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A PROJECT ON PORTFOLIO DESIGNING BASED ON SECTOR INDEX ANALYSIS AND SECURITY ANALYSIS

Presented to: Xcellon InstituteSchool of Business

Presented By: Nirali Mehta(M00144) Harsh desai(M00148) Sanjay Thacker(M00130) Umang Chavda(M00131)

FLOW OF PRESENTATION
Flow of Presentation Scope of the project Introduction of the topic Industry Profile Company Profile Research Methodology Findings Suggestions Learnings References

SCOPE OF THE PROJECT


We have studied about financial services & Stock Broking Industry.

We have Studied the impact of external variables on sector indices.


We have analyzed the sector indices & securities by using Statistical tools Risk(Standard deviation), Return(Average), Sharpe ratio, etc. We have identify the top script from the sector indices. We have designed the portfolio which gives highest shape ratio.

FINANCIAL INDUSTRY PROFILE


Includes a wide range of companies. Institutions involved with money management, lending, investing, insuring and securities insurance and trading services. The financial markets have been classified as below:
Bond market

Other Market
Financial Market Derivatives Market OTC

Stock Market

Foreign Exchange

http://www.icra.in/

BROKERAGE INDUSTRY
Two type of market The primary market The Secondary market Stock exchange is the part of an auction market Market Capitalization: $989 bn., Listed Companies: 1635 Turn over of equity: 25% proprietary, 30% retail, 45% institutional Trading in NSE and BSE
Cash NSE BSE 34% 14% Equity 48% 07% Debt 31% 26%

Both

52%

45%

43%

Growth in equity brokerage: Decrease 46%(in 2011) to 5%(in 2012), and increase in 2013 to 16%.
http://www.icra.in/

DEMAND & SUPPLY DRIVERS


Demand Drivers Potential yield Risk Rating Liquidity Availability of information Access to alternatives Supply Drivers Money supply Interest rates Inflation Economic conditions Government Regulations

http://www.icra.in/

STRATEGIC ANALYSIS

From PESTAL analysis we come to know that..


This industry is highly depends on the economic factors like Industrial growth as well as growth rate of individual SEBIs operations and guidance are very effective and it protect industry from scams. investors aggressiveness also plays an important role. This whole industry is very much depends on technology but compare to developed counties we are far behind.

PORTERS FIVE FORCES


Factor supplier buyer Competitors Avg. 3.166667 3.333333 4.5 Interpretation Medium Medium very high supplier
4.5 4 3.5 3 2.5 2 1.5 1 0.5 0

Substitute product 4.5 very high

New entrants 2.75 Below Medium

New entrants

buyer Avg.

Substitute product
Authors own compilation

Competitors

STRATEGIC GROUP MAPPING

Authors own compilation

MARKET STRUCTURE
FOLLOW ER: The players like 5 paisa, Motilal Oswal, HDFC Securities, Kotakstreet are the followers.

LEADER

ICICIdirect.com is a leader in the online account which is having 1, 24,000 accounts in the country. While in offline account Share khan is leading with 64,000 offline accounts.

NICHER

ICICIdirect.com and Kotak street.com are the two stock broking houses which are focusing only on online investors.

Sharekhan, Kotakstreet and Indiabulls come under this head. Sharekhan challenges competitors by providing quality services and research based CHALLEN advice. Indiabulls is also challenging with low brokerage rates and class one services. GER

Authors own compilation

COMPARATIVE ANALYSIS
A/c Brokerage COMPANY Opening (Intraday, Charges Delivery) Marwari Share khan NIL NIL 3p,30p 5p,50p AMC Trading Interest Debit Mode of Margin Exposure Rate Period Trading Money 5 times 18% 19% T+2 T+4 Online/ Rs 5000 Offline Online/ Rs 5000 Offline Online/ Offline NIL Rs 350pa

1st yr free, 4-6 times 2nd yr Rs 400 Rs 500pa 3-4 times

ICICI Direct Rs 750

50p,75p

18%

T+2

India bulls
Angel broking

Rs 900
Rs 660

3-4p, 30-40p
3p,20p

NIL
Rs 225

4-5 times
4-6 times

17%
18%

T+2
T+2

Online/ Offline
Both

NIL
Rs 5000/ 10,000

Authors own compilation

PART -1 RESEARCH (SECONDARY)

INTRODUCTION TO RESEARCH
Objective of Secondary Research To know the best performing script in the market on the Basis of Sharpe Ratio Four type of Indices: 1. Broad-Based Index 2. Sector Indices 3. Thematic Indices 4. Strategy Indices

RESEARCH METHODOLOGY
Population: 66 Indices & 5286 stocks listed on NSE and BSE
Sample size:
We have analyzed 35 indices to know that which index is more profitable. We have analyzed scripts of all Sector indices. Our sample size is 35 indices & 149 stocks

Research Design: Exploratory Research Design. Sources of data:


Secondary Sources http://www.nseindia.com, www.portfoliomanagement.in

Tools and techniques:


Statistical analysis Risk(standard deviation) and return(average) analysis on the bases of 10 years data Sharp Ratio Correlation Covariance Matrix multiplication Transpose Solver

RISK, RETURN & SHARPE RATIO


Return:
Yearly Return: Xi = Closing Price Opening Price Opening Price RETURN: = Xi or Average of Return. n

Risk = Standard Deviation =

Sharpe ratio
Sharpe ratio Describe how much excess return you are receiving for the extra volatility that you endure for holding a riskier assets. S(X) = (Rx-Rf )/Stdev(x) Where, X = investment Rx = average rate of return of X Rf = best available rate of return of a risk free security Stdev (x) = standard deviation of Rx

http://www.investopedia.com/articles/07/sharpe_ratio.asp

SECURITY ANALYSIS INDEX ANALYSIS

SECTORIAL INDICES
Return AUTO BANK ENERGY FINANCE FMCG IT MEDIA METAL PHARMA PSU BANK REALTY 0.32 0.23 0.17 0.26 0.24 0.27 0.15 0.38 0.18 0.15 -0.12 Risk 0.66 0.42 0.42 0.47 0.24 0.60 0.51 0.92 0.25 0.42 0.55 Sharp Ratio 0.37 0.35 0.21 0.40 0.70 0.31 0.14 0.33 0.38 0.18 -0.36

Sectorial indices
2.00 1.50 1.00 0.50 0.00 -0.50 auto bank energy finance fmcg IT media metal pharma psu bank realty

Return

Risk

Sharp Ratio

Return: Metal, IT, Finance Sharp Ratio: FMCG, Finance, Pharma Authors own compilation

SCRIPT ANALYSIS

AUTO SECTOR
RETURN RISK SHARPE RATIO

AMARA RAJA
BOSCH AMTEK BAJAJ HERO MOTOCORP EICHER MOTORS M&M MRF EXIDE ASHOK MOTHERSON APOLLO MARUTI BHARAT TATA

0.423
0.272 0.120 0.727 0.045 0.527 0.322 0.464 0.189 0.214 0.152 0.153 0.310 0.123 0.490

0.939
0.191 0.692 1.554 0.067 0.660 1.061 0.745 0.766 0.892 0.493 0.670 0.731 0.885 1.419

0.365
1.005 0.058 0.416 -0.528 0.677 0.228 0.515 0.143 0.151 0.145 0.110 0.315 0.049 0.289

CONT.
Auto
2.00 1.50 1.00 0.50 0.00 -0.50

-1.00
Return Risk Sharp Ratio

Return- Bajaj, Eicher Motors, TATA Sharp Ratio: Bosch, Eicher Motors, MRF

Authors own compilation

Bank
RETURN SBI HDFC AXIS KOTAK INDUS ICICI UBI PNB BOB CANARA BOI 0.222 0.211 0.180 0.387 0.571 0.260 0.123 0.098 0.210 0.144 0.179 RISK 0.497 0.525 0.586 0.930 1.111 0.521 0.472 0.344 0.508 0.527 0.411 SHARPE RATIO 0.286 0.250 0.171 0.330 0.442 0.346 0.092 0.053 0.256 0.121 0.242

Bank
1.20 1.00 0.80 0.60 0.40 0.20 0.00
ubi kotak

pnb

SBI

icici

axis

HDFC

BOB

Return

Risk

Sharp Ratio

Return: Indus, Kotak, ICICI Sharp Ratio: Indus, ICICI, Kotak

Authors own compilation

Canara

indus

BOI

FINANCE SECTOR
RETURN REL CAP BAJAJ HDFC SHREE RAM MAHINDRA LIC PFC IDFC REC LTD 0.632 0.500 0.156 0.690 0.195 0.297 0.178 0.349 0.514 RISK 1.377 0.677 0.537 1.023 0.639 1.013 0.586 0.937 1.091 SHARPE RATIO 0.401 0.621 0.141 0.596 0.180 0.214 0.168 0.287 0.398

Finance
1.50 1.00 0.50 0.00

Return

Risk

Sharp Ratio

Return: Shree Ram, Rel. Capital, Rec. Ltd. Sharp Ratio: Bajaj, Shree Ram, Rel. Capital

Authors own compilation

FMCG SECTOR
COMPANY NAME HINDUNILVR Return 0.18 Risk 0.10 Sharp Ratio 1.01

ITC
DABUR COLPAL GODREJCP EMAMILTD

0.02
0.18 0.25 0.27 0.19

0.42
0.57 0.31 0.53 0.58

-0.13
0.17 0.56 0.35 0.19

BRITANIYA
TATA EID GSK UBL

0.12
0.20 0.00 0.40 0.83

0.45
0.50 0.59 0.47 0.99

0.09
0.25 -0.14 0.69 0.76

PGHH
JUBL FOOD MCD MCLEODRUSS

0.25
0.30 0.84 0.58

0.43
0.37 1.31 1.58

0.40
0.60 0.58 0.32

CONT.
FMCG
2.00 1.50 1.00

0.50
0.00 -0.50

Return Return: MCD, UBL, Mcleodruss. Sharp Ratio: Hindunilvr, UBL, GSK

Risk

Sharp Ratio

Authors own compilation

IT SECTOR
POLARISE HCL KPIT ECLERX MINDTREE OFSS INFI TCS NIITTECH WIPRO NAUKRI MPHSIS TECHM PERSISTANCE HEXAWARE CMC COREDUTEC FINATECH ROLTA RETURN 0.245 0.395 0.334 0.653 0.481 0.928 0.171 0.139 0.268 0.121 0.190 0.425 0.432 0.411 0.272 0.539 -0.354 0.161 0.309 RISK 1.175 0.870 1.393 1.482 0.982 1.791 0.471 0.430 0.652 0.740 0.780 1.457 1.284 0.587 1.307 1.247 0.824 0.924 0.901 SHARPE RATIO 0.140 0.362 0.182 0.387 0.408 0.473 0.192 0.137 0.289 0.056 0.141 0.236 0.274 0.564 0.147 0.368 -0.527 0.088 0.254

CONT.
IT
2.00
1.50 1.00 0.50

0.00
persistance

mphsis

hexaware

mindtree

ofss

niittech

hcl

wipro

naukri

techm

finatech

polarise

eclerx

-0.50 -1.00

Return

Risk

Sharp Ratio

Return: OFSS, ECLERX, CMC Sharp Ratio: PERSISTANCE, OFSS, MindTree Authors own compilation

coredutec

rolta

infi

tcs

cmc

kpit

MEDIA SECTOR
RETURN D.B. CORP LTD 0.071 RISK 0.315 SHARPE RATIO -0.028

PVR
DEN NETWORK LTD ENTERTAINMENT NETWORK EROS INTERNATIONAL LTD HATHWAY CABLE AND DATACOM LTD HINDUJA VENTURE LTD HT MEDIA

0.401
0.513 0.225 0.039 0.412 0.176 -0.038

0.765
1.711 0.663 0.233 1.023 0.885 0.586

0.419
0.253 0.218 -0.175 0.324 0.108 -0.201

JAGRAN PRAKASHAN LIMITED


PRIME FOCUS LIMITED SHREE ASTHAVINAYAK CINE VISION SUN TV NETWORK LIMITED TV 18 BROADCAST LIMITED ZEE ENTERTAINMENT ENTERPRISES

0.226
0.213 -0.535 0.019 -0.029 0.128

0.888
1.255 0.378 0.642 0.335 0.629

0.164
0.106 -1.625 -0.095 -0.325 0.075

CONT.
Media
2.00 1.50

1.00
0.50 0.00

-0.50
-1.00 -1.50 -2.00 Return Risk Sharp Ratio

Return: Den Network Ltd., Hathway Cable and datacom Ltd., PVR. Sharp Ratio: PVR, Hathway Cable and data com Ltd., Den Network Ltd. Authors own compilation

METAL
RETURN BHUSHAN STEEL LIMITED COAL INDIA LIMITED GUJARAT MINERAL DEVELOPMENT CO. HINDALCO INDUSTRY HINDUSTAN COPPER LIMITED JINDAL SAW LIMITED JINDAL STEEL & POWER LIMITED JSW STEEL LIMITED MOIL LIMITED 0.771 -0.016 0.244 0.240 -0.392 -0.018 0.418 0.767 -0.164 Risk 1.644 0.183 0.963 1.035 0.140 0.782 0.624 1.451 0.468

SHARPE RATIO
0.420 -0.523 0.170 0.154 -3.367 -0.125 0.542 0.474 -0.522

NATIONAL ALUMINIUM COMPANY LIMI


NMDC LIMITED SEEL AUTHORITY OF INDIA LIMITED TATA STEEL LIMITED THE ORISSA MINERALS DEV CO. LTD

0.082
0.135 0.578 0.268 -0.591

0.724
0.813 1.729 0.821 0.246

0.002
0.068 0.288 0.230 -2.728

CONT.
2.00 1.00

Metal

0.00 -1.00
-2.00 -3.00 -4.00

Return

Risk

Sharp Ratio

Return: Bhushan Steel Limited, Jsw Steel Limited, Seel Authority of India Limited. Sharp Ratio: Jindal Steel & Power Ltd., Jsw Steel Limited, Bhushan Steel Limited Authors own compilation

PHARMA
RETURN CADILA CIPLA DIVI'S LAB. 0.016 0.080 0.067 RISK 0.295 0.369 0.491 SHARPE RATIO -0.217 0.000 -0.026

Pharma
0.80 0.60 0.40 0.20 0.00 -0.20 -0.40 Return Risk Sharp Ratio

DR.REDDY
GLEXO GLEN MARK LUPIN RENBEXY SUN PHARMA

0.210
0.136 0.102 0.144 0.009 0.088

0.531
0.228 0.489 0.570 0.499 0.381

0.245
0.244 0.045 0.113 -0.143 0.021

Return: Dr.reddy, Glexo, Lupin. Sharp Ratio: Dr.reddy, Glexo and Lupin.

Authors own compilation

REALTY
SHOBHA GODHRAGE OBEROI THE PHOENIX ANANT RAJ LTD UNITECH LTD INDIA BULLS DLF PRESTIGE HOUSING DEV. RETURN 0.155 -0.234 0.002 0.158 -0.157 0.110 -0.103 -0.173 0.279 0.047 RISK 0.783 0.440 0.322 0.872 0.789 0.981 0.650 0.390 1.099 1.106 SHARPE RATIO 0.096 -0.712 -0.242 0.090 -0.301 0.030 -0.282 -0.649 0.181 -0.030

Return: Prestige, The Phoenix Mills Limited and Shobha

Sharp Ratio: Prestige , Shobha and The Phoenix Mills Limited

Realty
2.00 1.00 0.00 -1.00 Return Risk Sharp Ratio

Authors own compilation

ENERGY SETOR
CAIRN INDIA GAIL NTPC BPCL INDIAN OIL PGCI ONGC RELIENCE TATA POWER REL. POWER RETURN 0.077 0.164 0.096 0.018 -0.041 -0.028 0.035 0.176 0.169 -0.028 RISK 0.322 0.555 0.353 0.362 0.360 0.257 0.484 0.556 0.742 0.365 SHARPE RATIO -0.009 0.151 0.046 -0.170 -0.336 -0.422 -0.093 0.172 0.120 -0.295

Return: Reliance, Tata Power and Gail Sharp Ratio: Reliance, Gail and Tata Power

ENERGY
1.500 Axis Title 1.000 0.500 0.000 -0.500 SHARPE RATIO RISK RETURN

PSU SECTOR
SHARPE RETURN RISK RATIO Syndicate Bank INDIAN oVERSEAS Bank Indian Bank Orient bank Andhra Bank IDBI Allahabad Bank 0.133 0.194 0.123 0.066 0.065 0.102 0.189 0.457 0.595 0.472 0.506 0.487 0.630 0.652 0.115 0.191 0.092 -0.028 -0.030 0.036 0.167

Return: Indian Overseas Bank, Allahabad Bank, Syndicate Bank


Sharp Ratio: IOB, Allahabad Bank, Syndicate Bankx

PSU BANK
1.500 1.000 0.500 0.000

SHARPE RATIO RISK RETURN

DERIVED SCRIPTS
AUTO BANK FINANCE FMCG IT METAL

AMARA RAJA BOSCH BAJAJ AUTO EICHER MRF MARUTI

KOTAK, INDUS, ICICI

REL CAP, BAJAJ, SHREE RAM, REC LTD

HINDUNILVR, COLPAL, GODREJCP, GSK, UBL, PGHH, JUBL FOOD, MCD, MCLEODRUSS

HCL, ECLERX, MINDTREE, OFSS, PERSISTAN CE, CMC, PVR, HATHWAY CABLE AND DATACOM LTD

BHUSHAN STEEL LIMITED, JINDAL STEEL & POWER LIMITED, JSW STEEL LIMITED

We have derived these scripts who have Sharpe ratio more than 0.30. Some sector like media, realty, PSU bank, energy, pharma etc are not giving good Sharpe ratio so we have ignore those all sector Authors own compilation

PART 2 RESEARCH (PRIMARY)

RESEARCH METHODOLOGY
Objective
This Study is Conducted by us for understanding that how professionals are creating portfolios

Population: This study is limited to interviewing the Financial Advisor who is creating their own portfolio for their clients. Sample size: We haveTaken 5 interview for understanding creation of portfolio
Company ING VYSYA Shree investment Name Kunal joshi Shailesh Mittal ICICI Bank Vikash Verma Angel broking Marwadi shares Bipin Rajput Bhavik Shah

Research Design: In depth Interview Research Instruments : Discussion guide.

FINDINGS
we are able to know that portfolio functioning was based on Market risk, so one can get the help from the professional portfolio manager or merchant banker if required before investment because applicability of practical knowledge through analysis can help an investor to reduce risk.

Researcher told us that in a selection of securities main three parameters we should consider they are as follows,
Economy Industry Company They are also considering investors interest area

If we see the elimination part than we are able to know that it depends on the risk taking capacity of the investors and performance of the company as well as growth of industry. For elimination of script they are also considering BCG Matrix(Company Growth Rate, Industry Growth Rate)

PORTFOLIO THEORY

PORTFOLIO
Portfolio means a collection of securities owned by an investor . It represents the total holdings of a securities belonging to any person.

Need of making portfolio


Basic need of making portfolio is Minimize risk and maximize profit Providing regular or stable income Creating safety of investment and capital appreciation Providing marketability and liquidity Minimizing tax liability

Types of Portfolio
Conservative portfolio and aggressive portfolio Domestic portfolio and International portfolio Optimal portfolio and Minimum variance portfolio

P O R T F O L I O

Security analysis

First step of portfolio management. Mainly involves evaluation and the risk return features of individual securities Types: Equity share, preference share, debentures and bonds Include fundamental analysis and technical analysis. Portfolio refers to a group of security. After analyzing securities Investor can make more then one combination of securities. Evaluate each combination according to risk and return . This phase require Statistical calculation for calculate risk and return Third and most important phase of portfolio creation. Done on the bases evaluation of all combination. Select the combination which give maximum return at lowest possible risk Risk taking ability of investor is also impact on selection of portfolio.

Portfolio analysis

Portfolio Selection

Portfolio revision

Economy and financial market both are not stable Because of the changes in both factor revision of portfolio require. Because of this changes it may arise new opportunities for the investor. Other securities may also promise high return with low risk Investor have choice to sell existing security and purchase new security
Check performance of portfolio Record performance of portfolio over a selected period of time in term of risk and return This shows result of investment decisions taken by investor. This helps investor to improve his decision making

Portfolio evaluation

M A N A G E M E N T

ADVANTAGES OF DIVERSIFIES PORTFOLIO


Diversifies portfolio

Advantages

Disadvantages

Risk reduction and diversification

Asset choice

Lower maintenance

Missed windfall

Increased exposure

http://wiki.fool.com/Advantages_and_Disadvantages_of_a_Diversified_Portfolio

PORTFOLIO CREATION

SELECTION OF SCRIPTS & WEIGHT ALLOCATION(Step 1)


R 1 Amara Raja Bosch 2 limited Bajaj Auto 3 Limited Eicher 4 Motors SD SR W R SD SR W R SD SR W 0.42 0.94 0.36 0.03 12 shree ram 0.69 1.02 0.60 0.03 23 hcl 0.27 0.19 1.00 0.03 13 rec ltd 0.51 1.09 0.40 0.03 24 eclerx HINDUNIL 0.73 1.55 0.42 0.03 14 VR 0.18 0.10 1.01 0.03 25 mindtree 0.53 0.66 0.68 0.03 15 COLPAL 0.25 0.31 0.56 0.03 26 ofss 0.40 0.87 0.36 0.03 0.65 1.48 0.39 0.03 0.48 0.98 0.41 0.03 0.93 1.79 0.47 0.03

5 MRF 0.46 0.75 0.52 0.03 16 GODREJCP 0.27 0.53 0.35 0.03 27 persistance Maruti 6 Suzuki India 0.31 0.73 0.32 0.03 17 gsk 0.40 0.47 0.69 0.03 28 cmc 7 Kotak 0.39 0.93 0.33 0.03 18 ubl 0.83 0.99 0.76 0.03 29 PVR Hathway cable 8 Indus 0.57 1.11 0.44 0.03 19 pghh 0.25 0.43 0.40 0.03 30 and datacom ltd Bhushan Steel 9 Icici 0.26 0.52 0.35 0.03 20 jubl food 0.30 0.37 0.60 0.03 31 Limited Jindal Steel & 10 rel cap 0.63 1.38 0.40 0.03 21 mcd 0.84 1.31 0.58 0.03 32 Power Limited mcleodrus Jsw Steel 11 Bajaj 0.50 0.68 0.62 0.03 22 s 0.58 1.58 0.32 0.03 33 Limited

0.41 0.59 0.56 0.03


0.54 1.25 0.37 0.03 0.40 0.77 0.42 0.03 0.41 1.02 0.32 0.03

0.77 1.64 0.42 0.03


0.42 0.62 0.54 0.03

0.77 1.45 0.47 0.04

PORT FOLIO CALCULATION


Use of matrix multiplication method Standard deviation of portfolio
wVw

where w = vector - weights of securities w = transpose of w - vector


V = DCD = Variance Matrix D = Standard deviation Matrix C = Correlation matrix
CONT.

Calculate V (Step 2)
Standard Deviation Matrix Correlation Matrix V = ((D*C)*D) Excel Formula V =MMULT(MMULT(D,C),D) Matrix Step 2.xlsx

Calculate Return (Step 3)


Manually Return = (w1*r1)+ (w2*r2)+ (w3*r3)+(w4*r4)+(w5*r5) ...+(w n*r n) Calculation of Return by using Excel= =MMULT(TRANSPOSE(W),R) Where, w = vector of weight allocated to securities R = Vector of return of all securities

CONT.

Calculate risk (Step 4)


Manually calculation of risk(for two securities): (W1^2*1^2)+(W2^2*2^2)+2(W1*W2*r12* 1*2) Calculation of risk by using Excel = wVw =SQRT(MMULT(MMULT(TRANSPOSE(W),V),W))

Calculate Sharpe Ratio (Step 5)


Return/Risk
Return ER(p) S.D. r. ESD(p) S.R. 0.498695 0.728089 0.684937

CONT.

Use of Solver (Step 6)


For find a efficient portfolios we have use solver in Excel

CONT.

EFFICIENT PORTFOLIOS
Sr. No SCRIPT Return 1 BOSCH LIMITED 0.27 2 EICHER MOTORS LIMITED 0.53 3 HINDUNILVR 0.18 4 COLPAL 0.25 5 GSK 0.4 6 UBL 0.83 7 PGHH 0.25 8 JUBL FOOD 0.3 9 MCD 0.84 10 PERSISTENCE 0.41 11 PVR 0.4 JINDAL STEEL & POWER 12 LIMITED 0.42
RETURN S.D. R. S.R.

Risk 0.19 0.66 0.1 0.31 0.47 0.99 0.43 0.37 1.31 0.59 0.77
0.62

Sharpe Sharpe Sharpe Sharpe Sharpe ratio 2 ratio 3 ratio 4 ratio 5 ratio 6 0.64 0.67 0.66 0.63 0.61 0.02 0.01 0 0 0 0.05 0.06 0.06 0.07 0.07 0.02 0.01 0 0 0 0.02 0.02 0.01 0.01 0.01 0.04 0.01 0 0 0 0.01 0 0 0 0 0.01 0 0 0 0 0.01 0 0 0 0 0.04 0.06 0.08 0.1 0.11 0.02 0.01 0 0 0 0.12 1 0.33 0.16 2 0.16 1 0.31 0.1 3 0.18 1 0.31 0.08 4 0.19 1 0.31 0.06 5 0.2 1 0.31 0.05 6

FINAL FINDINGS (PORTFOLIO)


Sharpe
Company Name 1 2 3 4 5 BOSCH LIMITED HINDUNILVR GSK PERSISTENCE JINDAL STEEL & POWER LIMITED E(RP) SD(P) SHARPE RATIO OF PORT FOLIO Return 0.27 0.18 0.40 0.41 0.42 Risk 0.19 0.10 0.47 0.59 0.62 Ratio 0.61 0.07 0.01 0.11 0.2 0.31 0.05 6.00

LEARNINGS
We learnt different types of indices available in the stock market. We learnt about levels at which invest and sell a particular stock. We learnt about the market factors which impact the stock market. We learnt to use MS. Excel with the advanced statistical tools and techniques. We learnt to use advanced tools like Solver and Data Analysis in MS. Excel. We learnt to find a risk and return of Scripts. We learnt to find the Expected Return and Expected Standard Deviation of a portfolio. We learnt to use the DCD Matrix Method to find out the Expected Return and Expected Standard Deviation of a portfolio.

We learnt to find a Matrix Co-relation and Co-variance for forming a portfolio. We learnt the theory of portfolio and got detailed knowledge regarding following topics: Efficient Portfolio Inefficient Portfolio Optimal Portfolio We learnt that portfolio was depends on the behavior of an Investor. Portfolio was suggested on the basis of the risk taking ability. We learnt to form portfolio for different type of investors on the basis of the risk taking ability.

FACTORS AFFECTING TO STOCK MARKET


Factors Interest rate Inflation Exchange rates Appreciation of rupee Appreciation of rupee Effect Indirect Relation (Falling Stock Prices) Indirect relations Benefits to High imports Industry(Jems & jewellery) Benefits to High Exports Industry(IT and Textile) Direct Relation

Industrial production(GDP)

Money supply

Direct Relation

SUGGESTION
For the investors who want highest return and also capable to cover higher risk than portfolio with Sharp Ratio 1 was optimal for them.
For the investors who want normal risk so we suggest the portfolio between Sharp Ratio 2 to 5.

LIMITATION OF THE STUDY


Our project is limited to financial aspect only and ignores other aspects like management team of the company and etc. Portfolio selection is depends on an individual investor we cannot create standardize portfolio which satisfy need of all investor. Our project is based on national stock exchange only. Project covers Sector Indices only.

CONCLUSION
Fluctuation in Financial Market Impact of Domestic & international Crises Efficient portfolio and Optimum portfolio are different from each other but all efficient portfolios can be a optimum portfolio. Portfolio creation can not be possible without analysis of Investors Behavior We are concluding that if an investor want to invest in equity market then he should invest money for long period of time then and then only he can earn maximum profit.

Thank you