
25.94667
0.45
7 0.00498
EDUCOMP
20.36475
0.59
All securities, whose excess return-to-beta ratio is above the cut-off rate, are selected and all whose ratios are below are rejected. The value of C* is computed from the characteristics of all of the securities that belong in the optimum portfolio. So here first 6 companies are those whose excess return to beta ratio are more than Ci. Now to determine C*, we will take the last securities as per ranked which is proving our condition i.e. excess return to beta more than that of Ci. So the cut-off rate will be (C*) = 28.22
Step 3 Computation of investment in each of the selected stock: Once we know which securities are to be included in the optimum portfolio, we must calculate the percent invested in each security. The percentage invested in each security is: Zi
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wi =
Zj
i=1
(2)
where i Zi = 2ei Ri Rf C* i (3)
The second expression determines the relative investment in each securities, and the first expression simply scales the weights on each securities so that they sum to 1 (ensure full investment).
Table5. Weightage of each Security in the Portfolio

STOCK AUROBINDO TITAN LIC HOUSING EXIDE CUMMINS IDBI PUNJ LLYOD B/UR ER/BETA Z W W(%)
0.000887 33.93 0.001343 33.72 0.001257 32.38 0.001862 31.34 0.001255 31.06 0.032301 30.96 0.000661 28.68 SUM
0.00506 0.0437346 4.373464 0.00739 0.0637979 6.379788 0.00522 0.0450974 4.509744 0.00581 0.0501844 5.018442 0.00356 0.0307218 3.072184 0.08845 0.7638625 76.38625 0.0003 0.0026012 0.260124 100
0.11579 1
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0.260124
4.373464 6.379788 4.509744 5.018442 3.072184 AUROBINDO TITAN LIC HOUSING EXIDE CUMMINS
76.38625
IDBI PUNJ LLYOD
Fig1. Stock Portfolio Composition
8.2 Risk and Return of Portfolio.

There are seven securities in optimum portfolio. So following formulas are used to find out risk and return profile for the securities Table6. Risk and Return of the Portfolio
STOCK E 52.789 AUROBINDO 6 30.254 TITAN 8 44.909 LIC HOUSING 2 38.401 EXIDE 6 28.807 CUMMINS 6 41.745 IDBI PUNJ LLYOD 2 55.029 0.0451 0.0501 8 0.0307 2 0.7638 6 0.0026 0.0638 W 0.0437 3 E*W 2.3087 3 1.9301 9 2.0252 9 1.9271 6 0.8850 2 31.887 6 0.1431 1.09 1.64 0.83261 0.00426 0.67 0.97 1.14 0.66 1.32 0.05773 0.04210 7 0.05141 1 0.04867 9 0.02058 4 BETA W*BETA UR 1488. 6 491.2 8 907.2 8 521.0 2 534.0 5 839.7 1 2481. 16.40694 641.4239 5 6.454091 Wsq*UR 65.10350 6 31.34266 7 40.91589 7 26.14701 3
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2 EXPECTED RETURN PORFOLIO
4 41.107 1 1055.2 SUM
6 1.05738 6
5 827.7940
SUM
SYSTEMATIC RISK
3 827.79
UNSYSTEMATIC RISK
4 1883.0
PORTFOLIO RISK(VARIANCE) RISK RETURN
2 45.807 7
RATIO(VAR/EXPEC RET)
8.3 Portfolio performance evaluation:

1. Jensen ratio= Rp E(Rp) E(RP)= Rf +p(Rm- Rf) Where, Rf = 8% , Rm = 38.28% , Rp = 41.1%, p = 1.05 E(RP)= 39.79 Jensen ratio= 1.31 Jensen ratio is positive so performance of portfolio is good on the Jensen scale 2. Sharpe ratio- It is the ratio of the reward or risk premium to variability of return as measured by the standard deviation of return. The formulae for calculating sharpe ratio: SR= (Rp-Rf)p SR= 2.66 for portfolio SR= 3.47 for market
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Sharpe ratio of market is greater than the portfolio so on the sharpe evaluation ratio portfolio is not performing good. 3. Famas net selectivity= Rp E(Rp) E(RP)= Rf +p(Rm- Rf)/m p= 12.5, m= 8.87 E(Rp)= 50.67 Famas net selectivity= -9.56 Famas net selectivity ratio is negative so performance of portfolio is not good on the Famas net selectivity scale.
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9. Findings
1. On the basis of fundamental analysis we selected 10 companies out of 14 companies which are looking good for the long term investment 2. Portfolio which I have made is not optimum portfolio because riskreturn ratio of portfolio is greater than some of the securities. 3. Portfolio beta is near about one. This means my portfolio is as volatile as the market. 4. I have evaluated the portfolio by three different ratios but only one ratios shows that the portfolio will perform well while the other two ratios shows that the portfolio will not perform well.
10.
Recommendations
Investors can also analyze the shareholding pattern of different companies. The experts in stock market speak that if foreign institutional investors and mutual funds hold high percentage in total companys share holding, company has good potential for growth. Because FIIs and MFs have good research techniques to observe the companies financial performance thats why they are willing to invest for particular companies in India. While preparing the portfolio, the investors should consider Midcap companies also, if they are providing good returns. The portfolio of the investors should be diversified in such a way that it consist the whole market behavior i.e. it should have qualities of Largecap, Smallcap as well as Midcap companies.
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11.
Limitations
Because of this limited period of only 2 months, I have chosen only SEVEN companies which are giving good return in the portfolio. But in market there are lots of securities which offer more return as compared to the selected securities. Due to insufficient data given in the financial statement, some financial ratio could not be found out. Indian stock market is not stable. It keeps on fluctuating so ratio derived today may not consider as useful tool of valuation tomorrow. As the study is depending on the information from the different sources, the reliability of study is depending on the reliability of information.
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XII. Conclusion
Since the stock market is very dynamic and volatile, it is important for investors to invest there money in the portfolio. This project tries to provide basic idea of different stock market investment instruments to investor and prepare an optimum portfolio for the investors to minimize risk without sacrificing the return in the long term investment. We have done fundamental analysis of the selected fourteen CNX Midcap companies and then selected ten companies for preparing portfolio. Portfolio is prepares by modern Sharpe approach.
The findings suggest that portfolio which we have made is not optimum portfolio because riskreturn ratio of portfolio is greater than some of the securities. So, our portfolio is somewhat a risky portfolio but when we have done the evaluation of the portfolio by the Sharpe ratio we found that our portfolio will perform well in the market. Portfolio beta is near about one. This means our portfolio is as volatile as the market. The investors are suggested to analyze the shareholding pattern of the companies before investing in any company. Midcap companies are growth companies and having more reasonable price than the large cap companies security. There are many midcap companies which give good returns so investors should also consider midcap companies in their portfolio with the large cap companies.
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XIII. References
Authored Book
1. Donald E. Fischer and Ronald J. Jordan, Security Analysis and Portfolio Management (Pearson, Prentice Hall, 2009), pp. 113-292, pp. 571-644 2. I M Pandey, Financial Management (Vikas Publishing House Pvt. Ltd, 2010), pp. 91-108, pp. 582-601
E- Book
1. B. Hiriyappa , Investment Management 2. Benjamin Graham, Security Analysis
Websites
1. www.reliancemoney.com 2. www.bseindia.com 3. www.nseindia.com 4. www.moneycontrol.com 5. www.investopedia.com 6. www.wikipedia.com
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XIV. Annexure
Annexure I
Reliance Money Products Range
Trading Portal
Financial Products
Gold Coins Retailing Equity Broking Mutual Funds Wealth Management Services Life Insurance Financial Planning Derivatives (Futures & Options) General Insurance Money Transfer & Loans
Commodity Broking
IPOs Demat Account

7
NFOs
Fig.2 Reliance Securities Product Range
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Annexure 2
Table7. Ratio Analysis of Selected 14 CNX Midcap Companies
year(Aurobindo) Current Ratio Quick Ratio Net Profit Margin (%) RETURN ON NET WORTH (%) Return On Capital Employed (%) Return on Assets (%) Earnings Per Share Dividend Per Share Dividend payout ratio P/E RATIO Debt Equity Ratio Interest Cover Face Value market price book value p/b ratio year(Amtek auto) Current Ratio Quick Ratio Net Profit Margin(%) RETURN ON NET WORTH (%) Return On Capital Employed(%) Return on Assets (%) Earnings Per Share Dividend Per Share Dividend payout ratio
2005-06 2006-07 2007-08 2008-09 2009-10 1.16 1.4 1.35 1.12 1.05 2.7 3.86 2.97 2.99 2.28 4.89 7.66 7.21 2.77 13.02 1.5 11.74 24.65 9.65 174.19 42.94 2.5 12.41 23.82 11.76 227.02 54.08 3.25 4.54 9.73 13.53 245.67 23.91 4.5 16.09 27.46 17.54 343.51 94.34 5
0.115207 0.058221 0.0600962 0.188206 0.0529998 54.15899 12.64089 3.1028107 38.22668 13.964384 1.33 2.13 1.44 1.6 1.02 2.71 3.99 6.64 6.44 12.47 5 5 5 5 5 705.15 542.8 167.8 914 1,317.40 169.97 174.19 227.02 245.67 343.51 4.148673 3.116138 0.7391419 3.720438 3.835114 2005-06 2006-07 2007-08 2008-09 2009-10 6.01 7.93 3.34 1.44 1.64 9.57 11.15 3.82 5.7 6.06 14.11 12.5 7.52 5.53 13.36 1.4 18.45 12.35 7.74 5.21 18.03 2 20.39 13.96 10.38 128.82 18.53 3 19.49 11.22 6.32 165.09 10.8 0.5 12.76 5.98 4.67 180.35 7.09 0.5
0.10479 0.110926 0.1618996 0.046296 0.0705219

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P/E RATIO Debt Equity Ratio Interest Cover Face Value market price book value p/b ratio year(Educomp) Current Ratio Quick Ratio Net Profit Margin(%) RETURN ON NET WORTH (%) Return On Capital Employed(%) Return on Assets (%) Earnings Per Share Dividend Per Share Dividend payout ratio P/E RATIO Debt Equity Ratio Interest Cover Face Value market price book value p/b ratio year(Punj Lloyd) Current Ratio Quick Ratio Net Profit Margin(%) RETURN ON NET WORTH (%) Return On Capital Employed(%) Return on Assets (%)
26.75524 23.59678 3.6454398 16.05556 19.541608 1.24 1.24 0.75 1 1.32 9.34 11.34 12.42 9.52 4.47 2 2 2 2 2 357.45 425.45 67.55 173.4 138.55 108.12 129.15 165.25 180.35 180.7 3.306049 3.294232 0.4087746 0.961464 0.7667405 2005-06 2006-07 2007-08 2008-09 2009-10 2.86 3.18 3.7 1.84 2.79 5.21 4.4 5.39 2.29 3.68 25.89 15.42 22.54 11.84 8.72 1.5 25.54 24.98 19.82 71.72 17.92 2 25.51 25.15 16.28 161.49 40.62 2.5 25.84 34.34 22.58 221.61 76.12 2.5 26.02 18.34 22 127.28 23.35 2.75
0.172018 0.111607 0.061546 0.032843 0.117773 109.633 265.0921 59.17159 9.374015 22.788009 0.11 1.09 1.32 1.36 0.49 44.88 35.71 25.42 17.81 10.78 10 10 10 10 2 956 4750.45 2403.55 713.55 532.1 56.59 71.75 161.51 221.61 127.28 16.89344 66.20836 14.881741 3.219846 4.1805468 2005-06 2006-07 2007-08 2008-09 2009-10 1.53 1.28 2.32 2.26 3.34 1.37 1.42 1.33 1.15 1.73 2.54 3.33 11.03 1.8 2.71 5.61 10.22 42.04 4.87 9.17 11.92 79.57 4.61 12.3 12.42 85.97 4.87 10.27 9.55 107.71
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Earnings Per Share Dividend Per Share dividend payout ratio P/E RATIO Debt Equity Ratio Interest Cover Face Value market price book value p/b ratio year(IFCI) Current Ratio Quick Ratio Net Profit Margin(%) RETURN ON NET WORTH (%) Return On Capital Employed(%) Return on Assets (%) Earnings Per Share Dividend Per Share dividend payout ratio P/E RATIO Debt Equity Ratio Interest Cover Face Value market price book value p/b ratio year(Apollo Hospital) Current Ratio Quick Ratio Net Profit Margin(%)
6.73 1
2.36 0.3
7.3 0.4
10.58 0.3
11.06 0.15
0.148588 0.127119 0.0547945 0.028355 0.0135624 152.9792 235.0424 20.143836 19.38091 10.11302 0.39 1.38 0.57 1.13 0.98 3.45 3.87 4.01 3.55 2.56 10 2 2 2 2 1029.55 554.7 147.05 205.05 111.85 202.04 42.04 79.57 85.97 107.71 5.095773 13.19458 1.8480583 2.385134 1.0384365 2005-06 2006-07 2007-08 2008-09 2009-10 8.66 8.54 7.35 6.79 8.65 8.66 6.68 6.1 5.61 7.67 -11.26 5.09 3.89 -1.56 -2.78 0 42.84 196.12 14.66 0.25 13.68 0 49.7 41.18 22.42 29.47 12.14 0 46.38 23.08 13.48 37.09 8.56 0.8 39.95 21.28 7.53 58.9 9.09 1
0 0 0 0.093458 0.110011 -4.35971 6.798246 1.7833608 6.349299 7.4037404 -4.19406 11.68994 3.0747037 2.586047 2.9420929 0.53 2.79 3.54 2.2 1.44 10 10 10 10 10 12.12 93 21.65 54.35 67.3 -61.37 0.25 29.47 37.09 58.9 -0.19749 372 0.7346454 1.465355 1.1426146
2005-06 2006-07 2007-08 2008-09 2009-10 1.49 1.66 1.71 1.76 1.61 1.33 1.48 1.64 1.64 1.65 8.37 11.12 8.91 7.98 8.2
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RETURN ON NET WORTH (%) Return On Capital Employed(%) Return on Assets (%) Earnings Per Share Dividend Per Share Dividend payout ratio P/E RATIO Debt Equity Ratio Interest Cover Face Value market price book value p/b ratio year(IDBI) Current Ratio Quick Ratio Net Profit Margin(%) RETURN ON NET WORTH (%) Return On Capital Employed(%) Return on Assets (%) Earnings Per Share Dividend Per Share Dividend payout ratio P/E RATIO Debt Equity Ratio Interest Cover Face Value market price book value p/b ratio year(Cummins India)
9.2 13.55 6.13 11.9 4.5
13.28 13.38 144.41 19.38 5
8.31 10.17 208.43 17.34 6
8.66 10.9 226.29 19.6 6.5
9.85 11.57 249.54 24.6 7
0.378151 0.257998 0.3460208 0.331633 0.2845528 36.09664 27.10268 26.046713 33.44388 18.461382 0.13 0.19 0.25 0.33 0.45 10.27 8.24 9.12 12.22 7.71 10 10 10 10 10 429.55 525.25 451.65 655.5 454.15 129.35 144.56 208.48 226.3 249.54 3.320835 3.633439 2.1663949 2.896597 1.8199487 2005-06 2006-07 2007-08 2008-09 2009-10 0.12 0.11 0.05 0.04 0.03 6.89 7.55 9.07 18.98 19.49 8.47 9.12 7.79 0.63 7.75 1.5 8.74 10 7.57 86.09 8.7 1.5 7.84 10.72 8.07 93.82 10.06 2 6.71 11.53 8.55 102.71 11.85 2.5 5.95 12.53 8.61 113.5 14.23 3
0.193548 0.172414 0.1988072 0.21097 0.2108222 9.845161 19 6.7246521 10.75527 11.577653 4.08 6.95 10.74 15.1 20.38 10 10 10 10 10 76.3 165.3 67.65 127.45 164.75 88.04 86.09 93.82 102.71 113.5 0.866652 1.920084 0.7210616 1.240872 1.4515419 2005-06 2006-07 2007-08 2008-09 2009-10
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Current Ratio Quick Ratio Net Profit Margin(%) RETURN ON NET WORTH (%) Return On Capital Employed(%) Return on Assets (%) Earnings Per Share Dividend Per Share Dividend payout ratio P/E RATIO Debt Equity Ratio Interest Cover Face Value market price book value p/b ratio year(Lupin) Current Ratio Quick Ratio Net Profit Margin(%) RETURN ON NET WORTH (%) Return On Capital Employed(%) Return on Assets (%) Earnings Per Share Dividend Per Share Dividend payout ratio P/E RATIO Debt Equity Ratio Interest Cover Face Value market price
1.96 1.36 11.37 22.53 30.83 15.21 8.87 4
2.03 1.36 11.84 24.6 35.74 46.95 12.22 4
1.54 1.14 11.45 23.36 33 55.74 14.18 4.6
1.8 1.25 12.63 28.36 39.74 70.44 21.9 9
1.58 1.05 14.96 28.82 39.02 78.84 22.42 12
0.450958 0.327332 0.3244006 0.410959 0.5352364 31.29087 33.99755 15.624118 19.55936 34.84612 0.01 -0.03 0.02 0.01 270.8 236.94 560.73 215.79 298.67 2 2 2 2 2 277.55 415.45 221.55 428.35 781.25 39.61 46.95 55.74 70.44 78.84 7.007069 8.848775 3.974704 6.081062 9.90931 2005-06 1.15 2.18 10.98 28.37 17.61 8.99 45.52 6.5 2006-07 1.22 2.02 14.89 34 18.79 110.57 37.6 5 2007-08 0.97 1.63 16.3 33.66 27.58 160.46 54.02 10 2008-09 0.83 1.02 14.09 30.31 22.04 166.06 50.35 12.5 2009-10 0.96 1.68 17.52 25.64 22.49 284.51 72.96 13.5
0.142794 0.132979 0.1851166 0.248262 0.1850329 13.44574 16.85372 11.437431 29.59881 6.5851151 1.42 0.97 0.73 0.69 0.36 9.05 8.88 18.31 12.32 27.25 10 10 10 10 10 612.05 633.7 617.85 1,490.30 480.45
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book value p/b ratio year(Exide Industry) Current Ratio Quick Ratio Net Profit Margin(%) RETURN ON NET WORTH (%) Return On Capital Employed(%) Return on Assets (%) Earnings Per Share Dividend Per Share Dividend payout ratio P/E RATIO Debt Equity Ratio Interest Cover Face Value market price book value p/b ratio year(Indrapastha Gas) Current Ratio Quick Ratio Net Profit Margin(%) RETURN ON NET WORTH (%) Return On Capital Employed(%) Return on Assets (%) Earnings Per Share Dividend Per Share dividend payout
160.42 110.57 160.46 166.06 284.51 3.815297 5.731211 3.8504923 8.974467 1.6886928
2005-06 0.99 0.59 6.49 19.98 22.25 8.53 13.43 3
2006-07 0.94 0.38 7.43 24.72 27.18 8.37 2.07 0.35
2007-08 1.14 0.48 7.92 25.29 30.55 12.37 3.13 0.4
2008-09 1.08 0.55 7.55 23.35 31.67 15.22 3.55 0.6
2009-10 1.39 0.46 12.7 24.53 36.16 25.76 6.32 1
0.22338 0.169082 0.1277955 0.169014 0.1582278 2.758749 36.37681 15.383387 32.5493 26.392405 0.57 0.52 0.35 0.26 0.04 7.26 9.08 10.72 14.11 117.11 10 1 1 1 1 37.05 75.3 48.15 115.55 166.8 67.22 8.37 12.37 15.22 25.76 0.551175 8.996416 3.8924818 7.591984 6.4751553
2005-06 0.8 0.73 19.85 27.81 44.74 15.84 7.58
2006-07 0.86 0.8 21.86 29.31
2007-08 1.1 1.05 23.75 30.08
2008-09 1.1 1.05 19.5 24.96
2009-10 0.91 0.81 19.6 26.1
45.56 46.513201 39.21893 39.305833 33.39 9.85 41.18 12.46 48.82 12.32 58.96 15.39
2.5 3 4 4 4.5 0.329815 0.304569 0.3210273 0.324675 0.2923977

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ratio P/E RATIO Debt Equity Ratio Interest Cover Face Value market price book value p/b ratio year(LIC Housing Finance) Current Ratio Quick Ratio Net Profit Margin(%) RETURN ON NET WORTH (%) Return On Capital Employed(%) Return on Assets (%) Earnings Per Share Dividend Per Share dividend payout ratio P/E RATIO Debt Equity Ratio Interest Cover Face Value market price book value p/b ratio year(Power Finance) Current Ratio Quick Ratio Net Profit Margin(%) RETURN ON NET WORTH (%) Return On Capital
15.29024 17.5533 8.1741573 16.13231 22.270955 0 0 0 0 0 78.23 24.73868 31.619104 24.23418 10 10 10 10 10 115.9 172.9 101.85 198.75 342.75 27.05 33.39 41.18 48.82 58.96 4.284658 5.178197 2.473288 4.071077 5.8132632
2005-06 20.66 25.73 16.52 15.5 7.34 1.33 24.56 6
2006-07 14.98 20.31 17.82 18.08 8.05 181.77 32.87 8
2007-08 16.95 19.02 17.82 21.13 9.08 215.66 45.59 10
2008-09 12.08 16.26 18.37 23.79 9.88 263.04 62.59 13
2009-10 13.32 18.45 19.05 19.54 8.7 356.85 69.75 15
0.2443 0.243383 0.2193463 0.207701 0.2150538 6.573697 11.62002 5.0570301 12.83831 2.8035842 10.24 10.58 11.11 11.38 10.26 1.3 1.31 1.35 1.36 1.38 10 10 10 10 10 161.45 381.95 230.55 803.55 195.55 158.42 181.77 215.66 263.04 356.85 1.019126 2.101282 1.0690439 3.054859 0.5479894
2005-06 9.31 20.68 31.04 11.93 8.76
2006-07 8.31 14.12 25.77 10.03 8.67
2007-08 8.81 14.67 23.95 11.6 9.69
2008-09 13.51 18.7 29.91 15.86 9.97
2009-10 22.61 22.61 29.18 16.92 9.76

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Employed(%) Return on Assets (%) Earnings Per Share Dividend Per Share Dividend payout ratio P/E RATIO Debt Equity Ratio Interest Cover Face Value market price book value p/b ratio year(Titan Industry) Current Ratio Quick Ratio Net Profit Margin(%) RETURN ON NET WORTH (%) Return On Capital Employed(%) Return on Assets (%) Earnings Per Share Dividend Per Share Dividend payout ratio P/E RATIO Debt Equity Ratio Interest Cover Face Value market price book value p/b ratio
2.64 9.42 3.51
85.6 8.59 2.41
90.58 10.51 3.5
108.18 17.16 4
121.32 20.54 4.5
0.372611 0.280559 0.3330162 0.2331 0.2190847 30.55879 12.654615 15.21562 15.087634 3.31 3.42 3.91 4.2 4.82 1.72 1.63 1.6 1.57 1.61 10 10 10 10 10 262.5 133 261.1 309.9 78.98 85.6 90.58 108.18 121.32 3.066589 1.4683153 2.41357 2.5544016
2005-06 1.08 0.7 4.98 31.65 27.07 8.26 16.77 3
2006-07 1.04 0.42 4.4 28.81 29.2 72.82 21.16 5
2007-08 1.12 0.27 4.92 34.45 34.19 98.26 33.85 8
2008-09 1.31 0.26 4.08 28.83 42.68 124.18 35.81 10
2009-10 1.39 0.35 5.34 34.55 48.67 163.19 56.39 15
0.178891 0.236295 0.2363368 0.279252 0.2660046 51.2254 73.8327 27.39291 39.71097 63.86416 1.6 0.75 0.59 0.32 0.1 4.58 6.72 11.78 10.54 15.26 10 10 10 10 10 859.05 1562.3 927.25 1422.05 3601.3 45.55 73.77 98.26 124.18 163.19 18.8595 21.17799 9.4366986 11.45152 22.068141
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Annexure 3
Table8. Risk and Return of Individual Securities APPOLO HOSPITALAPOLLO ADJUSTE COMPAN Month HOSPITAL D CNX MIDCAP Y RET CNX RET Apr-09 384.8 384.8 3860.8 May-09 513.15 513.15 5353.55 28.78 32.69 Jun-09 572.35 572.35 5427.25 10.92 1.37 Jul-09 553.55 553.55 5950.2 -3.34 9.20 Aug-09 525 525 6117.9 -5.30 2.78 Sep-09 548.25 548.25 6713.3 4.33 9.29 Oct-09 534.6 534.6 6579.8 -2.52 -2.01 Nov-09 528.45 528.45 7149.2 -1.16 8.30 Dec-09 655.5 655.5 7132.8 21.55 -0.23 Jan-10 684.15 684.15 7201.85 4.28 0.96 Feb-10 687 687 7167.25 0.42 -0.48 Mar-10 729.9 729.9 7704.9 6.06 7.23 Apr-10 782.55 782.55 8061.1 6.97 4.52 May-10 742.95 742.95 7755.95 -5.19 -3.86 Jun-10 751.45 751.45 8130.85 1.14 4.72 Jul-10 783.6 783.6 8415.3 4.19 3.44 Aug-10 805.9 805.9 8679.85 2.81 3.10 Sep-10 455.65 911.3 9164.25 12.29 5.43 Oct-10 521.9 1043.8 9360.7 13.58 2.12 Nov-10 479.15 958.3 8907.5 -8.55 -4.96 Dec-10 454.15 908.3 8857.2 -5.36 -0.57 Jan-11 490.4 980.8 7299.5 7.68 -19.34 Feb-11 464.8 929.6 7370.1 -5.36 0.96 Mar-11 471.2 942.4 8040.15 1.37 8.70 AVG 3.89 3.19 STOCK SPLIT ON SEPTEMBER 2010 IN THE RATIO OF 10:5 STD 9.08 8.87 VARIANCE 82.40 78.65 RSQ 0.20 INTERCEPT(ALPH A) 2.45 SLOPE(BETA) 0.45 COVRIANCE 34.02 BETA(COVAR/MVA R) 0.43 Page 44
AUROBINDO PHARMACOMPANY Month AUROBINDO ADJUSTED CNX MIDCAP RET CNX RET Apr-09 221.6 221.6 3860.8 May-09 387.55 387.55 5353.55 55.90 32.69 Jun-09 465.5 465.5 5427.25 18.33 1.37 Jul-09 589.65 589.65 5950.2 23.64 9.20 Aug-09 704.3 704.3 6117.9 17.77 2.78 Sep-09 779.1 779.1 6713.3 10.09 9.29 Oct-09 749.25 749.25 6579.8 -3.91 -2.01 Nov-09 855.9 855.9 7149.2 13.31 8.30 Dec-09 914 914 7132.8 6.57 -0.23 Jan-10 845.65 845.65 7201.85 -7.77 0.96 Feb-10 914 914 7167.25 7.77 -0.48 Mar-10 958.8 958.8 7704.9 4.79 7.23 Apr-10 951.95 951.95 8061.1 -0.72 4.52 May-10 854.6 854.6 7755.95 -10.79 -3.86 Jun-10 910.55 910.55 8130.85 6.34 4.72 Jul-10 973.8 973.8 8415.3 6.72 3.44 Aug-10 1039.6 1039.6 8679.85 6.54 3.10 Sep-10 1040.4 1040.4 9164.25 0.08 5.43 Oct-10 1179.65 1179.65 9360.7 12.56 2.12 Nov-10 1249.15 1249.15 8907.5 5.72 -4.96 Dec-10 1317.4 1317.4 8857.2 5.32 -0.57 Jan-11 1186.85 1186.85 7299.5 -10.44 -19.34 Feb-11 170 850 7370.1 -33.38 0.96 Mar-11 195.9 979.5 8040.15 14.18 8.70 AVG 6.46 3.19 STOCK SPLIT ON FEB 2011 IN THE STD 16.16 8.87 RATIO OF 10:2 VARIANCE 261.09 78.65 RSQ 0.52 INTERCEPT(ALPHA) 2.26 SLOPE(BETA) 1.32 COVRIANCE 99.11 BETA(COVAR/MVAR) 1.26
Page 45
CUMMINS INDIACOMPANY Month CUMMINS ADJUSTED CNX MIDCAP RET CNX RET Apr-09 202.35 202.35 3860.8 May-09 276.7 276.7 5353.55 31.29 32.69 Jun-09 277.05 277.05 5427.25 0.13 1.37 Jul-09 275.2 275.2 5950.2 -0.67 9.20 Aug-09 337.6 337.6 6117.9 20.44 2.78 Sep-09 349.3 349.3 6713.3 3.41 9.29 Oct-09 375.25 375.25 6579.8 7.17 -2.01 Nov-09 390.05 390.05 7149.2 3.87 8.30 Dec-09 428.35 428.35 7132.8 9.37 -0.23 Jan-10 448.7 448.7 7201.85 4.64 0.96 Feb-10 455 455 7167.25 1.39 -0.48 Mar-10 513.6 513.6 7704.9 12.11 7.23 Apr-10 569.75 569.75 8061.1 10.38 4.52 May-10 560.25 560.25 7755.95 -1.68 -3.86 Jun-10 596.05 596.05 8130.85 6.19 4.72 Jul-10 635.7 635.7 8415.3 6.44 3.44 Aug-10 737.3 737.3 8679.85 14.83 3.10 Sep-10 738.9 738.9 9164.25 0.22 5.43 Oct-10 793.1 793.1 9360.7 7.08 2.12 Nov-10 797.1 797.1 8907.5 0.50 -4.96 Dec-10 781.25 781.25 8857.2 -2.01 -0.57 Jan-11 727.1 727.1 7299.5 -7.18 -19.34 Feb-11 650.05 650.05 7370.1 -11.20 0.96 Mar-11 684.55 684.55 8040.15 5.17 8.70 AVG 5.30 3.19 STD 8.93 8.87 VARIANCE 79.81 78.65 RSQ 0.44 INTERCEPT(ALPHA) 3.16 SLOPE(BETA) 0.67 COVRIANCE 50.54 BETA(COVAR/MVAR) 0.64
Page 46
EDUCOMP SOLUTIONEDUCOM COMPANY Month P ADJUSTED CNX MIDCAP RET CNX RET Apr-09 2474.25 2474.25 3860.8 May-09 2823.55 2823.55 5353.55 13.21 32.69 Jun-09 3784.75 3784.75 5427.25 29.30 1.37 Jul-09 4107.5 4107.5 5950.2 8.18 9.20 Aug-09 4117.55 4117.55 6117.9 0.24 2.78 Sep-09 4693 4693 6713.3 13.08 9.29 Oct-09 800.6 4003 6579.8 -15.90 -2.01 Nov-09 758.95 3794.75 7149.2 -5.34 8.30 Dec-09 713.55 3567.75 7132.8 -6.17 -0.23 Jan-10 700.95 3504.75 7201.85 -1.78 0.96 Feb-10 670.15 3350.75 7167.25 -4.49 -0.48 Mar-10 747.85 3739.25 7704.9 10.97 7.23 Apr-10 681.25 3406.25 8061.1 -9.33 4.52 May-10 535.3 2676.5 7755.95 -24.11 -3.86 Jun-10 532.35 2661.75 8130.85 -0.55 4.72 Jul-10 607.7 3038.5 8415.3 13.24 3.44 Aug-10 544.35 2721.75 8679.85 -11.01 3.10 Sep-10 609.5 3047.5 9164.25 11.30 5.43 Oct-10 550.3 2751.5 9360.7 -10.22 2.12 Nov-10 563.4 2817 8907.5 2.35 -4.96 Dec-10 532.1 2660.5 8857.2 -5.72 -0.57 Jan-11 473.55 2367.75 7299.5 -11.66 -19.34 Feb-11 467.6 2338 7370.1 -1.26 0.96 Mar-11 420.5 2102.5 8040.15 -10.62 8.70 AVG -0.71 3.19 STOCK SPLIT ON OCTOBER 2009 IN THE STD 12.08 8.87 RATIO OF 10:2 VARIANCE 145.83 78.65 RSQ 0.18 INTERCEPT(ALPHA) -2.57 SLOPE(BETA) 0.59 COVRIANCE 44.04 BETA(COVAR/MVAR ) 0.56
Page 47
EXIDE INDUSTRIESEXIDE EXIDE COMPANY Month IND IND CNX MIDCAP RET CNX RET Apr-09 52.3 52.3 3860.8 May-09 70.7 70.7 5353.55 30.14 32.69 Jun-09 69.3 69.3 5427.25 -2.00 1.37 Jul-09 85.8 85.8 5950.2 21.36 9.20 Aug-09 95.7 95.7 6117.9 10.92 2.78 Sep-09 92 92 6713.3 -3.94 9.29 Oct-09 98.45 98.45 6579.8 6.78 -2.01 Nov-09 108.05 108.05 7149.2 9.30 8.30 Dec-09 115.55 115.55 7132.8 6.71 -0.23 Jan-10 111.55 111.55 7201.85 -3.52 0.96 Feb-10 107.35 107.35 7167.25 -3.84 -0.48 Mar-10 124.1 124.1 7704.9 14.50 7.23 Apr-10 122.3 122.3 8061.1 -1.46 4.52 May-10 119.15 119.15 7755.95 -2.61 -3.86 Jun-10 131.65 131.65 8130.85 9.98 4.72 Jul-10 145.3 145.3 8415.3 9.87 3.44 Aug-10 147.9 147.9 8679.85 1.77 3.10 Sep-10 163.1 163.1 9164.25 9.78 5.43 Oct-10 154.65 154.65 9360.7 -5.32 2.12 Nov-10 160.95 160.95 8907.5 3.99 -4.96 Dec-10 166.8 166.8 8857.2 3.57 -0.57 Jan-11 128.4 128.4 7299.5 -26.16 -19.34 Feb-11 136.25 136.25 7370.1 5.93 0.96 Mar-11 142.75 142.75 8040.15 4.66 8.70 AVG 4.37 3.19 STD 10.84 8.87 VARIANCE 117.42 78.65 RSQ 0.63 INTERCEPT(ALPHA) 1.27 SLOPE(BETA) 0.97 COVRIANCE 73.06 BETA(COVAR/MVAR) 0.93
Page 48
IDBICOMPANY Month IDBI ADJUSTED CNX MIDCAP RET CNX RET Apr-09 63.6 63.6 3860.8 May-09 93.2 93.2 5353.55 38.21 32.69 Jun-09 109.9 109.9 5427.25 16.48 1.37 Jul-09 105.7 105.7 5950.2 -3.90 9.20 Aug-09 103.85 103.85 6117.9 -1.77 2.78 Sep-09 127.2 127.2 6713.3 20.28 9.29 Oct-09 113.65 113.65 6579.8 -11.26 -2.01 Nov-09 121.8 121.8 7149.2 6.93 8.30 Dec-09 127.45 127.45 7132.8 4.53 -0.23 Jan-10 121.1 121.1 7201.85 -5.11 0.96 Feb-10 118.95 118.95 7167.25 -1.79 -0.48 Mar-10 115 115 7704.9 -3.38 7.23 Apr-10 125.95 125.95 8061.1 9.10 4.52 May-10 113.7 113.7 7755.95 -10.23 -3.86 Jun-10 119.15 119.15 8130.85 4.68 4.72 Jul-10 119.05 119.05 8415.3 -0.08 3.44 Aug-10 121.45 121.45 8679.85 2.00 3.10 Sep-10 152.4 152.4 9164.25 22.70 5.43 Oct-10 180.65 180.65 9360.7 17.01 2.12 Nov-10 163.35 163.35 8907.5 -10.07 -4.96 Dec-10 164.75 164.75 8857.2 0.85 -0.57 Jan-11 141.4 141.4 7299.5 -15.28 -19.34 Feb-11 131.35 131.35 7370.1 -7.37 0.96 Mar-11 142.45 142.45 8040.15 8.11 8.70 AVG 3.51 3.19 STD 12.77 8.87 VARIANCE 163.12 78.65 RSQ 0.57 INTERCEPT(ALPHA) 0.02 SLOPE(BETA) 1.09 COVRIANCE 82.14 BETA(COVAR/MVAR) 1.04
Page 49
LIC HOUSING FINANCELIC COMPANY CNX Month HOUSING ADJUSTED CNX MIDCAP RET RET Apr-09 364.05 364.05 3860.8 May-09 528.65 528.65 5353.55 37.30 32.69 Jun-09 618.7 618.7 5427.25 15.73 1.37 Jul-09 615.5 615.5 5950.2 -0.52 9.20 Aug-09 646.55 646.55 6117.9 4.92 2.78 Sep-09 771.5 771.5 6713.3 17.67 9.29 Oct-09 742.55 742.55 6579.8 -3.82 -2.01 Nov-09 860.4 860.4 7149.2 14.73 8.30 Dec-09 803.55 803.55 7132.8 -6.84 -0.23 Jan-10 773.25 773.25 7201.85 -3.84 0.96 Feb-10 752.9 752.9 7167.25 -2.67 -0.48 Mar-10 872 872 7704.9 14.69 7.23 Apr-10 958.1 958.1 8061.1 9.42 4.52 May-10 938.85 938.85 7755.95 -2.03 -3.86 Jun-10 997.5 997.5 8130.85 6.06 4.72 Jul-10 1136.45 1136.45 8415.3 13.04 3.44 Aug-10 1202.3 1202.3 8679.85 5.63 3.10 Sep-10 1436.85 1436.85 9164.25 17.82 5.43 Oct-10 1338.9 1338.9 9360.7 -7.06 2.12 Nov-10 998.85 998.85 8907.5 -29.30 -4.96 Dec-10 195.55 977.75 8857.2 -2.14 -0.57 Jan-11 180.15 900.75 7299.5 -8.20 -19.34 Feb-11 188.1 940.5 7370.1 4.32 0.96 Mar-11 225.45 1127.25 8040.15 18.11 8.70 AVG 4.91 3.19 STOCK SPLIT ON DECEMBER 2010 IN STD 13.33 8.87 THE RATIO OF 10:2 VARIANCE 177.82 78.65 RSQ 0.58 INTERCEPT(ALPHA) 1.27 SLOPE(BETA) 1.14 COVRIANCE 86.04 BETA(COVAR/MVAR) 1.09
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LUPINCOMPANY CNX Month LUPIN ADJUSTED CNX MIDCAP RET RET Apr-09 717.05 717.05 3860.8 May-09 833.85 833.85 5353.55 15.09 32.69 Jun-09 817.1 817.1 5427.25 -2.03 1.37 Jul-09 945.9 945.9 5950.2 14.64 9.20 Aug-09 1015.15 1015.15 6117.9 7.07 2.78 Sep-09 1136.85 1136.85 6713.3 11.32 9.29 Oct-09 1226.25 1226.25 6579.8 7.57 -2.01 Nov-09 1374.45 1374.45 7149.2 11.41 8.30 Dec-09 1490.3 1490.3 7132.8 8.09 -0.23 Jan-10 1420.45 1420.45 7201.85 -4.80 0.96 Feb-10 1497.65 1497.65 7167.25 5.29 -0.48 Mar-10 1624.55 1624.55 7704.9 8.13 7.23 Apr-10 1707.75 1707.75 8061.1 4.99 4.52 May-10 1861 1861 7755.95 8.59 -3.86 Jun-10 1966.1 1966.1 8130.85 5.49 4.72 Jul-10 1878.6 1878.6 8415.3 -4.55 3.44 Aug-10 356.05 1780.25 8679.85 -5.38 3.10 Sep-10 388.55 1942.75 9164.25 8.74 5.43 Oct-10 438.2 2191 9360.7 12.03 2.12 Nov-10 509.85 2549.25 8907.5 15.14 -4.96 Dec-10 480.45 2402.25 8857.2 -5.94 -0.57 Jan-11 422.6 2113 7299.5 -12.83 -19.34 Feb-11 381.75 1908.75 7370.1 -10.17 0.96 Mar-11 415.35 2076.75 8040.15 8.44 8.70 AVG 4.62 3.19 STOCK SPLIT ON AUGUST IN STD 8.27 8.87 THE RATIO OF 10:2 VARIANCE 68.45 78.65 RSQ 0.27 INTERCEPT(ALPHA) 3.08 SLOPE(BETA) 0.48 COVRIANCE 36.35 BETA(COVAR/MVAR) 0.46
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PUNJ LLYODPUNJ COMPANY CNX Month LLYOD ADJUSTED CNX MIDCAP RET RET Apr-09 115.85 115.85 3860.8 May-09 203.65 203.65 5353.55 56.41 32.69 Jun-09 209.65 209.65 5427.25 2.90 1.37 Jul-09 246.5 246.5 5950.2 16.19 9.20 Aug-09 268.9 268.9 6117.9 8.70 2.78 Sep-09 267.3 267.3 6713.3 -0.60 9.29 Oct-09 202.1 202.1 6579.8 -27.96 -2.01 Nov-09 198.5 198.5 7149.2 -1.80 8.30 Dec-09 205.05 205.05 7132.8 3.25 -0.23 Jan-10 187.35 187.35 7201.85 -9.03 0.96 Feb-10 174.9 174.9 7167.25 -6.88 -0.48 Mar-10 177.4 177.4 7704.9 1.42 7.23 Apr-10 165.05 165.05 8061.1 -7.22 4.52 May-10 120.05 120.05 7755.95 -31.83 -3.86 Jun-10 136.1 136.1 8130.85 12.55 4.72 Jul-10 126.55 126.55 8415.3 -7.28 3.44 Aug-10 105.3 105.3 8679.85 -18.38 3.10 Sep-10 126.6 126.6 9164.25 18.42 5.43 Oct-10 117.85 117.85 9360.7 -7.16 2.12 Nov-10 98.5 98.5 8907.5 -17.94 -4.96 Dec-10 111.85 111.85 8857.2 12.71 -0.57 Jan-11 94.4 94.4 7299.5 -16.96 -19.34 Feb-11 59.95 59.95 7370.1 -45.40 0.96 Mar-11 64.7 64.7 8040.15 7.63 8.70 AVG -2.53 3.19 STD 20.45 8.87 VARIANCE 418.30 78.65 RSQ 0.50 INTERCEPT(ALPHA) -7.75 SLOPE(BETA) 1.64 COVRIANCE 123.12 BETA(COVAR/MVAR) 1.57
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TITANMonth Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 TITAN ADJUSTED CNX MIDCAP 748.4 748.4 3860.8 1073.95 1073.95 5353.55 1173.9 1173.9 5427.25 1226.75 1226.75 5950.2 1229.95 1229.95 6117.9 1249.1 1249.1 6713.3 1255.4 1255.4 6579.8 1331.25 1331.25 7149.2 1422.05 1422.05 7132.8 1498.8 1498.8 7201.85 1748.95 1748.95 7167.25 1840.9 1840.9 7704.9 2129.45 2129.45 8061.1 2225.1 2225.1 7755.95 2365.55 2365.55 8130.85 2802.4 2802.4 8415.3 2932.75 2932.75 8679.85 3279.05 3279.05 9164.25 3553.45 3553.45 9360.7 3698.65 3698.65 8907.5 3601.3 3601.3 8857.2 3593.05 3593.05 7299.5 3328.6 3328.6 7370.1 3810.85 3810.85 8040.15 AVG STD VARIANCE RSQ INTERCEPT(ALPHA) SLOPE(BETA) COVRIANCE BETA(COVAR/MVAR) COMPANY CNX RET RET 36.12 8.90 4.40 0.26 1.54 0.50 5.87 6.60 5.26 15.44 5.12 14.56 4.39 6.12 16.95 4.55 11.16 8.04 4.00 -2.67 -0.23 -7.64 13.53 7.08 8.67 75.20
32.69 1.37 9.20 2.78 9.29 -2.01 8.30 -0.23 0.96 -0.48 7.23 4.52 -3.86 4.72 3.44 3.10 5.43 2.12 -4.96 -0.57 -19.34 0.96 8.70 3.19 8.87 78.65 0.45 4.99 0.66 49.32 0.63
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Basics Of Finance In Stock Market And Portfolio Management At Reliance Securities

Basics Of Finance In Stock Market And Portfolio Management At Reliance Securities

2.2 Company profile

Basics Of Finance In Stock Market And Portfolio Management At Reliance Securities

2.3 Reliance Money product range

2.4 Reliance Money organizational hierarchy

Basics Of Finance In Stock Market And Portfolio Management At Reliance Securities

3. Objectives Of The Project

Basics Of Finance In Stock Market And Portfolio Management At Reliance Securities

5.2 Types of financial market

5.3 Indian financial system

Basics Of Finance In Stock Market And Portfolio Management At Reliance Securities

5.4 Stock market

Basics Of Finance In Stock Market And Portfolio Management At Reliance Securities

Basics Of Finance In Stock Market And Portfolio Management At Reliance Securities

Basics Of Finance In Stock Market And Portfolio Management At Reliance Securities

Basics Of Finance In Stock Market And Portfolio Management At Reliance Securities

Basics Of Finance In Stock Market And Portfolio Management At Reliance Securities

Basics Of Finance In Stock Market And Portfolio Management At Reliance Securities

5.6.1 Economic analysis

Basics Of Finance In Stock Market And Portfolio Management At Reliance Securities

Basics Of Finance In Stock Market And Portfolio Management At Reliance Securities

5.6.2 Industry analysis

Basics Of Finance In Stock Market And Portfolio Management At Reliance Securities

5.6.3 Company analysis

Basics Of Finance In Stock Market And Portfolio Management At Reliance Securities

Basics Of Finance In Stock Market And Portfolio Management At Reliance Securities

5.7.2 Portfolio age relationship

70% in equity 10% in cash 20% in fixed income

60% in equity 10% in cash 30% in fixed income

50% in equity 10% in cash 40% in fixed income

40% in equity 10% in cash 50% in fixed income

Basics Of Finance In Stock Market And Portfolio Management At Reliance Securities

5.7.3 Portfolio management:

Basics Of Finance In Stock Market And Portfolio Management At Reliance Securities

There are two theories of portfolio management under modern portfolio-

1. MARKOWITZ THEORY: Markowitz has suggested a systematic search for

2. SHARPES THEORY: William Sharpe has suggested a simplified method of

Basics Of Finance In Stock Market And Portfolio Management At Reliance Securities

Basics Of Finance In Stock Market And Portfolio Management At Reliance Securities

Table.1 List of the CNX Midcap companies

Company Name Amtek Auto Apollo Hospitals Enterprises

Industry Automobile Miscellaneous

Punj Llyod Titan Industries

6.2 Data collection

Basics Of Finance In Stock Market And Portfolio Management At Reliance Securities

6.3 Data analysis method

Basics Of Finance In Stock Market And Portfolio Management At Reliance Securities

32.37649 0.58 2133.84 28.03 0.27 821.4 5019.6

33.71939 0.45 902.4

Basics Of Finance In Stock Market And Portfolio Management At Reliance Securities

8.1 Simple Sharpe portfolio optimization

Table3. Ranking of the Securities on the basis of Excess Return to Beta

Basics Of Finance In Stock Market And Portfolio Management At Reliance Securities

32.38 31.34 31.06 30.96 28.68 28.03 25.95 20.36

1.14 0.97 0.67 1.09 1.64 0.48 0.45 0.59

907.27752 521.01858 534.04818 839.71122 2481.1555 603.94848 797.6805 1421.4232

For a portfolio of i stock, C is given by

(Ri-Rf)i 2ei (1) i / i=0

the market index; that is the stocks unsystematic risk.

Table4. Cut-Off Value of the Securities

Basics Of Finance In Stock Market And Portfolio Management At Reliance Securities

0.02989 TITAN 33.71939 0.66 8 0.04637 LIC HOUSING 32.37649 1.14 7

0.00088 7 0.00143 2 0.00180 0.115991 0.00349 0.069614 0.002057