AURORA’S POST-GRADUATE COLLEGE

Accredited by NAAC with‘ A+’ Grade

PROJECT SYNOPSIS

Name of the Student : G.BALARAJU

Course : MBA

Academic Year : 2021-2023

Hall Ticket No : 1325-21-672-237

Title of the Project : SECURITY ANALYSIS

NAME OF THE COMPANY: INDIA BULLS SECURITIES LIMITED

Name of the Guide :

Date of Submission :

Signature of the Student Signature of the Guide

College Seal
 A
SYNOPSIS ON
SECURITY ANALYSIS

AT

INDIA BULLS SECURITIES LIMITED

Project Synopsis submitted in partial fulfillment for the award of the
Degree of
MASTER OF BUSINESS ADMINISTRATION
By
G.BALARAJU

1325-21-672-237

AURORA’S POST-GRADUATE COLLEGE

Accredited with ‘A+’Grade by NAAC
Ramanthapur, Hyderabad – 500 013

(2021-23)
 TABLE OF CONTENTS

S. No Description Page No
1 INTRODUCTION 1
1.1 Definition of Expatriate -
1.2 Need for the Study -
1.3 Problem Statement -
1.4 Significance of the Study -
1.5 The Objectives of the Study -
1.6 The Hypotheses of the Study -
1.7 Scope of the study -
2 REVIEW OF LITERATURE
2.1 Theoretical Reviews -
2.2 Articles -
3 RESEARCH METHODOLOGY
3.1 Research Design -
3.2 Sampling Procedure -
3.3 Sample Size -
3.4 Methods of Data Collection -
3.5 Questionnaire Design -
3.6 Reliability test -
3.7 Statistical Tools -
CHAPTERIZATION -
BIBLIOGRAPHY -
 INTRODUCTION

Security analysis is the analysis of tradable financial instruments called securities.

These can be classified into debt securities, equities, or some hybrid of the two. More

broadly, futures contracts and tradable credit derivatives are sometimes included. Security

analysis is typically divided into fundamental analysis, which relies upon the examination of

fundamental business factors such as financial statements, and technical analysis, which

focuses upon price trends and momentum. Quantitative analysis may use indicators from both

areas.

Security analysis is about valuing the assets, debt, warrants, and equity of companies from

the perspective of outside investors using publicly available information. The security analyst

must have a thorough understanding of financial statements, which are an important source of

this information. As such, the ability to value equity securities requires cross-disciplinary

knowledge in both finance and financial accounting.

While there is much overlap between the analytical tools used in security analysis and those

used in corporate finance, security analysis tends to take the perspective of potential

investors, whereas corporate finance tends to take an inside perspective such as that of a

corporate financial manager.

Security analysis Portfolio management and investment decision as a concept came to be

familiar with the conclusion of second world war when thing can be in the stock market can

be liberally ruined the fortune of individual, companies ,even government ‘s it was then

discovered that the investing in various scripts instead of putting all the money in a single

securities yielded weather return with low risk percentage, it goes to the credit of

HARYMERKOWITZ, 1991 noble laurelled to have pioneered the concept of combining

high yielded securities with these low but steady yielding securities to achieve optimum

correlation coefficient of shares.

Portfolio management refers to the management of portfolio’s for others by

professional investment managers it refers to the management of an individual investor’s

portfolio by professionally qualified person ranging from merchant banker to specified

portfolio company.

Definition by SEBI:

A portfolio management is the total holdings of securities belonging to any person.

Portfolio is a combination of securities that have returns and risk characteristics of their own;

port folio may not take on the aggregate characteristics of their individual parts.

Thus a portfolio is a combination of various assets and /or instruments of

investments.

Combination may have different features of risk and return separate from those of

the components. The portfolio is also built up of the wealth or income of the investor over a

period of time with a view to suit is return or risk preference to that of the port folio that he

holds. The portfolio analysis is thus an analysis is thus an analysis of risk –return

characteristics of individual securities in the portfolio and changes that may take place in

combination with other securities due interaction among them and impact of each on others.

Security analysis is only a tool for efficient portfolio management; both of them together and

cannot be dissociated. Portfolios are combination of assets held by the investors.

 These combination may be various assets classed like equity and debt or of different

issues like Govt. bonds and corporate debts are of various instruments like discount bonds,

debentures and blue chip equity nor scripts of emerging Blue chip companies.

Portfolio analysis includes portfolio construction, selection of securities revision of

portfolio evaluation and monitoring of the performance of the portfolio. All these are part of

the portfolio management

The traditional portfolio theory aims at the selection of such securities that would fit in will

with the asset preferences, needs and choices of the investors. Thus, retired executive invests

in fixed income securities for a regular and fixed return. A business executive or a young

aggressive investor on the other hand invests in and rowing companies and in risky ventures.

The modern portfolio theory postulates that maximization of returns and minimization of risk

will yield optional returns and the choice and attitudes of investors are only a starting point

for investment decisions and that vigorous risk returns analysis is necessary for optimization

of returns. Portfolio analysis includes portfolio construction, selection of securities, and

revision of portfolio evaluation and monitoring of the performance of the portfolio. All these

are part of the portfolio management.

STATEMENT OF PROBLEM

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

institutions, mutual funds and other agencies are undertaking the task of investing money of

small investors, on their behalf. Growth in the number and size of ingestible funds–a large

part of household savings is being directed towards financial assets.

Increased market volatility–risk and return parameters of financial assets are continuously

changing because of frequent changes in government‘s industrial and fiscal policies,

economic uncertainty and instability.

 Greater use of computers for processing mass of data.

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

techniques) in the investment decision–making.

Larger direct and indirect costs of errors or short falls in meeting portfolio objectives–

increased competition and greater scrutiny by investor.

NEED & SIGNIFANCE OF STUDY

Portfolio management or investment helps investors in effective and efficient management of

their investment to achieve this goal. The rapid growth of capital markets in India has opened

up new investment avenues for investors.

The stock markets have become attractive investment options for the common man. But the

need is to be able to effectively and efficiently manage investments in order to keep

maximum returns with minimum risk.

Hence this study on Security Analysis Portfolio Management” to examine the role process

and merits of effective investment management and decision.

SCOPE OF STUDY:

This study covers the Markowitz model. The study covers the calculation of correlations

between the different securities in order to find out at what percentage funds should be invested

among the companies in the portfolio. Also the study includes the calculation of individual Standard

Deviation of securities and ends at the calculation of weights of individual securities involved in the

portfolio. These percentages help in allocating the funds available for investment based on risky

portfolios.

OBJECTIVES OF THE STUDY:

 To study the investment decision process.

 To analysis the risk return characteristics of sample scripts.

 Ascertain portfolio weights.

 To construct an effective portfolio which offers the maximum return for minimum

risk
 2.2 REVIEW OF LITERATURE
Security analysis is the analysis of tradable financial instruments called securities. These are

usually classified into debt securities, equities, or some hybrid of the two. Tradable credit

derivatives are also securities. Commodities or futures contracts are not securities. They are

distinguished from securities by the fact that their performance is not dependent on the

management or activities of an outside or third party. Options on these contracts are however

considered securities, since performance is now dependent on the activities of a third party.

The definition of what is and what is not a security comes directly from the language of a

United States Supreme Court decision in the case of SEC v. W. J. Howey Co.. Security

analysis is typically divided into fundamental analysis, which relies upon the examination of

fundamental business factors such as financial statements, and technical analysis, which

focuses upon price trends and momentum. Quantitative analysis may use indicators from both

areas.
Review-1: Equity Security Analysis & Portfolio Management within the MCDM frame

Authors: Panagiotis Xidonas, John Psarras

Publisher: International Journal of Banking Accounting and Finance,vol.1 No.3
Abstract
The current study provides a categorized bibliography on the application of the techniques of
multiple criteria decisions making (MCDM) to the problems and issues of portfolio
management. A large number of studies in the field of Security Analysis & Portfolio
Managementhave been compiled and classified according to the different multicriteria
methodological approaches that have been used. Except the in-depth presentation of the
MCDM contributions in the area of portfolio management, the outmost aim of this paper is to
stress the inarguable multiple criterion nature of the majority of the problems that modern
financial management faces.

Review- 2: The modern portfolio theory as an investment decision tool

Authors: Iyiola Omisore, Munirat Yusuf and Nwufo Christopher
Publisher: Journal of Accounting & Taxation, Vol.4 (2), pp. 20-28, March 2012
Abstract
This research paper is academic exposition into the modern portfolio theory (MPT) written
with a primary objective of showing how it aids an investor to classify, estimate, and control
both the kind and the amount of expected risk and return in an attempt to maximize portfolio
expected return for a given amount of portfolio risk, or equivalently minimize risk for a given
level of expected return. A methodology section is included which examined applicability of
the theory to real time investment decisions relative to assumptions of the MPT. A fair
critique of the MPT is carried out to determine inherent flaws of the theory while attempting
to proffer areas of further improvement (for example, the post-modern portfolio
theory [PMPT]). The paper is summarized to give a compressed view of the discourse upon
which conclusions were drawn while referencing cited literature as employed in the course of
the presentation.
Review-3: Balancing Risk and Return in a Customer Portfolio
Authors: Crina O. Tarasi , Ruth N. Bolton, Michael D. Hutt, Beth A. Walker
Publisher: SAGE Journals, Volume:75 issue:3
Abstract
Marketing managers can increase shareholder value by structuring a customer portfolio to
reduce the vulnerability and volatility of cash flows. This article demonstrates how financial
portfolio theory provides an organizing framework for (1) diagnosing the variability in a
customer portfolio, (2) assessing the complementarity/similarity of market segments, (3)
exploring market segment weights in an optimized portfolio, and (4) isolating the reward on
variability that individual customers or segments provide. Using a seven-year series of
customer data from a large business-to-business firm, the authors demonstrate how market
segments can be characterized in terms of risk and return. Next, they identify the firm's
efficient portfolio and test it against (1) its current portfolio and (2) a hypothetical profit
maximization portfolio. Then, using forward- and back-testing, the authors show that the
efficient portfolio has consistently lower variability than the existing customer mix and the
profit maximization portfolio. The authors provide guidelines for incorporating a risk overlay
into established customer management frameworks. The approach is especially well suited
for business-to-business firms that serve market segments drawn from diverse sectors of the
economy.
Review-4: Security Analysis & Portfolio Managementunder sudden changes in volatility and
heterogeneous investment horizons

Authors: Viviana Fernandez, Brian M.Lucey

Publisher: Physica A: Statistical Mechanics and its Applications, Volume 375, Issue 2

Abstract

We analyze the implications for Security Analysis & Portfolio Managementof accounting for
conditional heteroskedasticity and sudden changes in volatility, based on a sample of weekly
data of the Dow Jones Country Titans, the CBT-municipal bond, spot and futures prices of
commodities for the period 2092–2005. To that end, we first proceed to utilize the ICSS
algorithm to detect long-term volatility shifts, and incorporate that information into PGARCH
models fitted to the return’s series. At the next stage, we simulate returns series and compute
a wavelet-based value at risk, which takes into consideration the investor's time horizon. We
repeat the same procedure for artificial data generated from semi-parametric estimates of the
distribution functions of returns, which account for fat tails. Our estimation results show that
neglecting GARCH effects and volatility shifts may lead to an overestimation of financial
risk at different time horizons. In addition, we conclude that investors benefit from holding
commodities as their low or even negative correlation with stock and bond indices contribute
to portfolio diversification.
Review-5: Managing Portfolio Volatility
Authors: Michael Stamos and Thomas Zimmerer
Publisher: The Journal of Security Analysis & Portfolio ManagementMulti-Asset Special
Issue 2021
Abstract
The authors revisit asset allocation strategies that aim at actively managing the volatility of
multi-asset-class portfolios in response to time-varying volatility forecasts. They use the
historical data of 29 major market indexes covering global equities, bonds, currencies, and
commodities and apply a common set of exponentially weighted volatility estimates to them.
The authors find that active volatility management is beneficial for most of these asset classes
and for mixed asset portfolios, leading to more consistent wealth accumulation over time. In
cross-validations, they find that fast-moving volatility forecasts seem beneficial because they
have better forecasting accuracy and produce economic gains in terms of risk accuracy and
performance. The authors also find significant reduction of tail risks for most assets, except
for bonds, where the reduction is minor.
RESEARCH METHODOLOGY:

The data collection method secondary collection method.

Secondary collection methods:

The secondary collection methods includes the lectures of the superintend of the department

of market operations and so on., also the data collected from the news, magazines and

different books issues of this study Superintend

STANDARD DEVIATION:

The concept of standard deviation was first suggested by Karl Pearson in 1983.it may

be defined as the positive square root of the arithmetic mean of the squares of deviations of

the given observations from their arithmetic mean In short S.D may be defined as “Root

Mean Square Deviation from Mean”.

Primary source

Information gathered from interacting with employees in the organization. And the data

from the textbooks and other magazines.

Secondary source

Daily prices of scripts from news papers

1.4 TOOLS AND TECHNIQUES USED

1. Portfolio Risk
√
σ p= x 2a σ 2a + x 2b σ 2b + ( 2 x a x b ) ρab σ a σ b
Where Xa= weight or proportion of investment in security a.
Xb= weight or proportion of investment in security b.
σ a= standard deviation of security a.
σ b =standard deviation of security b.
ρab = correlation co-efficient between securities.
σ p= portfolio risk.

2. Portfolio Return
 R p =R a x a + R b x b
R p= Return on portfolio

R p= Return on investment a

Rb = Return on investment b

x a=Weight of investment a

x b=Weight of investment b

3. Variance
It is a measure of dispersion of a set of data points around their mean value. Variance is a
mathematical execution of the average squared deviation from the mean.
1 2
Variance = N −1 Σ ( R−R )

4. Standard Deviation
The concept of standard deviation was first suggested by Karl Pearson in 2083. Standard
deviation is calculated as the square root of variance.

Standard Deviation = √ variance =

2
√ 1
N −1
Σ ( R−R )
2

Where ( R−R ) = square of difference between sample and mean

N = number of sample observed

1
5. Covariance of A & B = Σ ( R A−R B ) (R ¿¿ B−R)¿
N

6. Correlation —Coefficient A and B=

CO V A , B
ρ A ,B =
[ σ A ][ σ B ]
Where ( R A −R B ) (R¿¿ B−R)¿ = Combined deviation of A&B

[ σ A ] [ σ B ] standard Deviation of A&B

CO V A , B= Covariance between A&B

N = number of observations
 LIMITATION OF THE STUDY

 Construction of Portfolio is restricted to two companies based on Markowitz model.

 Very few and randomly selected scripts / companies are analyzed from BSE listings.

 Data collection was strictly confined to secondary source. No primary data is associated with

the project.

 Detailed study of the topic was not possible due to limited size of the project.

 There was a constraint with regard to time allocation for the research study i.e. for a period of

two months.

 Only two samples have been selected for constructing a portfolio.

 Share prices of scripts of 5 years period was taken.

 Duration Period 2 months

 Sample size : 5 years

 To ascertain risk, return and weights.

 CHAPTERISATION

CHAPTER -1 - INTRODUCTION

This chapter includes the introduction of the topic, need, scope, objectives of the study,

Project limitations and methodology of the study.

CHAPTER - 2 REVIEW OF LITERATURE

This chapter includes the theoretical background and articles written by different authors and

brief explanation of the topic.

CHAPTER - 3 - INDUSTRY PROFILE & COMPANY PROFILE

CHAPTER - 4 - DATA ANALYSIS AND INTERPRETATION

CHAPTER - 5 – SUMMARY AND CONCLUSION

This chapter includes the overall summary of the project and the conclusion based on the

study during the period.

 BIBILOGRAPHY

Books:

 Investment Analysis and Portfolio Management, written by

M.Ranganathan,R.Madhumathi published by Dorling Kindersley (India) Pvt.Ltd.,

3rdEdititon.

 Investment Analysis and Portfolio Management, written by Prasanna Chandra

Published by Tata Mc.Graw-Hill, 3rd Edition.

 Security Analysis and Portfolio Management, written by V.A.Avadhani, Published by

Himayala Publishing house Pvt.Ltd.9th Revised Editon.

Newspapers :

The Economic times

Financial Express

Websites:

 www.bseindia.com

 www.nseindia.com

 www.moneycontrol.com

 www.investleaf.com