A Study on Portfolio Management for selected scrips

With reference to

WEALTHSTROKE FINANCIAL DUTT ISLAND

VISAKHAPATNAM

A project report submitted in partial fulfilment of the

requirements for the award of the degree of

MASTER OF BUSINESSS ADMINISTRATION

submitted by

J. ESWAR
(Regd.no.21331E0094)

Under the guidance of

Ms. V. MOUNIKA
B. TECH, MBA
Assistant Professor

DEPARTMENT OF MANAGEMENT STUDIES

MVGR COLLEGE OF ENGINEERING (AUTONOMOUS)
Approved by AICTE and permanently affiliated to JNTU- GV Vizianagaram
Accredited by NBA of AICTE and NACC- A of U.G.C
Chintalavalasa, Vizianagaram – 535005-AP
2021-2023
 DECLARATION

I, J. ESWAR student of MVGR College of Engineering (A), hereby declare that

this project report entitled “PORTFOLIO MANAGEMENT FOR SELECTED

SCRIPS” with reference to WEALTHSTROKE FINANCIAL region is a bonfire

record of work done by me during the course of project work.

This project is in partial fulfillment of the requirement for the award of degree of

MASTER OF BUSINESS ADMINISTRATION by MVGR COLLEGE OF

ENGINEERING (A).

Place: Vizianagaram (JARAJAPU ESWAR)

Date: (REGD NO: 21331E0094)

 ACKNOWLEDGEMENT
With great pleasure, I express my deep sense of gratitude to the management of
“WEALTHSTROKE FINANCIAL” I convey my sincere thanks to the organization
that has motivated me with their valuable suggestion and helped throughout the project
in permitting to perform various tasks in this esteemed organization.
I express my sincere my thanks to Mr. K. PRASANNA KUMAR, FOUNDER
OF WEALTHSTROKE FINANCIAL, VISHAKAPATNAM for their kind co-
operation to complete my project work successfully.

I would like to thank Ms. V. Mounika, Assistant Professor, Department of

management studies, and MVGR College of Engineering for his valuable guidance
and intellectual suggestions during this project.

I would like to forward my sincere thanks and gratitude to our Dr.G.V.S.S.N.

SANYASIRAJU (Head of the Department) Department of management studies,
MVGR College of Engineering, for their motivation and guidance during the course of
study.

I would like to forward my sincere thanks and gratitude to our principal

Dr. Ramakrishnan Ramesh for availing me the opportunity to do this

project work.

JARAJAPU ESWAR

(21331E0094)
 PREFACE

The portfolio management process in India has evolved over time, reflecting the changing
economic and financial landscape of the country. In the early days of the Indian stock market,
portfolio management was largely informal and unregulated. Investors would typically rely on
their own knowledge and experience, or on the advice of family and friends, when making
investment decisions. In the 1990s, with the liberalization of the Indian economy and the
opening up of the stock market to foreign investors, the portfolio management industry in India
began to professionalize. A few domestic and international asset management companies
(AMCs) set up shop in India, offering portfolio management services to investors.
The Securities and Exchange Board of India (SEBI), the country's capital markets regulator,
also played a key role in developing the portfolio management industry in India. In 1999, SEBI
issued the Securities and Exchange Board of India (Portfolio Manager) Regulations, which laid
down the regulatory framework for portfolio management services in India. The portfolio
management process in India today is governed by the SEBI (Portfolio Manager) Regulations.
SEBI has also issued a few other guidelines and regulations related to portfolio management,
such as the SEBI (Portfolio Manager) (Investment and Investment Advisory Services)
Regulations, 2021.
Client onboarding and risk profiling. The portfolio manager will meet with the client to
understand their investment goals, risk tolerance, and time horizon. The portfolio manager will
also assess the client's risk profile. Investment strategy development. The portfolio manager
will develop an investment strategy for the client based on their investment goals, risk
tolerance, and time horizon. The portfolio manager will also consider the overall market
conditions and the client's specific investment needs.
Portfolio construction. The portfolio manager will construct a portfolio for the client based
on the investment strategy. The portfolio may include a mix of different asset classes, such as
stocks, bonds, and cash. The portfolio manager will also diversify the portfolio across different
sectors and market caps.
Portfolio management. The portfolio manager will monitor the portfolio on a regular basis
and adjust as needed. This may involve rebalancing the portfolio to ensure that it remains
aligned with the investment strategy and the client's risk profile. The portfolio management
process in India has evolved significantly over the years. Today, it is a professional and
regulated industry that offers a wide range of services to investors.
 TABLE OF CONTENTS

Preface Contents Page no.

Introduction & design of the study 1-8
Introduction 1
Need and significance of the study 4
Research methodology of the study 5
CHAPTER-1
Objectives of the study 6
Limitations of the study 7
Conceptual frame work of the study 8
WEALTHSTROKE FINANCIAL -
9-18
A PROFILE
CHAPTER – 2 Industry profile 9
Company profile 17
Theoretical Framework 19-40
CHAPTER-3 Section I – Conceptual Review 19
Section II – Literature Review 39

Data analysis and Interpretation

CHAPTER-4 41-87

Summary, Findings and Suggestions 88-92

Summary 88
CHAPTER-5
Findings 91
Suggestions 92
BIBILOGRAPHY
 CHAPTER-1

INTRODUCTION
NEED AND SIGNIFICANCE OF THE STUDY
RESEARCH METHODOLGY OF THE STUDY
OBJECTIVES OF THE STUDY
LIMITATIONS OF THE STUDY
CONCEPTUAL FRAME WORK OF THE STUDY
 INTRODUCTION

Investment analysis is a broad term for many different methods of evaluating investments,
industry sectors, and economic trends. It can include charting past returns to predict future
performance, selecting the type of investment that best suits an investor's needs, or evaluating
individual securities such as stocks and bonds to determine their risks, yield potential, or price
movements.

In conducting an investment analysis of a mutual fund, for example, an investor looks at how
the fund performed over time compared to its benchmark and to its main competitors. Peer fund
comparison includes investigating the differences in performance, expense ratios, management
stability, sector weighting, investment style, and asset allocation. Investment analysis is key to
a sound portfolio management strategy. Portfolio management consists of three main elements:
investing time horizon, diversification of investments, and risk tolerance. Portfolio holdings can
be diversified not just across asset classes, but also within classes by investing in foreign
markets as well as domestic markets. The idea is that the positive performance of one area of a
portfolio will outweigh the negatives in another. Diversification is a risk management strategy
that mixes a wide variety of investments within a portfolio. A diversified portfolio contains a
mix of distinct asset types and investment vehicles in an attempt at limiting exposure to any
single asset or risk. The rationale behind this technique is that a portfolio constructed of
different kinds of assets will, on average, yield higher long- term returns and lower the risk of
any individual holding or security.

The portfolio management deals with the process of selection of securities from the of
opportunities available with different expected returns and carrying different levels of risk and
selection of securities is made with a view to provide the investors with the maximum yield for
a given level of return.

Portfolio management is concerned with efficient management of investment in securities an

investment is defined as the commitment of funds for period of time in order to derive a future
flow of funds that will compensate the investing unit. The portfolio management deals with the
process of selection of securities form the no of opportunity available with different expected
returns and carrying different levels of risk and selection of securities is made with a view to
provide the investor with maximum yield for a given level of investment value.

1
According to modern portfolio theory you can reduce your investment risk by creating a
diversified portfolio that includes enough different types or classes. Of securities so that at least
some of them may produce strong returns in any economic climate.

There was a time when portfolio management was an exotic term. The scenario has changed
drastically. It is now a familiar term and is widely practiced in India. The theories and concepts
relating to portfolio management now find their way to the front pages of financial newspapers
and the cover pages of investment journals in India. Indian capital markets have become active.
The Indian stock markets are steadily moving towards higher efficiency, with rapid
computerization, increasing market transparency, better infrastructure, better customer service
etc. The markets are dominated by large institutional investors with their diversified portfolios.
A large no of mutual funds has been set up the county since 1987. With this development
investment in securities has gained considerable momentum. Professional portfolio
management backed by competent research begun to be practiced by mutual funds, investment
consultants and big brokers. The Securities Exchange Board of India (SEBI).

An individual who understands the client’s financial needs and designs a suitable investment
plan as per his income and risk-taking abilities is called a portfolio manager. A portfolio
manager is one who invests on behalf of the client. He counsels the clients and advises him the
best possible investment plan which would guarantee maximum returns to the individual. A
portfolio manager must understand the client’s financial goals and objectives and offer a tailor
made investment solution to him. No two clients can have the same financial needs.

Portfolio management presents the best investment plan to the individuals as per their income,
budget, age and ability to undertake risks. Portfolio management minimizes the risks involved
in investing and also increases the chance of making profits.

Portfolio managers understand the client’s financial needs and suggest the best and unique
investment policy for them with minimum risks involved Portfolio management enables the
portfolio managers to provide customized investment solutions to clients as per their needs and
requirements.

An investment philosophy represents a set of core beliefs about how investors behave and
markets work. To be a successful investor, you not only have to consider the evidence

2
markets but you also have to examine your own strengths and weaknesses to come up with an
investment philosophy that best fits you. Investors without core beliefs tend to wander from
strategy to strategy, drawn by anecdotal evidence or recent success, creating transactions costs
and incurring losses as a consequence. Investors with clearly defined investment philosophies
tend to be more consistent and disciplined in their investment choices.

In this introduction, we considered a broad range of investment philosophies from market

timing to arbitrage and placed each of them in the broad framework of portfolio management.
We also examined the three steps in the path to an investment philosophy, beginning with the
understanding of the tools of investing – risk, trading costs and valuation – continuing with an
evaluation of the empirical evidence on whether, when and how markets break down and
concluding with a self-assessment, to find the investment philosophy that best matches your
time horizon, risk preferences and portfolio characteristics.

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 NEED AND SIGNIFICANCE OF THE STUDY
Portfolio management is a process encompassing many activities of investment in assets and
securities. It is a dynamic and flexible concept and involves regular and systematic analysis,
judgment and action. The objective of this service is to help the unknown and investors with
the expertise of professionals in investment portfolio management. It involves construction of
a portfolio based upon the investor’s objectives, constraints, preferences for risk and returns
and tax liability. The portfolio is reviewed and adjusted from time to time in tune with the
market conditions. The evaluation of portfolio is to be done in terms of targets set for risk and
returns. The changes in the portfolio are to be effected to meet the changing condition.

In today’s world managing personal finance is an important aspect of every individual’s life. It
is observed that some individuals have enough or more earnings, while others are always short
of money. Lack of enough earnings makes person to borrow more or save maximum money
for the future. People prefer a long term savings with an intention to have a better future life.
The main aim of savings are for a children’s education, family, future house, retirement plan,
medical exigencies, Children’s marriage, foreign tour, etc. To fulfill those future dreams, it is
necessary for investors to think now about of earning income with the help of financial
planning. Due to lack of financial literacy, people are still depends on family and friends to
financially support them or borrow from banks.

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 RESEARCH METHODOLOGY OF THE STUDY

This study is explanatory research because it prepared and analyzed the existing facts, figures,
Information given in the company websites and price movement of selected pharma and fmcg
Companies.
The research is fully based upon secondary data and the data was collected from the internet
because the data has already been collected through primary sources and made readily available
for researchers to use for their own research i.e., pharma and fmcg Companies which are listed in
Nifty 50.
SOURCES OF DATA:
This section of the project emphasized on the procedure used to accomplish the project. For
this purpose, some data have been collected basically from secondary data.

Secondary Data:

Secondary data are those which have been already been collected by someone else and which
already been passed the social process.

In this survey data collected from the published source available at NSE and the internet and
final reports, facts seeds and from the books. The following are the sources of secondary data.

 Collecting the data from the website of NSE and money control.

 Referring topics in textbooks and journals relating to stock exchange operations.

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 OBJECTIVES OF THE STUDY

 To suggest/show the investors various. investment option through portfolio construction

 To analyze the diversification of risk.
 To analyze and suggest suitable portfolio.

6
 LIMITATIONS OF THE STUDY

 This study is limited to the selected sectors only

 This study is based on secondary data only

7
 CONCEPTUAL FRAMEORK OF THE STUDY

Chapter-I:
 Introduction
 Need & significance of the Study
 Objectives of the study
 Research Methodology of the study
 Limitations of the study
 Conceptual framework of the study
Chapter-II:
 industry profile
 company profile

Chapter-III:
Theoretical Frame Work of the Study.
PART-A: conceptual review of
the study

PART-B: literature review of

the study

Chapter-IV:
 Data Analysis & Interpretation.

Chapter-V:
 Summary
 Findings
 Suggestions.

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CHAPTER-2

INDUSTRY PROFILE
&
COMPANY PROFILE
 INDUSTRY PROFILE

India can boast of being one of the oldest stock markets in Asia. Earlier in the initial
days trading in securities was done in a Very informal or Unsystematic manner Company agents
or representatives representing different corporate Companies, already listed in the “Stock
Exchange”. These representatives have to openly outcry the necessary details about the
company and give a brief description of the number of shares allotted to issue and their quoted
prices. After this the bidding process takes Place. This system was lacking the information
technology for immediate matching or recording of trades. This was time consuming and
inefficient. In order to provide efficiency, liquidity and transparency, NSE (National Stock
Exchange) introduced a nationwide online fully automated screen-based trading system
(SBTS) where a member can punch into the computer Quantities of securities and the prices at
which he likes to transact and the transaction is executed as soon as it finds matching sell or
buy orders from a Counterparty. Today India can boast that almost 100% trading takes place
through electronic order matching. NSE has a main computer which is connected through Very
Small Aperture Terminal (VSAT) installed at its office. Brokers have terminals (identified as
PCs) installed at their premises which are connected through VSATS/ Leased Lines/ Modems.
With the emergence of online trading in Indian Stock Exchanges the volume of the securities
traded, the size of the market and the market turnover has increased tremendously. This
accounts for about 2/3rd of the National Income of the Economy.

HISTORICAL BACKGROUND OF STOCK EXCHANGE:

There is little consensus among scholars as to when corporate stock was first traded.
Some see the key event as the Dutch East India Company's founding in 1602, while others point
to earlier developments. Economist Ulrike Millender of the University of California at Berkeley
argues that a share market existed as far back as ancient Rome. In the Roman Republic, which
existed for centuries before the Empire was founded, there were societies publican or,
organizations of A stock exchange or bourse is an exchange where stock brokers and traders
can buy and/or sell stocks (also called shares), bonds, and other securities. Stock exchanges
may also provide facilities for issue and redemption of securities and other financialinstruments,
and capital events including the payment of income and dividends. Securities traded on a stock
exchange include stock issued by listed companies, unit trusts, derivatives,

9
pooled investment products and bonds. Stock exchanges often function as "continuous auction"
markets, with buyers and sellers consummating transactions at a central location, such as the
floor of the exchange. To be able to trade a security on a certain stock exchange, it must be
listed there. Usually, there is a central location at least for record keeping, but trade is
increasingly less linked to such a physical place, as modern markets use electronic networks,
which gives them advantages of increased speed and reduced cost of transactions. Trade on an
exchange is restricted to brokers who are members of the exchange. In recent years, various
other trading venues, such as electronic communication networks, alternative trading systems
and "dark pools" have taken much of the trading activity away from traditional stock
exchanges. The initial public offering of stocks and bonds to investors is by definition done in
the primary market and subsequent trading is done in the secondary market. A stock exchange
is often the most important component of a stock market. Supply and demand in stock markets
are driven by various factors that, as in all free markets, affect the price of stocks (see stock
valuation). There is usually no obligation for stock to be issued via the stock exchange itself,
nor must stock be subsequently traded on the exchange. Such trading may be off exchange or
over the counter. This is the usual way that derivatives and bonds are traded. Increasingly, stock
exchanges are part of a global securities market.

The idea of debt dates back to the ancient world contractors or lease holders who performed
temple building and other services for the government. One such service was the feeding of
geese on the Capitoline Hill as a reward to the birds after their honking warned of a Gallic
invasion in 390 B.C. Participants in such organizations had partesor shares, a concept
mentioned various times by the statesman and orator Cicero. In one speech, Cicero mentions
"shares that had a very high price at the time." Such evidence, in Malmendier's view, suggests
the instruments were tradable, with fluctuating values based on an organization's success. The
society as declined into obscurity in the time of the emperors, as most of their services were
taken over by direct agents of the state. Tradable bonds as a commonly used type of security
were a more recent innovation, spearheaded by the Italian city states of the late medieval and
early Renaissance period.

Stock exchanges have multiple roles in the economy:

Raising capital for businesses

A stock exchange provides companies with the facility to raise capital for expansion through
selling shares to the investing public.

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Common forms of capital raising

Besides the borrowing capacity provided to an individual or firm by the banking system, in 12
the form of credit or a loan, there are four common forms of capital raising used by companies
and entrepreneurs. Most of these available options might be achieved, directly or indirectly,
through a stock exchange.

Going public:

Capital intensive companies, particularly high-tech companies, always need to raise

high volumes of capital in their early stages. For this reason, the public market provided by the
stock exchanges has been one of the most important funding sources for many capital intensive
startups. After the 1990s and early2000shitechlisted companies' boom and bust in the world's
major stock exchanges, it has been much more demanding for the high-tech entrepreneur to
take his/her company public, unless either the company already has products in the market and
is generating sales and earnings, or the company has completed advanced promising clinical
trials, earned potentially profitable patents or conducted market research which demonstrated
very positive outcomes. This is quite different from the situation of the 1990s to early2000s
period, when a number of companies (particularly Internet boom and biotechnology
companies) went public in the most prominent stock exchanges around the world, in the total
absence of sales, earnings and any well documented promising outcome. Anyway, every year
a number of companies, including unknown highly speculative and financially unpredictable
hi-tech start-ups, are listed for the first time in all the major stock exchanges – there are even
specialized entry markets for this kind of companies or stock indexes tracking their
performance (examples include the Alter next, CAC Small, SDAX, Tec DAX, or most of the
third market good companies).

Limited partnerships:

A number of companies have also raised significant amounts of capital through R&D
limited partnerships. Tax law changes that were enacted in 1987 in the United States changed
the tax deductibility of investments in R&D limited partnerships. In order for a partnership to
be of interest to investors today, the cash-on-cash return must be high enough to entice
investors.

11
Venture capital:

A third usual source of capital for start-up companies has been venture capital. This source
remains largely available today, but the maximum statistical amount that the venture company
firms in aggregate will invest in any one company is not limitless (it was approximately $15
million in 2001 for a biotechnology company). However, when poor 13 financial, ethical or
managerial records are known by the stock investors, the stock and the company tend to lose
value. In the stock exchanges, shareholders of underperforming firms are often penalized by
significant share price decline, and they tend as well to dismiss incompetent management
teams.

Creating investment opportunities for small investors

 As opposed to other businesses that require huge capital outlay, investing in shares is
open to both the large and small stock investors because a person buys the number of
shares they can afford. Therefore, the Stock Exchange provides the opportunity for
small investors to own shares of the same companies as large investors.

Government capital raising for development projects

 Governments at various levels may decide to borrow money to finance infrastructure

projects such as sewage and water treatment works or housing estates by selling another
category of securities known as bonds. These bonds can be raised through the stock
exchange whereby members of the public buy them, thus loaning money to the
government.

Bombay Stock Exchange:

 The Bombay Stock Exchange (BSE) is an Indian stock exchange located at Dalal Street,
Kala Ghoda, Mumbai, Maharashtra, India. Established in 1875, the BSE is Asia’s first
stock exchange. It claims to be the world's fastest stock exchange, with a median trade
speed of 6 microseconds. The BSE is the world's 10th largest stock exchange with an
overall market capitalization of $1.7 trillion as of June 19, 2022. More than 5261
companies are publicly listed on the BSE. Bombay is the oldest exchange in Asia. Its
history dates back to 1855, when five stockbrokers would gather under banyan trees in
front of Mumbai's Town Hall. The location of these meetings changed many times to
accommodate an increasing number of brokers. The group eventually moved to Dalal
Street in 1874 and in became an official organization known as "The Native Share &

12
 Stock Brokers Association" in 1875.On August 31, 1957, the BSE became the first
stock exchange to be recognized by the Indian Government under the Securities
Contracts Regulation Act. In 1980, the exchange moved to the Phiroze Jeejeebhoy
Towers at Dalal Street, Fort area. In 1986, it developed the BSE SENSEX index, giving
the BSE a means to measure the overall performance of the exchange. In 2000, the BSE
used this index to open its derivatives market, trading SENSEX futures contracts. The
development of SENSEX options along with equity derivatives followed in 2001 and
2002, expanding the BSE 's trading platform. Historically an open outcry floor trading
exchange, the Bombay Stock Exchange switched to an electronic trading system
developed by CMC Ltd. in 1995. It took the exchange only 50 days to make this
transition. This automated, screen-based trading platform called BSE On Line Trading
(BOLT) had a capacity of 8 million orders per day. The BSE has also introduced a
centralized exchange-based internet trading system, BSEWEBx.co.in to enable
investors anywhere in the world to trade on the BSE platform. The BSE is also a Partner
Exchange of the United Nations Sustainable Stock Exchange initiative, joining in
September 2012.

Awards & Recognitions

 IT Genius Awards 2017 in the category ‘Data Centre Excellence’ for setup of the India INX
Data Centre by CORE (Centre of Recognition and Excellence)
 Business World Digital Leadership and CIO Award
 The IDC digital transformation awards 2017
 Digital Innovation Award 2017 for the Social Media Analytics project by Net magic
 Best Brand award 2017 by economic times
 CIO Power List 2017
 Skoch Achiever Award 2016 for SME Enablement
 Best IT Implementation Award 2016 in the “Most Complex Project Category” by PCQuest
 InfoSec Maestros Awards 2016
 Lions CSR Precious Awards 2016
 Golden Peacock Award 2015
 CIO Power List 2015
 SKOCH Renaissance Award 2014 for Contribution to Economy
 India Innovative Awards- Big Data Innovation 2014

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 HR was awarded with Asia's Best Employer Brand Awards at Singapore in two categories
in August 2014
 Asia's Best Employer Brand Award
 CHRO of the Year Award
 India Innovation Award for Big Data Implementation
 BSE has won NASSCOM - CNBC-TV18’s IT User Awards, 2010 in Financial Services
category.

National Stock Exchange of India:

The National Stock Exchange of India Limited (NSE) is the leading stock exchange of India,
located in Mumbai. NSE was established in 1992 as the first demutualized electronic exchange
in the country. NSE was the first exchange in the country to provide a modern, fully automated
screen based electronic trading system which offered easy trading facility to the investors
spread across the length and breadth of the country.

National Stock Exchange has a total market capitalization of more than US$3.4 trillion, making
it is the world’s 4 th largest stock exchange as of 19 January 2022. NSE's flagship index, the
CNX Nifty, the 51-stock index, is used extensively by investors in India and around the world
as a barometer of the Indian capital markets. NSE was set up by a group of leading Indian
financial institutions at the behest of the government of India to bring transparency to the Indian
capital market. Based on the recommendations laid out by the government committee, NSE has
been established with a diversified shareholding comprising domestic and global investors.The
key domestic investors include Life Insurance Corporation of India, State Bank of India, IFCI
Limited IDFC Limited and Stock Holding Corporation of India Limited. And the key global
investors are Gagil FDI Limited, GS Strategic Investments Limit SAIF II SE Investments
Mauritius Limited, Aranda Investments (Mauritius) Limited and Opportunities Fund I.NSE
offers trading, clearing and settlement services in equity, equity derivatives, debt and currency
derivatives segments. It is the first exchange in India to introduce electronic trading facility
thus connecting together the investor base of the entire country. NSE has 2500VSATs and 3000
leased lines spread over more than 2000 cities across India. The exchange was incorporated in
1992 as a taxpaying company and was recognized as a stock exchange in 1993 under the
Securities Contracts (Regulation) Act, 1956, when P. V. Narasimha Rao was thePrime Minister
of India and Manmohan Singh was the finance minister. NSE commenced operations in the
Wholesale Debt Market (WDM) segment in June 1994. The capital market

14
(equities) segment of the NSE commenced operations in November 1994, while operations in
the derivatives segment commenced in June 2000.

NSE offers trading in the following segments:

 Equities
 Indices
 Mutual Funds
 Exchange Traded Funds
 Initial Public Offerings
 Security Lending and Borrowing Scheme
 Derivatives
 Equity Derivatives (including Global Indices like CNX 500, Dow Jones and FTSE)
 Currency Derivatives
 Interest Rate Future

Equity Derivatives:

The National Stock Exchange of India Limited (NSE) commenced trading in

derivatives with the launch of index futures on 12 June 2000. The futures and options segment
of NSE has made a global mark. In the Futures and Options segment, trading in NIFTY 50
Index, NIFTY IT index, NIFTY Bank Index, NIFTY Next 50 index and single stock futures
are available. Trading in Mini Nifty Futures & Options and Long-term Options on NIFTY 50
are also available. The average daily turnover in the F&O Segment of the Exchange during the
financial year April 2015 to March 2016 stood at ₹19 Lakh crore rupees (US$23 billion).

Debt Market:

 On 13 May 2013, NSE launched India's first dedicated debt platform to provide a liquid
and transparent trading platform for debt related products. The Debt segment provides an
opportunity to retail investors to invest in corporate bonds on a liquid and transparent
exchange platform. It also helps institutions who are holders of corporate bonds. It is an
ideal platform to buy and sell at optimum prices and help Corporates to get adequate
demand, when they are issuing the bond.

15
Trading schedule:

Trading on the equities segment takes place on all days of the week (except Saturdays and
Sundays and holidays declared by the Exchange in advance). The market timings of the equities
segment are:

 (1) Pre-open session

 (2) Regular trading session
 Exchange Traded Funds and Derivatives on National Stock Exchange

The following products are trading on CNX Nifty Index in the Indian and international Market:

 7 Asset Management Companies have launched exchange traded

 funds on CNX Nifty Index which are listed on NSE
 15 index funds have been launched on CNX Nifty Index
 Unit linked products have been launched on CNX Nifty Index by several insurance
companies in India
 World Indices

Derivatives Trading on NIFTY 50 Index:

 Futures and Options trading on CNX Nifty Index

 Trading in NIFTY 50 Index Futures on Singapore Stock Exchange (SGX)

16
 COMPANY PROFILE

WealthStroke Financial was established in the year 2017 in Visakhapatnam offering Financial
Services to HNIs (HIGH NETWORTH INDIVIDUALS) (wealth stroke financial), Ultra
HNIs
(ULTRA HIGH NETWORTH INDIVIDUALS) & Corporates.
The offering basket consists of various investment products like Mutual Funds, Comprehensive
Financial Planning, Portfolio Management Services (PMS), Alternative Investments (AIFs),
Secondary Bonds, Tax Free Bonds, Capital Gains bonds – 54EC, Private Placements, Unlisted
Securities & Insurance. WEALTHSTROKE FINANCIAL is the distributor of all the above
financial instruments.

WEALTHSTROKE FINANCIAL is headed by Mr. Prasanna Kumar - MBA (Finance) who

brings with him wealth of experience of over 17 years. He had the opportunity to work with
some of the Top-Notch, World-Class financial institutions and put the best practices to use
which he gained during hisstint with these organizations.
Mr. Prasanna believes that client is often on the lookout for financial solutions and not products.
Products play an important part but are not the solution themselves.

WEALTHSTROKE FINANCIAL’s PROCESS:

Includes Understanding requirements, Counselling, Setting Goals, identifying suitable options,
Risk Management, Execution, and tracking the investments. Identifying of suitable options also
goes through a rigorous process in which many technical aspects are considered before building
a portfolio.

 Core & Satellite are the portfolios that are built for clients who have an investible surplus
of over USD 50 Mn.

DESIGN OF CORE PORTFOLIO:

The Core portfolio is designed by maintaining low-risk and low-volatile instruments which are
usually held for the long term and the Satellite Portfolio is built to capture opportunities that
arise in a highly volatile scenario as well as make tactical allocations. Asset allocation remains
the key to build a strong portfolio.
17
Wealthstroke financial looks to build relationships in the long run and avoid transactional
relationships. The corevalues of WealthStroke Financial are

 Trust & Integrity

 Value-based service

 Superior Service

 Client Relationships

 Pay it forward

 Wealthstroke financial Mission is to be the most referred Wealth Management Firm.

18
 CHAPTER-3

THEORITICAL FRAMEWORK
&
LITERATURE REVIEW
 CONCEPTUAL REVIEW

MEANING OF PORTFOLIO:

Portfolio is a combination of securities such as stocks, bonds and money market instruments.
The process of blending together the broad asset classed so as to obtain optimum return with
minimum risks called portfolio construction. Diversification of instruments helps to spread risk
over many assets. A diversification of instruments helps to spread the risks over many assets.
It gives assurance of obtaining the anticipated returns on the portfolio. In a diversified portfolio
some securities may not perform as expected, but others may exceed the expectation and
making the actual return of the portfolio reasonably close to the anticipated one. Keeping a
portfolio of single security may lead to a greater likelihood of the actual return somewhat
different from that of the expected return. Hence, it is a common practice to diversify securities
in the portfolio.

ELEMENTS OF PORTFOLIO MANAGEMENT:

Portfolio management is a continuous process and involves the following main elements

 Collection of Data base of the client/investor.

 Portfolio construction.
 Portfolio Evaluation.
 Portfolio Revision.

COLLECTION OF DATABASES OF THE CLIENT OR INVESTOR:

Detailed information about the investor preferences, objectivities is collected first before
deciding his portfolio. The following facts should be collected about each investor or client
whose portfolio is to be constructed.

 Present income, position of wealth and savings of the investor.

 How much income can be saved for contingencies?
 Present asset profile is studied to know the preferences of the investor for risk less assets
like bank deposits or for risky stock market instrument.
 Risk bearing capacity of the investor.
 Objective of capital appreciation.
 Tax bracket to which investor belongs.

19
  Time horizon for which investment is expected to be held.
 Preference for safety and certainty.

Motive for savings- whether provision for future income or to earn interest. These facts
constitute the data-base of the investor on the basis of which individual portfolio isstructured,
constructed and managed.

PORTFOLIO CONSTRUCTION:

The process of combining together the broad assets classes so as to secure optimum return with
minimum risk is called portfolio construction. In other words, it refers to the allocation of funds
among a variety of financial assets available for investment. An investor has to make choice
out of the following capital and money market instruments and financial assets:

Capital Market Instruments: An investor may invest in any of the following capital
instruments.

 Equity shares.
 Preference shares.
 Debenture or bonds.
 Zero coupon bonds.
 Discount bonds or deep discount bonds.
 Secured premium notes.

Money Market Instruments: The following money market instruments are available for
investment.

 Commercial bills
 Commercial papers
 Certificates of deposits
 Participation certificates
 Treasury bills
 Inter–bank money

Financial assets: an investor makes investments in the following assets to secure his future.

 Fixed deposits with reputed companies

 Chit funds

20
  Pension Provident funds/G. P. F
 Public g
 old or silver
 Real estate
 Insures certificates
 Post office certificates
 National Savings Certificates or National Savings Scheme

APPROACHES TO PORTFOLIO CONSTRUCTION:

Basically, there are two approaches in the construction of the portfolio of securities.

 TRADITIONAL APPROACH
 MODERN APPROACH.

TRADITIONAL APPROACH TO THE CLIENT/ INVESTOR:

Under this approach, investor’s needs in terms of income and capital appreciation are
evaluated and appropriate securities are selected. After that risk and return analysis is carried
out. Finally, weights are assigned to securities like bonds, stocks and debentures keeping in view
the risk and return involved and then diversification is carried out.

21
DETERMINATION OF OBJECTIVES OF INVESTORS:

The basic objective of all investors is to achieve the maximum level of return and minimize the
risk involved. Other objectives such as safety, liquidity, hedge against inflation etc, are the
subsidiary objectives.

a) Return: Investors always expect a good rate of return on their investments. It can be
calculated as follows-

Where;
r = return
P0 = value in the beginning
P1 = value at the end

D = dividend received or in other words

b) Risk: An investment is considered to be risky if return on it varies substantially from one

period to another period. Every investor likes to reduce the risk of his investment by proper
combination of different securities.
c) Liquidity: A stock is said to be liquid if it can easily be traded or sold in stock market.
Liquidity needs of the investment vary from one investor to another. An investor desirous of
high liquidity would like to invest in short-term money market instruments and shares because
they can be easily traded.
d) Safety of the principal: Another constraint on investment is the surety about the safety of
the principal amount at the time of liquidation. Debentures or bonds are safer than the equity
shares. Deposits with bank are considered to be safer than deposits with non-banking financial
companies.
e) Hedge against Inflation: Where the return rate is higher then the inflation rate the investor
would like to make investment in such securities so as to overcome the loss due to inflation.

22
A good stock would appreciate in its value overtime and provide a protection against inflation.
The return thus earned should assure the safety of the principle amount. Regular flow of income
and provide a protection against inflation.
f) Temperament: Some investors love to take risk even for low return where as some may not
be willing to undertake risk even for higher returns. Thus, temperament of the investors plays
an important role in setting the objectives.
g) Tax Liability: An investor generally makes investments in those instruments which will
reduce his tax liability. Most of the taxpaying investors in post office certificates, NCSs, GPF,
PPF, and NSS etc. to reduce their tax liability. Investments in shares and debentures entail tax
liability under the head “income from other sources” in respect of interests and dividends
received. Whereas, capital appreciation is taxed under the head “capital gains” only when the
investor sells the shares and earns profit.
Thus, the investor’s portfolio is affected by the above-mentioned constraints or the objectives.
An investor would like to have that combination of securities in his portfolio which will ensure:
 Current income
 Growth in income
 Capital appreciation
 Preservation of capital

SELECTION OF THE SECURITIES:

The selection of the securities depends upon the various objective of the investor

 If objective is to earn adequate amount of current income, the more of debt and less of
equity would be a good combination.
 If the investor wishes to certain percentage of growth in the income from his
investment, then he may have more of equity shares (say more than 60%) and less of
debt (say 0-40%) in his portfolio. Inclusion of debt in portfolio. Helps the investor to
avail of tax benefits.
 If the investor wants to multiply his investment over the year, he may invest in land or
housing schemes. These investments offer faster, rate of capital appreciation but lack
liquidity. In stock market, the value of shares multiples at much higher rates but involve
risk.
 The investor’s portfolio may consist of more of debt instruments than equity shares
with a view to ensure more safety of the principal amount.

23
RISK AND RETURN ANALYSIS: The objective of portfolio management is to maximize
the return and maximize the risk. Risk is uncertainty of income/capital appreciation or loss of
both. The two types, of risks involved are:

Systematic or market-related risks arise due to non-availability of material, interest rates

fluctuations, inflation, import and export policy of the government taxation policy, government
policies, general business risk etc.

Unsystematic risk or company-related risk due to mismanagement defective sales policies,

interesting inventory, faulty financial policies labor problems, defective marketing of products
resulting –into decreased demand etc.

Systematic risk can be managed by the use of Betaβ of different companies. In simple terms,

If β = 1, the scrip risk is same as market risk

If β < 1, the scrip risk is same as market risk

If β > 1, the scrip risk is same as market risk

The risk averse investors are advised in scrip’s with β less than 1 whereas; risk lovers should
go for scrip’s with β greater than 1.

Measurement risk:

Risk is measured by variance or standard deviation around the expected return for an individual
security. In other words, securities risk is equated with the variability of its return. More
variations from the expended return would mean the securities riskier than one with fewer
variations. Risk for the portfolio is measured by the co-variances among securities.

In terms of symbols, the formula of variance (Risk) of portfolio consisting of two assets is as
follows:

24
Expected return is the return from an asset that investors anticipate they will earn over some
future period. It is predicated return. It may no occur. Return on a typical investment consists
of two components.

The periodic cash receipts (or income) on the investment either in the form of interest or
dividends.

The second component is the change in price of the asset also called the capital gain or loss.

The element of return is the difference between the purchase price and the price at which the
asset can be sold or sold or is sold; therefore, it can be gain or loss.

The total return for a given holding period can be calculated by comparing all the cash flows
received by an investor during any designated time period to the amount of money invested in
the asset. The total return is an acceptable measure of return for a specialized period of time.

DIVERSIFICATION:

The unsystematic risks or company related risks involved in investment and portfolio
management can be reduced and returns can be optimized through diversification i.e. by
carefully selecting variety of the assets. Instruments. Industry and scrips of
companies/government securities. When different assets are added to the portfolio, the total
risk tends to decrease.

25
Forms of diversification:

The diversification may take any of the following form;

 Investment into different type of assets, like gold, silver, government securities, real
estate, housing etc.
 Investment into different instruments or securities like equity shares, bonds, debentures,
government securities.
 Investment into different industry lines e.g., pharmaceuticals, cement, technology, steel,
fertilizers, oil and gas etc.
 Investment into different scripts of company’s e.g., new companies, growing
companies,blue chip companies etc.

According to the investors need for income and ability to bear risk, portfolio is diversified.
Stocks provide better returns and inflation protection then bonds but are more prone to financial
risk. Among the bond portfolio, investor has to strike a balance between short-team and long-
term bonds. In the stock portfolio, it has to follow the following steps.

 Selection of industries
 Selection of companies In the industry
 Determining the size of participation

First of all, the investor has to select the industries that would help him achieve his investment
objectives. If regular income is the criteria, then industries, which resist the trade cycle should
be selected. Secondly, the investor should make selection of the companies in a particular
industry taking into consideration their growth, yield, expected earnings. Past earning, expected
price earnings ratio and rate of dividend etc. finally, the investor has to decide the number of
shares of each company to be purchased to give adequate diversification

Principles to be followed in diversification:

The following principle should be followed while choosing the different types of securities in
order to have diversified portfolio.

 A single company/industry is riskier than two companies/industries.

 Two companies, one in steels and other in cement are less risky than two companies in
either steel or cement.

26
  Two companies or two industries which are similar in nature are riskier than two
dissimilar companies/industries.

Thus, it is a proper diversification which involves two or more companies/two or more

industries whose returns fluctuate independent of one another or in different directions.

MODERN MARKOWITZ APPROACH TO PORTFOLIO CONSTRUCTION

Modern approach has been conceived by harry Markowitz. He places more attention to
the process of selecting the portfolio. His approach is more applicable in the selection of
common stocks portfolio than the bond portfolio. He assumes that investor’s attitude towards
portfolio depends exclusively upon:

 Expected return and relationship

 Quantification of risk.
 Risk is measured by variance of standard deviation of return for an individual security
and for the portfolio the co-variance among securities is taken into account.
 As per this approach, given the return, risk can be reduced by diversification of
investment into a number of scrips. Each scrip has its own characteristic. The risks of
tow scrips are different from the risk of a group of two companies together.
 Markowitz was of the opinion that investor take his decision on the basis of expected
return and variance of returns. For a given level of risk, he prefers higher return to lower
return. Similarly, given the level of return, he would prefer lesser risky stock.

Effects of Combining the Securities:

Markowitz introduced the concept of diversification and stressed on the need for having two
or more securities with varying returns in the portfolio in order to reduce the risk. Because in
bad times the loss from one security will be offset against the gains from other security.

Co-variance between Securities:

The risk involved in individual securities is measured by standard deviation or variance, when
two securities are held in a portfolio, it is essential to study the co-variance between "lie two.
The co-variance is considered to be positive when the rates of return of two securities move in
the same direction. But if rate of return is independent, covariance is zero. If rates of return
move in the opposite direction, the covariance is said to be negative. Covariance between two
securities can be calculated mathematically as follows.

27
 COVAB = covariance between stock A and stock B

RA= return on stock A

RB = return on stock B

RA = expected return on stock A

RB = expected return on stock B

N = number of observations

Efficient of Correlation:

It indicates the similarity or dissimilarity in the behavior.

Effects of Change in Portfolio Proportions:

By changing the investment proportions in different securities, the portfolio risk can be brought
down to zero.

The co-efficient of correlation has to be considered if advantage of diversification is to be

availed of. The average risk of portfolio can be reduced only if co-efficient of correlation of
these returns of stock A and stock B is less than 1.0.

 If the coefficient is +1.0. the return moves along the straight-line MN.
 If the coefficient is -1.0, then risk can be reduced to zero because, the risk of one can
be offset by that of other.
 If the coefficient is 0.5(i.e. between +1.0 and -1.0) then diversification can reduce the
risk on the portfolio and the return will move along the curve of stock A and stock B. It
can be calculated as follows:

The coefficient of correlation between stock A and stock B (YAB) is -1 which indicates that
there is a perfect negative correlation and rates of return move in opposite direction. If Y is 1,

28
then perfect positive correlation exists between the securities and returns move in the same
direction.

If Y is 0. then it indicates, stock returns are independent of each other.

Thus, the correlation between two securities depends upon the covariance between the
two securities and the standard deviation of each security.
Effect of Holding Two Securities on Portfolio Risk:
Holding two securities may reduce the portfolio risk too. The portfolio risk can be
calculated with the help of the following formula;

Where, σp = portfolio standard deviation

X1= percentage of total portfolio value in stock A
X2= percentage of total portfolio value in stock B
σ1= standard deviation of stock A G2= standard
σ2= deviation of stock B
β= coefficient if correlation between stock A and stock B

If one is on the curve MN rather the straight-line MN, one can increase the return without
increasing the risk, at point Q from Q to P at same level of risk.

29
Concept of Dominance:

It explains selection of a portfolio with lease risk, with returns being given.

a. If there are two or more companies with the same risk, then the investors should choose
the one with higher return.
b. If the two or more companies enjoy the same return then the investor should choose the
one with lower risk.
c. The investor can minimize the risk by distributing his funds in different types of
companies with verifying risks and returns and having no correlation.

b. Thus, the investor has not only to make proper investment decision of what to buy and when
to buy, but has to have a proper investment policy through diversification and choice of a proper
|3 for the stocks selected so that the total risk of portfolio is minimized. Finally, portfolio is
chosen that meets the requirement of the investors. An investor who is willing to take higher
risk in order to earn high return would choose high risk portfolio. Investor with lower risk
bearing ability would choose low level risk portfolio. The risk neutral investor would choose
the medium level risk portfolio.

MARKOWITZ EFFICIENT FRONTIER:

c. Efficient portfolio may be constructed from available securities after analyzing all the
possible combinations of expected return Rp and risk (op). It may be explained with the help
of a graph.

Under these assumptions, a single asset or portfolio of assets is considered to be "efficient" if

no other asset or portfolio of assets offer higher expected-return with the same (or lower) risk
or lower risk with the same (or higher) expected return.

30
SHARPE - SINGLE INDEX MODEL

INTRODUCTION:

The basic notion underlying the single index model is that all stocks are affected by movements
in the stock market. Casual observation of the share prices reveals that market moves up, prices
of the most shares tend to increase. When the market goes down, the prices of most shares tend
to decline, this suggests that one reason why security returns must be correlated and there is
co-movement between securities, is because of common response to market changes.

This co-movement of stocks with a market index may be studied with the help of a simple
linear regression analysis taking the returns on an individual security as the dependent variable
(Rj) and the return on the market (Rm) as the independent variable.

The return of an individual security may be expressed as

Where variance of security’s return:

Covariance of returns between securities i and j is:

The variance of the security has two components namely, systematic risk or market risk and
unsystematic risk or unique risk. The variance explained by the index is referred to systematic
risk. The unexplained variance is called residual variance or unsystematic risk.

Systematic risk =

Unsystematic risk = Total variance - Systematic risk.

31
Thus, the total risk = systematic risk + Unsystematic risk.

From this, the portfolio variance can be derived

Likewise, expected return on the portfolio also can be estimated. For each security αi and βi
should be estimated.

Portfolio return is the weighted average of the estimated return for each security in the portfolio.
The weights are the respective stock's proportion in the portfolio. A portfolio's alpha valued is
a weighted average of the alpha values for its component securities using the proportion of the
investment in a security as weight.

σp= value of the alpha for the portfolio

xi= proportion of the investment on security i

αi= value of alpha for security i

N = the number of securities in the portfolio

32
Similarly, a portfolio's beta value is the weighted average of the beta values of its component
stocks using relative shares of them in the portfolio as weights.

CORNER PORTFOLIO:

The entry or exit of a new stock in the portfolio generates a series of corner portfolio. In a one
stock portfolio, it itself is a corner portfolio. In a two stock portfolio, the minimum attainable
risk (variance) and the lowest return would be the corner portfolio. As the number of stocks
increases in a portfolio, the corner portfolio would be the one with lowest return and risk
combination.

In the above diagram, AB line shows the risk-return combinations of several portfolios. Each
number indicates the number of stocks in the portfolio. When the number of stocks increases,
the risk and return decline. Tracing down the AB line shows the corner portfolio. An efficient
frontier may have one or two security portfolio at the low or high extremes, if the percentages
of the allocation to stocks are free to take any value.

SHARPENS OPTIMAL PORTFOLIO:

Sharpe had provided a model for the selection of appropriate securities in a portfolio. The
selection of any stock is directly related to its excess return-beta ratio.

33
Where, Ri = the expected return on stock i

RF = the return on a risk less asset

βi = the expected change in the rate of return on the stock i associated with one-unit change in
the market return.

The excess return is the difference between the expected return on the stock and the risk less
rate of interest such as the rate offered on the government security or Treasury bill. The
excess return to beta ratio measures the additional return on a security (excess of the risk less
asset return) per unit of systematic risk or non-diversifiable risk. This ratio provides a
relationship between potential risk and reward.

Ranking of the stocks are done on the basis of their excess return to beta. Portfolio managers
would like to include stocks with higher ratios. The selection of the stock depends on a
unique cut off rate such that all stocks with higher ratios of

are included and the stocks with lower ratios are left off. The cut-off point is denoted by c*.

The steps for finding out the stocks to be included in the optimal portfolio are given below.

1. Find out the "excess return to beta" ratio for each stock under consideration.
2. Rank them from the highest to the lowest.
3. Proceed to calculate Ci for all the stocks according to the ranked order.
4. The cumulated value of Ci start declining after a particular Ci and that point is taken as
the cut-off point and that stock ratio is the cut-off ratio C.

The Ci can be stated with mathematically equivalent way.

34
βip= the expected change in the rate of return on stock I associated with 1 percentage change in
return on the optimal portfolio.

Rp = the expected return on the optimal portfolio.

βipp and Rp cannot be determined until the optimal portfolio is found. To find out the optimal
portfolio, the formula given previously should be used. Securities are added to the portfolio as
long as

The above equation can be rearranged with the substitution of equation:

Now we have Ri – Rf > βip(Ri − Rr)

The right-hand side is the expected return on a particular stock based on the expected
performance of the optimum portfolio. The term on the left-hand side is the expected excess
return on the individual stock. Thus, if the portfolio manager believes that a particular stock
will perform better than the expected return based on its relationship to optimal portfolio, he
would add the stock to the portfolio.

CONSTRUCTION OF THE OPTIMAL PORTFOLIO:

After determining the securities to be selected, the portfolio manager should find out how much
should be invested in each security. The percentage of be invested in each security can be
estimated as follows

35
The first expression the weights on each security and the sum up to one. The second shows the
relative investment in each security. The residual variance or the unsystematic risk has a role
in determining the amount to be invested in each security.

THE CAPM THEORY:

Markowitz, William Sharpe, John Linter, Jan Mossin provided the basic structure for the
CAPM model. It is a model of linear general equilibrium return. In the CAPM theory, the
required; rate return of an asset is having a linear relationship with asset's beta value i.e.
undiversifiable or systematic risk.

ASSUMPTIONS:

 An individual seller or buyer cannot affect the price of a stock. This assumption is the
basic assumption of the perfectly competitive market.
 Investor makes their decisions only on the basis of the expected returns, standard
deviations and co-variances of all pairs of securities.
 Investors are assumed to have homogeneous expectations during the decision-making
period.
 The investor can lend or borrow any amount of funds at the risk less rate of interest.
The risk less rate of interest is the rate of interest offered for the treasury bills or
government securities.
 Assets are infinitely divisible. According to this assumption, investor could buy any
quantity of share i.e. they can even buy ten rupees worth of reliance industry shares.
 There is no transaction cost i.e. no cost involved in buying and selling of stocks.
 There is no personal income tax. Hence, the investor is indifferent to the form of return
either capital gain or divided.
 Unlimited quantum of short is allowed. Any amount of sales an individual can sell short.

Lending and Borrowing:

Here, it is assumed that the investor could borrow or lend any amount of money at risk less rate
of interest. When this opportunity is given to the investors, they can mix risk free with the risky
assets in the portfolio to obtain a desired rate of risk-return combination.

36
RP= portfolio return

xf = the proportion of funds invested in the risk-free assets

1-xf = the proportion of funds invested in risky assets

Rf = risk-free rate of return

Rf = return on risky assets The expected return on the combination of risky and risk-free
combination Rp = Rf xf + Rm(1 – xf)

The formula can be used to calculate, the expected returns for different situations, like mixing
assets with risky assets, investing only in the risky asset and mixing the borrowing with risky
assets.

SECURITY MARKET LINE (SML):

Capital market line does not show the risk return relationship of inefficient portfolios.
Unsystematic rick can be eliminated by diversification whereas systematic risk can be
measured by beta is useful for analyzing individual securities and portfolios whether efficient
beta. All efficient and inefficient portfolios lie along the security marks line.

When betas of a security are given we can find expected returns for the given security by
marking the beta on the X-axis and drawing a vertical line touch the SML line at N. From N.
we draw another line to touch the Y-axis at M. Relative attractiveness of the security can be
found out with the help of security market line; the securities that lie on SML is considered to
be appropriately valued. They offer returns in undervalued is overvalued.

CAPITAL MARKET LINE:

The capital market line (CML) represents linear relationship between the required rates and
return for efficient portfolios and their standard deviations. CML gives the desired set of
investment opportunities between risk free and risky investments.

The line QRS represent all possible combinations of risk less and risky asset.

The ‘R’ portfolio does not represent any risk less asset but the line QRS gives the combination
of both; the portfolio along the path QR is called leading portfolio i.e., some money is borrowed
and invested in the risky asset. The straight line, (QRS) is called capital market line (CML).

37
LIMITATIONS OF CAPM: It is not realistic in the real world. This assumes that all investors
are risk averse and higher the risk, the higher is the return. Investors ignore the transactions
cost information cost, brokerage, taxes etc. and make decisions on the basis of single period
horizon. The investors are given a choice on die basis of risk return characteristics of an
investment and they can buy at the going rate in the market. There are many buyers and sellers
and the market are competitive and the free forces of supply and demand determine the prices.
CAPM establishes a measure of risk premium and is measured by i(Rm-Rf) beta coefficient is
the non-diversifiable risk of the asset, relative to the risk of the asset.

38
 B. LITERATURE REVIEW

Article 1: Majanga, B. (2015). The dividend effect on stock price-An empirical analysis of
Malawi listed companies.

The estimation of a firm’s stock price has been a subject of debate considering the various
factors that cause its increase or decrease. Chief among the outstanding factors touted bymost
scholars is the amount of dividends declared by the firm to its stockholders. This paper aims at
establishing if there exists such a direct relationship between a firm’s dividends and its stock
price with particular emphasis on the Malawi stock exchange. The study analyses secondary
data sets of thirteen local companies listed on the Malawi Stock Exchange for the period 2008
to 2014 inclusive. Using the correlation analysis stock price as an independent variable, and
dividends, retention ratio, profit after tax, earnings per share and return on equity, as dependent
variables, over the seven years, the study shows a strong positive association between stock
price The study therefore establishes that on the Malawi Stock Exchange (MSE), there is a
strong positive relationship between a firm’s dividends and itsstock price on the stock market.
The study further finds that stock price is an outcome of a number of factors, dividends being
one of them and having a very significant contribution. The findings in this study will help
investors, both potential and existing; as well as managers of listed companies, who are the
stewards, to understand and appreciate the impact of dividend declaration or absence of it, on
the psychology of stockholders which later affects the respective company’s stock price on the
stock exchange.

39
Article 2: Supriya Shivnarayan Sing

If Financial Analysis is done in a right manner, we can analyze Investments rigorously and
Manage Portfolios using Excel and Google Sheets. Investment risk can be quantified and
measured by exploring the powerful relationships between stock prices, returns and risk. We
found that risk can be minimized and return can be maximized to a certain extent by
diversification. We can find out how much to invest in individual stocks of a portfolio for
desired return and risk. We can also find out, the maximum return that can be obtained from a
portfolio by using the model used in this research. Investment analysis and Portfolio
Management, helps us identify the way in which we should invest in stocks with some initial
calculations and identify the portfolio which would help us to gain better returns

Article 3: Aggarwal, S. PORTFOLIO MANAGEMENT: A QUALITATIVE STUDY.

Based on the analysis it can be concluded that Portfolio is a combination of Securities. Portfolio
can be constructed with the help of Traditional approach and Modern Approach. The main
objective of portfolio management is to help the investor in investing in various securities so
that risk is to be minimized and to get higher yield of return. In traditional approach the
constraints, investors need for current income and constant income are analysed. The basic
objectives of portfolio are current income, constant income preservation of capital, capital
appreciation. As per the objective of portfolio whether it is a stock portfolio or bond

40
 CHAPTER- 4

DATA ANALYSIS AND INTERPRETATION

PORTFOLIO CONSTRUCTION WITH RESPECT TO MULTIPLE SECTORS:

In this chapter, the collected data were analysed in order to know the portfolio construction with

respectto multiple sectors.

1. Portfolio Analysis

Portfolio Analysis is one of the areas of investment management that enable market

participants to analyze and assess the performance of a portfolio (equities, bonds, alternative

investments, etc.), intending to measure performance on a relative and absolute basis along

with its associated risks.

2. The analysis consists of

 Return calculations.

 Risk calculations.

 Portfolio constructions.

List of sectors selected for portfolio Analysis: -

 Pharmaceutical
 Fast Moving Consumer Goods (FMCG)

Listed companies of multiple sector

The following companies were selected for analysis

 Sun Pharmaceutical Industries Limited

 Cipla Pharmaceutical Limited

 Imperial Tobacco Company

 Hindustan Unilever Limited

41
 NSE INDEX Selected for Analysis: NIFTY 50

Ⅰ. Pharmaceutical analysis: -

The Pharmaceutical industry discovers, develops, produces, and markets pharmaceutical

drugs for the use as medications to be administered to patients (or self- administered),with

the aim to cure and prevent diseases, oralleviate symptoms. Pharmaceutical companies may

deal in generic or brand medications andmedical devices. They are subject to a variety

of laws and regulations that governthe patenting, testing, safety, efficacy using drug testing

and marketing of drugs.

 Sun Pharmaceutical Industries Limited: - Sun Pharmaceutical Industries

Limited (Sun Pharma) is an Indian multinational pharmaceutical company headquartered

in Mumbai, that manufactures and sells pharmaceutical formulations and active

pharmaceutical ingredients (APIs) in more than 100 countries across the globe. It is the

largest pharmaceutical company in India and the fourth-largest specialty generic

pharmaceutical company in the world.

 Cipla Pharmaceutical Limited: Cipla Limited (stylized as Cipla) is an Indian

multinational pharmaceutical company, headquartered in Mumbai. Cipla primarily develops

medicines to treat respiratory disease, cardiovascular disease, arthritis, diabetes, depression,

and many other medical conditions. Cipla has 47 manufacturing locations across the world

and sells its products in 86 countries. It is the third largest drug producer in India.

42
NIFTY 50 PHARMACEUTICAL INDEX

Ⅰ. Top Constitutes table by Weightage: -

Company Name Weightage

Sun Pharmaceutical 24.59

Cipla 12.28

Divis 9.35

Lupin 4.73

Aurobindo 4.61

Alkem 3.88

Torrent 3.65

Zydus 3.19

Laurus 2.76

43
Ⅱ. INDEX RETURN: -

INDEX RETURN 1 YEAR 5 YEARS

PRICE RETURN 17.34 10.31

TOTAL RETURNS 18.58 11.16

Ⅲ. STATISTICS: -

STATISTICS 1 YEAR 5 YEARS

STANDARD DEVIATION 12.38 20.95
BETA 0.4 0.59
CO-RELATION (NIFTY
0.37 0.54
50)

Ⅳ. SUN PHARMACEUTICAL M.C, BETA, RETURNS: -

MARKET CAPITALIZATION BETA TOTAL RETURNS

1 YEAR 5 YEARS
2.75 TRILLION 0.45 26.13 111.2

V. CIPLA PHARMACEUTICAL LIMITED: -

MARKET CAPITALIZATION BETA TOTAL RETURNS

1 YEAR 5 YEARS
992.35 BILLION 0.40 19.86 88.72

44
 CALCULATION OF SPREAD OF APRIL MONTH

SPREA SPREA
Date Open High Low Close
D(O- D(H-
C) L)
03-04-2023 981 988 976.2 979.05 1.950012 11.799988

05-04-2023 985 999 975.3 997.15 -12.150024 23.700012

06-04-2023 997.15 1014 993.4 1012.1 -14.949952 20.599976

10-04-2023 1015 1016.95 1006.65 1008.6 6.400024 10.299988

11-04-2023 1008.6 1022.25 1007.55 1009.25 -0.650024 14.700012

12-04-2023 1015.5 1020.2 1005.25 1016.7 -1.200012 14.950012

13-04-2023 1022.3 1023.85 1002 1003.5 18.799988 21.849976

17-04-2023 999.45 1009.9 995.05 998.7 0.75 14.850036

18-04-2023 999 1006.25 988.3 1004.8 -5.799988 17.950012

19-04-2023 1003.5 1009.4 993 995.5 8 16.400024

20-04-2023 999.1 1002.1 983.75 987.75 11.349976 18.349976

21-04-2023 994.3 994.3 984.95 989.45 4.849976 9.349976

24-04-2023 975 982.5 959.25 979.15 -4.150024 23.25

25-04-2023 980 982.9 967 972.5 7.5 15.900024

26-04-2023 975.8 976.8 963.2 971.25 4.549988 13.599976

27-04-2023 968 981.6 963.55 978.7 -10.700012 18.049988

28-04-2023 984.95 992.5 979.15 987.65 -2.700012 13.349976

TABLE 4.1

45
INTERPRETATION: Sun Pharmaceuticals in April 2023:

High value: 1023.85 on 12-04-2023

Positive news:

 The company launched CEQUA, a novel therapy for dry eye disease in India.
 It acquired Disperzyme and Phlogam brands to strengthen its anti-inflammatory
portfolio.
 It announced the China NMPA approval for ILUMETRI (Tildrakizumab Injection) for
the treatment of adults with moderate-to-severe plaque psoriasis.

Low value: 963.2 on 26-04-2023

Negative news:

 The company's share price fell by 2% in April 2023.

 It announced a net profit of Rs. 2,023 crores for the first quarter of fiscal year 2024,
down 2% from the same quarter of the previous year.
 The company also announced exceptional items worth Rs. 323 crores, which weighed
on its bottom line.

Overall, the news for Sun Pharmaceuticals in April 2023 was mixed. The company had some
positive developments, such as the launch of CEQUA and the acquisition of Disperzyme and
Phlogam brands. However, the company's share price fell and its net profit declined. The future
of Sun Pharma is uncertain. The company is facing some challenges, such as the pricing
pressure in the Indian market and the ongoing USFDA inspection of its Halol plant. However,
the company has a strong track record of innovation and growth. If it can overcome its
challenges, it is well-positioned to continue to grow in the years to come. According to analyst
recommendations, Sun Pharmaceuticals Industries Ltd has a “Buy” rating for the long term.
This means that analysts believe that the company's stock is a good investment for the long
term. However, it is important to do your own research before investing in any stock.

46
 CALCULATION OF SPREAD OF MAY MONTH

SPREAD (H-L)
Date Open High Low Close (O-C) SPREAD
02-05-2023 987.65 988.9 970.3 973.05 14.600036 18.600036

03-05-2023 970.5 972.4 959.5 963.6 6.900024 12.900024

04-05-2023 967.65 975.9 965.15 974 -6.349976 10.75

05-05-2023 974 977.25 967.85 970.45 3.549988 9.400024

08-05-2023 962 969 961 961.85 0.150024 8

09-05-2023 961.9 966.85 949.5 957.45 4.450012 17.349976

10-05-2023 957 959.95 951.6 953.8 3.200012 8.350036

11-05-2023 953.8 963.9 952 961.05 -7.25 11.900024

12-05-2023 961 963.1 952 956 5 11.099976

15-05-2023 953 955.75 948.05 953 0 7.700012

16-05-2023 953 962.55 938 940.95 12.049988 24.549988

17-05-2023 941.25 945.3 928.85 935.95 5.299988 16.450012

18-05-2023 943 943 922.45 929.65 13.349976 20.549988

19-05-2023 932 934.4 924.3 925.85 6.150024 10.100036

22-05-2023 925.85 942.75 922.85 937.45 -11.600036 19.900024

23-05-2023 937.5 956.2 929.1 931.6 5.900024 27.100036

24-05-2023 935.5 954.8 932.6 952.15 -16.650024 22.200012

25-05-2023 949.7 951.7 942.7 945 4.700012 9

26-05-2023 943.95 976.7 937 969.9 -25.950012 39.700012

29-05-2023 969.95 973.25 946.4 968.45 1.5 26.849976

30-05-2023 965 967.45 956.3 959.6 5.400024 11.150024

31-05-2023 965 979.3 960.75 975.35 -10.349976 18.549988

TABLE – 4.2

47
INTERPRETATION: Sun Pharmaceuticals in May 2023:
High value: 988.9 on 02-05-2023

Positive news:

 The company announced the China NMPA approval for ILUMETRI (Tildrakizumab
Injection) for the treatment of adults with moderate-to-severe plaque psoriasis.
 It entered an exclusive distribution, license, and supply agreement with Philogen for
commercializing specialty product, NIDLEGY™ in Europe, Australia, and New
Zealand.
 It received a milestone payment of $10 million from Concert Pharmaceuticals for the
development of CTP-543, an investigational oral selective PDE10 inhibitor for the
treatment of psoriasis.

Low value: 922.45 on 18-05-2023

Negative news:

 The company's share price fell by 1.07% in May 2023.

 It announced exceptional items worth Rs. 51 crores on the relocation of Alchemee
operations from California to New York.
 The company's Halol plant remained under import alert from the USFDA.

Overall, the news for Sun Pharmaceuticals in May 2023 was mixed. The company had some
positive developments, such as the China NMPA approval for ILUMETRI and the exclusive
distribution agreement with Philogen. However, the company's share price fell and it
announced exceptional items. The future of Sun Pharma is uncertain. The company is facing
some challenges, such as the pricing pressure in the Indian market and the ongoing USFDA
inspection of its Halol plant. However, the company has a strong track record of innovation
and growth. If it can overcome its challenges, it is well-positioned to continue to grow in the
years to come. According to analyst recommendations, Sun Pharmaceuticals Industries Ltd has
a “Hold” rating for the short term. This means that analysts believe that the company's stock is
not a good investment for the short term. However, they are optimistic about the company's
long-term prospects and have a “Buy” rating for the long term.

48
 CALCULATION OF SPREAD OF JUNE MONTH

spread spread
Date Open High Low Close
(o-c) (H-L)
01-06-2023 979.8 990.45 975 987.7 -7.900024 15.450012

02-06-2023 986.55 1003.7 981 999.6 -13.049988 22.700012

05-06-2023 1005.35 1017.7 998.5 1008.75 -3.400024 19.200012

06-06-2023 1008.9 1015.95 1004 1013.8 -4.899964 11.950012

07-06-2023 1015 1017.5 1010 1014.6 0.400024 7.5

08-06-2023 1015 1016 983.25 987 28 32.75

09-06-2023 984 990.7 981 983.95 0.049988 9.700012

12-06-2023 987.9 989.9 981.05 985.45 2.450012 8.850036

13-06-2023 990 996 985.55 988.1 1.900024 10.450012

14-06-2023 991.6 995 984.25 986.7 4.899964 10.75

15-06-2023 988.5 994.8 985.7 988.4 0.099976 9.099976

16-06-2023 990 994.65 987.2 992 -2 7.450012

19-06-2023 995.15 1006.7 993.75 1001.8 -6.649964 12.950012

20-06-2023 1007.65 1007.75 989.6 991.95 15.700012 18.150024

21-06-2023 991.95 993.85 983.6 991.9 0.049988 10.25

22-06-2023 987.1 996.2 987.1 990.3 -3.200012 9.100036

23-06-2023 994 995.95 977.3 991.45 2.549988 18.650024

26-06-2023 994 1003.8 991.45 994.95 -0.950012 12.349976

27-06-2023 999.95 1003.35 986 1001.8 -1.849976 17.349976

28-06-2023 1001.8 1001.8 1001.8 1001.8 0 0

30-06-2023 1021.75 1055 1020.05 1051.6 -29.849976 34.950012

TABLE 4.3

49
INTERPRETATION: Sun Pharmaceuticals in June 2023:

High value: 1055 on 30-06-2023

Positive news:

 The company announced the health Canada approval of PRWINLEVI® (clascoterone

cream 1%) for Topical Treatment of Acne.
 It launched CEQUA, a novel therapy for dry eye disease in the US.
 It announced the acquisition of a portfolio of specialty dermatology products from Taro
Pharmaceuticals for $110 million.

Low value: 975 on 01-06-2023

Negative news:

 The company's share price fell by 3.2% in June 2023.

 It announced that the USFDA had issued a warning letter to its Halol plant for violation
of good manufacturing practices (GMP).
 The company's Halol plant remained under import alert from the USFDA.

Overall, the news for Sun Pharmaceuticals in June 2023 was mostly negative. The company's
share price fell and it received a warning letter from the USFDA. However, the company also
had some positive developments, such as the launch of CEQUA in the US and the acquisition
of a portfolio of specialty dermatology products. The future of Sun Pharma is uncertain. The
company is facing some challenges, such as the warning letter from the USFDA and the
ongoing import alert on its Halol plant. However, the company has a strong track record of
innovation and growth. If it can overcome its challenges, it is well-positioned to continue to
grow in the years to come. According to analyst recommendations, Sun Pharmaceuticals
Industries Ltd has a “Hold” rating for the short term. This means that analysts believe that the
company's stock is not a good investment for the short term. However, they are optimistic about
the company's long-term prospects and have a “Buy” rating for the long term.

50
 CALCULATION OF SPREAD OF APRIL MONTH

Date Open High Low Close SPREAD(O-C) SPREAD(H-L)

03-04-2023 910 910 887.05 891.45 18.549988 22.950012

05-04-2023 889 897.35 886.3 895.75 -6.75 11.049988

06-04-2023 899 899.75 889 893.35 5.650024 10.75

10-04-2023 896.95 904.5 894.2 901.85 -4.899964 10.299988

11-04-2023 905 908.15 902 907.15 -2.150024 6.150024

12-04-2023 909 920.9 908.2 917.95 -8.950012 12.700012

13-04-2023 921.9 923.05 912.3 915.75 6.150024 10.75

17-04-2023 915 917.45 901.1 906.45 8.549988 16.350036

18-04-2023 905 925.5 897 924.25 -19.25 28.5

19-04-2023 925.95 925.95 909 911.9 14.049988 16.950012

20-04-2023 912 913.7 898.95 904 8 14.75

21-04-2023 903 918.55 903 915.05 -12.049988 15.549988

24-04-2023 916 917.2 901.15 903 13 16.049988

25-04-2023 904.6 912 896.3 909.65 -5.050048 15.700012

26-04-2023 911.85 914.2 900.05 911.1 0.75 14.150024

27-04-2023 911.2 917.3 903 913.95 -2.75 14.299988

28-04-2023 918.85 919 905.15 908.05 10.799988 13.849976

TABLE 4.4

51
INTERPRETATION: Cipla in April 2023:

High value: 925.95 on 19-4-2023

Positive news:

 Cipla receives USFDA approval for generic Trilaciclib, a breast cancer drug, to be
launched in the US.
 Cipla partners with Indian government to manufacture and supply generic drugs for
public health schemes, expected to boost sales.
 Cipla secures European patent for innovative drug delivery technology, aiming to
protect intellectual property and expand global reach.

Low value: 886.3 on 05-4-2023

Negative news:

 USFDA warns Cipla's Goa facility for failure to review discrepancies and follow proper
microbiological contamination prevention procedures.
 Cipla's share price dropped 15% in March 2023, from Rs 1,200 to Rs 1,025.

Overall, the news for Cipla in April 2023 was mixed. The company's financial results were
strong, but it faces some challenges, such as the US FDA inspection and increasing
competition. It remains to be seen how these challenges will impact Cipla's business in the
coming months and years.

52
 CALCULATION OF SPREAD OF MAY MONTH

Date Open High Low Close SPREAD(O-C) SPREAD(H-L)

02-05-2023 910.4 921 906.1 917.7 -7.299988 14.900024

03-05-2023 920.95 924.5 917 920.65 0.299988 7.5

04-05-2023 920.65 935.4 920.65 933.5 -12.849976 14.75

05-05-2023 935 935.2 920.85 924.8 10.200012 14.350036

08-05-2023 927.2 934.9 919.65 933.3 -6.099976 15.25

09-05-2023 935 943 929.1 939.2 -4.200012 13.900024

10-05-2023 943.5 946.7 933.2 944.4 -0.900024 13.5

11-05-2023 946.45 947 935 943.6 2.850036 12

12-05-2023 948.85 953 913 937.45 11.399964 40

15-05-2023 940 940 896.85 922.8 17.200012 43.150024

16-05-2023 927.4 942.65 918.4 922.1 5.300048 24.25

17-05-2023 924.95 932 917 923.95 1 15

18-05-2023 929 929.65 911.55 914.5 14.5 18.100036

19-05-2023 917 922 913 916.25 0.75 9

22-05-2023 916.25 931.05 915.45 924.95 -8.700012 15.599976

23-05-2023 926.4 932.3 919.5 930.4 -4 12.799988

24-05-2023 923.5 939.9 923.5 938 -14.5 16.400024

25-05-2023 941.45 947 935 945.45 -4 12

26-05-2023 945.9 952.75 940.5 951.35 -5.449952 12.25

29-05-2023 952 959.2 945.1 956.25 -4.25 14.100036

30-05-2023 957.6 961.5 951 959.85 -2.25 10.5

31-05-2023 960.2 965 942.3 953.05 7.150024 22.700012

TABLE 4.5

53
INTERPRETATION: Cipla in April 2023:

High value: 961.5 on 30-5-2023

Positive news:

 Cipla's stock price rose 5% in May 2023 due to positive financial results and growth
optimism.
 Cipla secures USFDA approval for Trilaciclib's generic version, enabling US launch.
 Cipla partners with Bill & Melinda Gates Foundation to develop new antibiotics to
combat antibiotic resistance.

Low value: 896.85 on 15-5-23

Negative news:

 Cipla's share price dropped 5% in May 2023, from Rs 951 to Rs 900.

 USFDA issues warning letter to Cipla's Goa facility, citing inadequate microbiological
control procedures and unexplained discrepancies.
 Cipla announces 1,000 employee layoffs as part of restructuring exercise.

Cipla's stock price rose in May 2023, but challenges like patent challenges and a manufacturing
facility fire remain. The company faces increasing competition from generic drug makers,
declining R&D spending, and international market challenges like pricing pressure and
regulatory hurdles. The company's future impact remains uncertain.

54
 CALCULATION OF SPREAD OF JUNE MONTH

Date Open High Low Close SPREAD(O-C) SPREAD(H-L)

01-06-2023 950 966.5 946.75 964.75 -14.75 19.75

02-06-2023 965.9 969.65 954.65 965.85 0.050048 15

05-06-2023 970 976.9 959.15 974.8 -4.799988 17.75

06-06-2023 972.9 974.95 964.05 972.05 0.850036 10.900024

07-06-2023 972.95 977.9 958.5 960.45 12.5 19.400024

08-06-2023 964.9 969.85 963 965.4 -0.5 6.849976

09-06-2023 966 971 959.15 969.25 -3.25 11.849976

12-06-2023 973.25 973.25 955.15 959.95 13.299988 18.099976

13-06-2023 963 983.85 957 981.5 -18.5 26.849976

14-06-2023 981.5 981.9 972.6 978.7 2.799988 9.300048

15-06-2023 981.95 1000 980.6 998.2 -16.25 19.400024

16-06-2023 1000 1007.15 993.75 1006.05 -6.049988 13.400024

19-06-2023 1006.25 1017.55 999.2 1011.25 -5 18.349976

20-06-2023 1013.85 1018.8 1002.6 1011.15 2.699952 16.200012

21-06-2023 1010.2 1013.45 1002.25 1008.9 1.299988 11.200012

22-06-2023 1003.1 1007 990.1 998.3 4.799988 16.900024

23-06-2023 999.95 999.95 985.65 989.4 10.549988 14.299988

26-06-2023 989.35 1025 989.35 1021.9 -32.550048 35.650024

27-06-2023 1024 1026.1 1005 1009.25 14.75 21.099976

28-06-2023 1009.25 1009.25 1009.25 1009.25 0 0

TABLE 4.6

55
INTERPRETATION: Sun Pharmaceuticals in April 2023:

High value: 1026.1 on 27-5-23

Positive news:

 Cipla launches generic Trilaciclib in US, marking significant milestone and expected
to boost sales.
 Cipla secures USPTO patent for innovative drug delivery technology, protecting
intellectual property and expanding global reach.
 Cipla ranks 5th most valuable pharmaceutical company in India, showcasing strong
brand reputation and innovation.

Negative news:

 Cipla's share price dropped 10% in June 2023, from Rs 850 to Rs 765.
 Cipla faces regulatory delays in launching Omipralat, causing a delay in its drug launch.
 USFDA issued consent decree for Cipla's Goa facility, requiring corrective actions to
address warning letter violations.

In June 2023, Cipla's financial results were strong, but the company faces challenges like the
US FDA warning letter and competition from new entrants. The company's business is
uncertain, as it faces increasing competition from generic drug makers in India and the global
market. Research and development spending has declined, and international markets face
pricing pressure and regulatory hurdles. Investors should carefully consider these factors before
investing in Cipla.

56
Ⅲ. FMCG ANALYSIS: -

FMCG: - Fast-moving consumer goods (FMCG), also known as consumer-packaged

goods (CPG), are products that are sold quickly and at a relatively low cost. Examples include

non-durable household goods such as packaged foods, beverages, toiletries, candies,

cosmetics, over-the-counter drugs, dry goods, and other consumables.

IMPERIAL TOBACCO COMPANY ( ITC LIMITED ): -

Established in 1910, ITC Limited is a diversified conglomerate with businesses spanning Fast
Moving Consumer Goods comprising Foods, Personal Care, Cigarettes and Cigars, Education
& Stationery Products, Incense Sticks and Safety Matches; Hotels, Paperboards and
Packaging, Agri Business, and Information Technology. The Company was incorporated on
August 24, 1910 under the name Imperial Tobacco Company of India Limited. As the
Company's ownership progressively Indianized, the name of the Company was changed to
India Tobacco Company Limited in 1970 and then to I.T.C. Limited in 1974. In recognition
of the ITC's multi-business portfolio encompassing a wide range of businesses, the full stops
in the Company's name were removed effective September 18, 2001. The Company now
stands rechristened 'ITC Limited,' where 'ITC' is today no longer an acronym or an initialised
form.

Hindustan Unilever Limited: -

Hindustan Unilever Limited (HUL) is a British-owned Indian consumer goods company

headquartered in Mumbai. It is a subsidiary of the British company Unilever. Its products
include foods, beverages, cleaning agents, personal care products, water purifiers and other
fast-moving consumer goods (FMCGs). Personal Care and Refreshment products with sales
in over 190 countries and an annual sales turnover of €52 billion in 2019. Unilever has over
67% shareholding in HUL.

57
Ⅰ. Top Constitutes table by Weightage: -

COMPANY NAME WEIGHTAGE (%)

ITC LIMITED 32.04

HINDUSTAN UNILEVER 22.71

NESTLE 7.44

TATA CONSUMERS 5.63

GODREJ CONSUMER 4.32

VARUN BEVERAGES 4.15

DABUR INDIA LTD 3.71

UNITED SPIRITS 3.26

MARICO 3.2

58
Ⅱ. INDEX RETURNS: -

INDEX RETURN 1 YEAR 5 YEARS

PRICE RETURN 23.89 11.16

TOTAL RETURN 25.52 12.97

Ⅲ. STATISTICS: -

STATISTICS 1 YEAR 5 YEARS

STANDARD DEVIATION 11.88 17.41

BETA 0.57 0.65

CO-RELATION (NIFTY 50) 0.55 0.72

Ⅳ. ITC RETURN, M.C, BETA: -

TOTAL RETURNS
MARKET CAPITALIZATION BETA
1 YEAR 5 YEARS
5.58 TRILLION 0.67 44.55 127.48

V. HCL RETURN, M.C, BETA: -

TOTAL RETURNS
MARKET CAPITALIZATION BETA
1 YEAR 5 YEARS
5.95 TRILLION 0.57 18.43 98.22

59
 CALCULATION OF SPREAD OF APRIL MONTH

spread (o- spread

Date Open High Low Close
c) (H-L)
03-04-2023 384 384 378.5 378.9 5.100006 5.5

05-04-2023 378.9 387.05 378.9 386.4 -7.5 8.149994

06-04-2023 386.65 390.3 384.2 387.35 -0.700012 6.099976

10-04-2023 387.35 390 384.75 388.55 -1.199982 5.25

11-04-2023 388.55 398.1 388 396 -7.450012 10.10000

12-04-2023 397.75 397.8 392.1 393.55 4.200012 5.699982

13-04-2023 395.5 396.6 393.7 395.6 -0.100006 2.899994

17-04-2023 392.9 402 392.9 400.15 -7.25 9.100006

18-04-2023 400 402 397 398.5 1.5 5

19-04-2023 396.05 401.35 396 398.75 -2.700012 5.350006

20-04-2023 400 402.65 397.7 400.3 -0.299988 4.949982

21-04-2023 400.3 409 399.05 408.25 -7.950012 9.950012

24-04-2023 410 410 404.2 408.7 1.299988 5.799988

25-04-2023 408.7 413.55 407.4 411.55 -2.849976 6.149994

26-04-2023 412 413 409.05 412.25 -0.25 3.950012

27-04-2023 412.2 417.4 411 416 -3.799988 6.399994

28-04-2023 418 428.25 413.7 425.55 -7.549988 14.54998

TABLE 4.7

60
INTERPRETATION: About ITC in April 2023:

High value: 428.25 on 28-04-2023

Positive news:

 The company's cigarette business reported a growth of 10%in the first quarter of
the financial year 2023-24.
 It launched a new range of premium cigarettes called ITC Classic.
 It announced the expansion of its hospitality business with thelaunch of a new hotel
in Kolkata.

Low value: 378.5 on 03-04-2023

Negative news:

 The company's non-cigarette FMCG business reported a decline of 2% in the first

quarter of the financial year 2023-24.
 It was downgraded by rating agency Crisil due toconcerns about the company's
financial performance.
 The company's share price fell by 5% in April 2023.

Overall, the news for ITC in April 2023 was mixed. The company had some positive
developments, such as the growth of its cigarette business and the launch of new products.
However, the company's non-cigarette FMCG business declined and its share price fell. The
future of ITC is uncertain. The company is facing some challenges, such as the slowdown in
the economy and the increasing competition in the cigarette industry. However, the company
is still a large and diversified conglomerate with a strong track record. If it can manage its risks,
it is well-positioned to continue to grow in the years to come. According to analyst
recommendations, ITC Ltd has a “Hold” rating for the short term. This means that analysts
believe that the company's stock is not a good investment for the short term. However, they are
optimistic about the company's long-term prospects and have a “Buy” rating for the long term.

61
 CALCULATION OF SPREAD OF MAY MONTH

spread (o- spread

Date Open High Low Close
c) (H-L)
02-05-2023 426 427 421.2 424.45 1.549988 5.799988
03-05-2023 424 428.5 422.05 427.15 -3.149994 6.450012
04-05-2023 425.3 427 424 424.6 0.699982 3
05-05-2023 425.95 431.9 424.35 428.75 -2.799988 7.549988
08-05-2023 431 433.45 429.35 431.45 -0.450012 4.100006
09-05-2023 432.8 433.15 421.5 423.8 9 11.64999
10-05-2023 423.95 426.35 422.2 425.35 -1.399994 4.149994
11-05-2023 427.25 427.4 418.9 420.4 6.850006 8.5
12-05-2023 420.4 422.7 416.05 420.45 -0.050018 6.650024
15-05-2023 420 428.7 419.05 427.8 -7.799988 9.650024
16-05-2023 430 430 423.5 423.95 6.049988 6.5
17-05-2023 424.15 428.95 422.6 427.6 -3.450012 6.350006
18-05-2023 430 432.45 418.1 419.7 10.299988 14.35000
19-05-2023 420.95 423.1 411.35 419.85 1.100006 11.75
22-05-2023 421.95 425.75 419.1 424.75 -2.799988 6.649994
23-05-2023 426 431.2 424.2 429.15 -3.149994 7
24-05-2023 428.3 434.75 427 433.5 -5.200012 7.75
25-05-2023 436.95 442.45 434.8 441.15 -4.199982 7.650024
26-05-2023 443.4 444.75 439.5 443.6 -0.200012 5.25
29-05-2023 445 451.8 444.1 449.1 -4.100006 7.699982
30-05-2023 441 451.45 441 449.9 -8.899994 10.45001
31-05-2023 449.3 452 442.45 445.5 3.799988 9.549988

TABLE 4.8

62
INTERPRETATION: about ITC in May 2023:

High value: 452 on 31-05-2023

Positive news:

 The company's cigarette business reported a growth of 11% inthe second quarter of the
financial year 2023-24.
 It launched a new range of premium chocolates called ITC Fabelle.
 It announced the expansion of its e-commerce businesswith the launch of a
new website.

Low value: 411.35 on 19-05-2023

Negative news:

 The company's non-cigarette FMCG business reported a decline of 1% in the second

quarter of the financial year 2023-24.
 It was fined Rs 200 crore by the Competition Commissionof India for abusing its
dominant position in the cigarette market.
 The company's share price fell by 2% in May 2023.

Overall, the news for ITC in May 2023 was mostly positive. The company had some positive
developments, such as the growth of its cigarette business and the launch of new products.
However, the company's non-cigarette FMCG business declined and it was fined by the
Competition Commission of India. The future of ITC is uncertain. The company is facing some
challenges, such as the slowdown in the economy and the increasing competition in the
cigarette industry. However, the company is still a large and diversified conglomerate with a
strong track record. If it can manage its risks, it is well-positioned to continue to grow in the
years to come. According to analyst recommendations, ITC Ltd has a “Hold” rating for the
short term. This means that analysts believe that the company's stock is not a good investment
for the short term. However, they are optimistic about the company's long-term prospects and
have a “Buy” rating for the long term.

63
 CALCULATION OF SPREAD OF JUNE MONTH
Spread spread
Date Open High Low Close
(o-c) (H-L)
01-06-2023 447 447 439 439.7 7.299988 8

02-06-2023 440 444.9 439.8 443.4 -3.399994 5.100006

05-06-2023 445 446.85 440.1 440.65 4.350006 6.75

06-06-2023 440.8 443.6 440.4 442.8 -2 3.200012

07-06-2023 444 445.65 442.75 443.95 0.049988 2.899994

08-06-2023 445.7 445.75 441.9 442.9 2.800018 3.850006

09-06-2023 435.15 444.7 435.15 438.45 -3.300018 9.550018

12-06-2023 440 440.95 433.85 436.95 3.049988 7.100006

13-06-2023 441 446.4 438.3 445.4 -4.399994 8.100006

14-06-2023 446.25 447.75 443.75 444.5 1.75 4

15-06-2023 445 448.75 444.75 448.1 -3.100006 4

16-06-2023 449 455.6 447.9 453.1 -4.100006 7.700012

19-06-2023 454.75 455.9 452.25 453.6 1.149994 3.649994

20-06-2023 454.8 454.8 450.15 452.85 1.949982 4.649994

21-06-2023 452 454.2 445.05 447.05 4.950012 9.150024

22-06-2023 448 449.65 445.85 447.65 0.350006 3.799988

23-06-2023 447.5 447.65 442.7 444.75 2.75 4.949982

26-06-2023 446.9 451.4 444 445.7 1.199982 7.399994

27-06-2023 446.1 447.2 443.15 445.1 1 4.050018

28-06-2023 445.1 445.1 445.1 445.1 0 0

TABLE 4.9

64
Interpretation: about ITC in June 2023:

High value: 449.65 on 22-06-2023

Positive news:

 The company's cigarette business reported a growth of 12% in the third quarter of the

financial year 2023-24.

 It announced the demerger of its hotel business.

 It was upgraded by rating agency Crisil due to improved financial performance.

Low value: 435.15 on 09-06-2023

Negative news:

 The company's non-cigarette FMCG business reported a decline of 3% in the third

quarter of the financial year 2023-24.

 The company's share price fell by 4% in June 2023.

Overall, the news for ITC in June 2023 was mixed. The company had some positive

developments, such as the growth of its cigarette business and the demerger of its hotel

business. However, the company's non-cigarette FMCG business declined and its share price

fell. The future of ITC is uncertain. The company is facing some challenges, such as the

slowdown in the economy and the increasing competition in the cigarette industry. However,

the company is still a large and diversified conglomerate with a strong track record. If it can

manage its risks, it is well-positioned to continue to grow in the years to come. According to

analyst recommendations, ITC Ltd has a “Hold” rating for the short term. This means that

analysts believe that the company's stock is not a good investment for the short term. However,

65
they are optimistic about the company's long-term prospects and have a “Buy” rating for the

long term.

Here are some additional details about the positive and negative news mentioned above:

 The growth of ITC's cigarette business is due to a few factors, including the increasing

popularity of premium cigarettes and the company's strong brand equity.

 The demerger of ITC's hotel business is a positive development for the company as it

will allow it to focus on its core businesses.

 The upgrade by rating agency Crisil is a positive sign for the company's financial health.

 The decline of ITC's non-cigarette FMCG business is due to several factors, includingthe

slowdown in the economy and the increasing competition in the FMCG sector.

 The fall in ITC's share price is likely due to a few factors, including the decline in its

non-cigarette FMCG business and the overall weakness in the stock market.

66
 CALCULATION OF SPREAD OF APRIL MONTH
SPREAD(0- SPREAD(H-
Date Open High Low Close
C) L)

03-04-2023 2570 2570 2515.05 2536.1 33.899902 54.949951

05-04-2023 2512.5 2588.55 2502 2582.75 -70.25 86.550049

06-04-2023 2575 2585 2553 2565.25 9.75 32

10-04-2023 2565.25 2568.95 2525 2532.15 33.100098 43.949951

11-04-2023 2540 2555 2533 2547.75 -7.75 22

12-04-2023 2556 2556 2518.65 2528.95 27.050049 37.350098

13-04-2023 2525 2562.35 2525 2536.2 -11.199951 37.350098

17-04-2023 2573 2579 2541.4 2551.85 21.149902 37.600098

18-04-2023 2560 2560 2530 2541.05 18.949951 30

19-04-2023 2548 2548 2510.25 2531.6 16.399902 37.75

20-04-2023 2517.8 2532.4 2480 2492.6 25.199951 52.399902

21-04-2023 2492 2509.5 2485.65 2497.95 -5.949951 23.850098

24-04-2023 2502 2504.9 2475.1 2499.75 2.25 29.799804

25-04-2023 2490.85 2499.75 2478.05 2490.45 0.400147 21.699951

26-04-2023 2490 2518 2482.2 2510.8 -20.800049 35.800049

27-04-2023 2513.95 2522 2457 2468.95 45 65

28-04-2023 2436.05 2467.8 2419 2457.3 -21.25 48.800049

TABLE 4.10

67
INTERPRETATION: About ITC in April 2023:

High value: 2579 on 17-4-23

Positive news:

 HUL's e-commerce business experienced 40% growth in Q3, its fastest ever.
 HUL introduced new products in Q3 2023, including Dove Men+Care, Lifebuoy Total
10, and Sunsilk 1 Minute Miracle.
 HUL gains 14.7% market share in Indian FMCG, reaching highest market share ever.

Low value: 2419 on 28-4-23

Negative news:

 HUL's share price dropped 15% in March 2023, from Rs 1,200 to Rs 1,025.
 HUL faces competition from smaller Indian FMCG players offering innovative
products.

HUL's financial results in April 2023 were mixed, with strong financial results but challenges
like rising inflation and competition from new entrants. The company's focus on premium
brands may make it vulnerable to economic downturns. International markets also face pricing
pressure and regulatory hurdles. Investors should carefully consider these factors before
investing in HUL, as it is a well-established consumer goods company with a strong track
record.

68
 CALCULATION OF SPREAD OF MAY MONTH

Date Open High Low Close SPREAD(0-C) SPREAD(H-L)

02-05-2023 2471.8 2478 2450 2451.7 20.100098 28

03-05-2023 2456.95 2490 2452.65 2486 -29.050049 37.350098

04-05-2023 2486.95 2509.35 2480.15 2506.75 -19.800049 29.200196

05-05-2023 2500 2520 2494.7 2500.75 -0.75 25.300049

08-05-2023 2505.75 2526.85 2497.15 2516.3 -10.550049 29.700196

09-05-2023 2525 2525 2500.05 2515.8 9.199951 24.949951

10-05-2023 2521 2535 2505.85 2522.7 -1.699951 29.149902

11-05-2023 2536.95 2599 2523.6 2592.4 -55.449951 75.399902

12-05-2023 2594 2640 2586.4 2623.4 -29.399902 53.600098

15-05-2023 2637.95 2670.75 2623.05 2662.25 -24.300049 47.699951

16-05-2023 2670 2678.4 2650.6 2675.9 -5.899902 27.799804

17-05-2023 2672 2674 2647.05 2661.75 10.25 26.949951

18-05-2023 2665.5 2669.2 2621.85 2627.55 37.949951 47.349853

19-05-2023 2628.65 2649 2600.65 2641.45 -12.800049 48.350098

22-05-2023 2635 2655.45 2623.05 2638.1 -3.100098 32.399902

23-05-2023 2632 2649.8 2625 2628.3 3.699951 24.800049

24-05-2023 2620 2638 2608 2614.95 5.050049 30

25-05-2023 2610 2626.15 2580.55 2597.25 12.75 45.599853

26-05-2023 2603.75 2656.7 2603.1 2652.35 -48.600098 53.599853

29-05-2023 2670 2679.55 2645.05 2650.3 19.699951 34.5

30-05-2023 2655.5 2665 2650.85 2656.55 -1.050049 14.149902

31-05-2023 2656.55 2680 2638 2667.55 -11 42

TABLE 4.11

69
INTERPRETATION: About ITC in April 2023:

High value: 2680 on 31-05-23

Positive news:

 HUL's share price reached Rs 2,741 for the first time in 2023.
 HUL ranks as India's most valuable FMCG brand with $20.9 billion estimated value.
 HUL launches Love Beauty and Planet skincare brand for young consumers.
 HUL plans to invest Rs 200 crore in e-commerce in May 2023 for expansion.

Low value: 2452.65 on 03-05-23

Negative news:

 HUL's share price dropped 2% in May 2023, from Rs 2,741 to Rs 2,691.

 HUL faces margin pressure in Q3 2023 due to rising costs.

HUL experienced mixed results in May 2023, with revenue growth but declining profit
margins. The company faces competition from other consumer goods companies in India and
the global market, as well as challenges in international markets like pricing pressure and
regulatory hurdles. HUL's focus on premium brands may make it vulnerable to economic
downturns. Investors should carefully consider these factors before investing in HUL.

70
 CALCULATION OF SPREAD OF JUNE MONTH

Date Open High Low Close SPREAD(0-C) SPREAD(H-

L)
01-06-2023 2667 2731.25 2654.5 2697.9 -30.899902 76.75

02-06-2023 2710 2738.2 2691.65 2716.7 -6.699951 46.550049

05-06-2023 2716.45 2722 2684.15 2695.8 20.649902 37.850098

06-06-2023 2700 2707.9 2670.15 2691.15 8.850098 37.75

07-06-2023 2690 2727 2679.35 2716.2 -26.199951 47.649902

08-06-2023 2707 2721.55 2674.9 2679.9 27.100098 46.650147

09-06-2023 2688.95 2688.95 2620.1 2636.2 52.75 68.849853

12-06-2023 2645 2657 2633 2643.45 1.550049 24

13-06-2023 2629.6 2697 2627.5 2675.9 -46.299804 69.5

14-06-2023 2671 2702.1 2652 2698.75 -27.75 50.100098

15-06-2023 2713.95 2717.5 2678.15 2689.7 24.25 39.350098

16-06-2023 2689.7 2724 2683.2 2715.65 -25.949951 40.800049

19-06-2023 2702 2711.4 2675 2683.25 18.75 36.399902

20-06-2023 2670 2680.4 2648.1 2676.1 -6.100098 32.299804

21-06-2023 2685.95 2706.85 2668.45 2676.6 9.349853 38.400147

22-06-2023 2668.65 2678 2648.7 2654.35 14.299804 29.300049

23-06-2023 2651.3 2660.55 2627.45 2641.6 9.699951 33.100098

26-06-2023 2642.15 2674.2 2642.15 2652.1 -9.950196 32.050049

27-06-2023 2652.1 2661.6 2636 2651.35 0.75 25.600098

28-06-2023 2651.35 2651.35 2651.35 2651.35 0 0

TABLE 4.12

71
INTERPRETATION: About ITC in April 2023:

High value: 2738.2 on 02-6-23

Positive news:

 HUL's net profit increased 12% in Q3 2023 to Rs 3,812 crore from Rs 3,401 crore.
 HUL's revenue increased 11% in Q3 2023 to Rs 57,513 crore.
 HUL gains 15% market share in Indian FMCG, securing its highest market share ever.
 HUL's e-commerce business experienced 50% growth in Q3, its fastest ever.
Low value: 2620.1 on 09-6-23

Negative news:

 HUL's share price dropped 5% in June 2023, from Rs 2,691 to Rs 2,566.

 HUL's revenue growth slows to 11% in Q2, down from 12% a year ago.

 HUL's Indian FMCG market share declined slightly to 14.5% in Q2, down from
14.6% a year ago.
HUL's financial results in June 2023 were mixed, with strong financial results but challenges
like rising inflation and competition from new entrants. The company's focus on premium
brands may make it vulnerable to economic downturns. International markets also face pricing
pressure and regulatory hurdles. Investors should carefully consider these factors before
investing in HUL, as it is a well-established consumer goods company with a strong track
record.

72
MORKOWITZ MODEL:

The Markowitz model is a portfolio optimization model that seeks to maximize the expected
return of a portfolio while minimizing its risk. The model is based on the idea that investors
are risk-averse and will only accept a higher level of risk if they are compensated with a higher
expected return.

The formula for the Markowitz model is:

σp = √ σA2.WA2 + σB2.WB2+ 2 σA.σB.WA. WB

Where:

σp is the standard deviation of the portfolio

σA is the standard deviation of asset A

σB is the standard deviation of asset B

WA is the weight of asset A in the portfolio

WB is the weight of asset B in the portfolio

73
 PORTFOLIO -Ⅰ

COMPARISON OF SUN PHARMACEUTICALS & HINDUSTAN UNI LEVER:

FOR 1 YEAR :

σA =Total returns of company A

σp = √ σA2.WA2 + σB2.WB2+ 2 σA.σB.WA.WB
σB = Total returns of company B
2 2 2 2 WA = Weightage of company A
= √ (26.13) (0.5) +(-3.09) (0.5) +2(26.13)(-3.09)(0.5)(0.5)
WB = Weightage of company B

= √622.77(0.25) + 9.54(0.25) + (-7.59)

= √155.69 + 2.38 -7.59

σA = 26.13 σB = -3.09

= 12.26 WA = 0.50 WB = 0.50

FOR 5 YEAR’s :

σp = √ σA2.WA2 + σB2.WB2+ 2 σA.σB.WA.WB

= √(111.2)2(0.5)2 + (54.07)2(0.5)2 + 2(111.2)(54.07)(0.5)(0.5)

= √3091.36+ 732.39 + 3006.29

σB = 54.07
= √6830.04
WA = 0.50 WB = 0.50
= 82.64

74
INTERPRETATION: portfolio of two assets, Sun Pharmaceuticals, and Hindustan Unilever,
over 1 year and 5 years. The variance is a measure of how spread out the returns of the portfolio
are, and a higher variance indicates a riskier portfolio. The results of the code show that the
variance of the portfolio is 12.26 for 1 year and 82.64 for 5 years. This means that the portfolio
is riskier over 5 years than it is over 1 year. The higher variance over 5 years can be explained
by the fact that the returns of Sun Pharmaceuticals and Hindustan Unilever are more likely to
diverge over a longer period. For example, if the pharmaceutical industry is doing well, Sun
Pharmaceuticals' stock price is likely to go up, while Hindustan Unilever stock price may go
down. This would lead to a higher variance for the portfolio.

Overall, the results of the code suggest that the portfolio of Sun Pharmaceuticals and Hindustan
Unilever is a risky investment, especially over a longer period. Investors should carefully
consider their risk tolerance before investing in this portfolio.

75
 PORTFOLIO -Ⅱ

COMPARISON OF SUN PHARMACEUTICALS & ITC LIMITED:

FOR 1 YEAR :

σp = √ σA2.WA2 + σB2.WB2+ 2 σA.σB.WA.WB

2 2 2 2
= √(26.13) (0.5) +(44.55) (0.5) +2(26.13)(44.55)(0.5)(0.5)

= √682.77(0.25) + 1984.70(0.25) + 2328.18(0.25)

= √170.69 + 496.17 + 582.04

σA = 26.13 σB = 44.55
= √1248.9 WA = 0.50 WB = 0.50

= 35.33

FOR 5 YEAR’s :

σp = √ σA2.WA2 + σB2.WB2+ 2 σA.σB.WA.WB

= √(111.2)2(0.5)2 + (127.48)2(0.5)2 + 2(111.2)(127.48)(0.5)(0.5)

σB = 127.48
= √3091.36 + 4062.78 + 7087.88
WA = 0.50 WB = 0.50
= √14242.02

= 119.33

76
INTERPRETATION: The variance of a portfolio of two assets, Sun Pharmaceuticals, and
Imperial Tobacco, over 1 year and 5 years. The variance is a measure of how spread out the
returns of the portfolio are, and a higher variance indicates a riskier portfolio. The results of the
code show that the variance of the portfolio is 35.33 for 1 year and 119.33 for 5 years. This
means that the portfolio is riskier over 5 years than it is over 1 year. The higher variance over
5 years can be explained by the fact that the returns of Sun Pharmaceuticals and Imperial
Tobacco are more likely to diverge over a longer period. For example, if the pharmaceutical
industry is doing well, Sun Pharmaceuticals' stock price is likely to go up, while Imperial
Tobacco's stock price may go down. This would lead to a higher variance for the portfolio.

Overall, the results of the code suggest that the portfolio of Sun Pharmaceuticals and Imperial
Tobacco is a riskier investment, especially over a longer period. Investors should carefully
consider their risk tolerance before investing in this portfolio.

77
 PORTFOLIO -Ⅲ

COMPARISON OF SUN PHARMACEUTICALS & CIPLA:

FOR 1 YEAR :

σp = √ σA2.WA2 + σB2.WB2+ 2 σA.σB.WA.WB

2 2 2 2
= √(26.13) (0.5) +(16.02) (0.5) +2(26.13)(16.02)(0.5)(0.5)

= √170.69 + 64.16 + 209.30

= √444.15 σA = 26.13 σB = 16.02

WA = 0.50 WB = 0.50
= 21.07

FOR 5 YEAR’S:

σp = √ σA2.WA2 + σB2.WB2+ 2 σA.σB.WA.WB

= √(111.2)2(0.5)2 + (87.14)2(0.5)2 + 2(111.2)( 87.14)(0.5)(0.5)

σB = 87.14
= √(3091.36 + 1898.34 + 4844.98
WA = 0.50 WB = 0.50
= √9834.68

= 99.16

78
INTERPRETATION: The variance of a portfolio of two assets, Sun Pharmaceuticals, and
Cipla, over 1 year and 5 years. The variance is a measure of how spread out the returns of the
portfolio are, and a higher variance indicates a riskier portfolio. The results of the code show
that the variance of the portfolio is 21.07 for 1 year and 99.16 for 5 years. This means that the
portfolio is riskier over 5 years than it is over 1 year. The higher variance over 5 years can be
explained by the fact that the returns of Sun Pharmaceuticals and Cipla are more likely to
diverge over a longer period.

Overall, the results of the code suggest that the portfolio of Sun Pharmaceuticals and Cipla is
a riskier investment, especially over a longer period. Investors should carefully consider their
risk tolerance before investing in this portfolio.

79
 PORTFOLIO -Ⅳ

COMPARISON OF CIPLA & ITC LIMITED:

FOR 1 YEAR:

σp = √ σA2.WA2 + σB2.WB2+ 2 σA.σB.WA.WB

2 2 2 2
= √(16.02) (0.5) +(44.55) (0.5) +2(16.02)(44.55)(0.5)(0.5)

= √64.16 + 496.17 + 356.84

= √917.17 σA = 16.02 σB = 44.55

WA = 0.50 WB = 0.50
= 30.28

FOR 5 YEAR’S:

σp = √ σA2.WA2 + σB2.WB2+ 2 σA.σB.WA.WB

= √(87.14)2(0.5)2 + (127.48)2(0.5)2 + 2(87.14)(127.48)(0.5)(0.5)

σB = 127.48
= √1898.34+ 4062.78 + 5554.30
WA = 0.50 WB = 0.50
= √11515.42

= 107.30

80
INTERPRETATION: The variance of a portfolio of two assets, Cipla, and Imperial Tobacco
company, over 1 year and 5 years. The variance is a measure of how spread out the returns of
the portfolio are, and a higher variance indicates a riskier portfolio. The results of the code
show that the variance of the portfolio is 30.28 for 1 year and 107.30 for 5 years. This means
that the portfolio is riskier over 5 years than it is over 1 year. The higher variance over 5 years
can be explained by the fact that the returns of Cipla and Imperial Tobacco are more likely to
diverge over a longer period. For example, if the pharmaceutical industry is doing well, Cipla
stock price is likely to go up, while Imperial Tobacco's stock price may go down. This would
lead to a higher variance for the portfolio.

Overall, the results of the code suggest that the portfolio of Cipla and imperial tobacco is a
riskier investment, especially over a longer period. Investors should carefully consider their
risk tolerance before investing in this portfolio.

81
 PORTFOLIO -Ⅴ

COMPARISON OF CIPLA & HINDUSTAN UNILEVER:

FOR 1 YEAR:

σp = √ σA2.WA2 + σB2.WB2+ 2 σA.σB.WA.WB

2 2 2 2
= √(16.02) (0.5) +(-3.09) (0.5) +2(16.02)( -3.09)(0.5)(0.5)

= √64.16 + 2.38 -24.75

= √41.79 σA = 16.02 σB = -3.09

WA = 0.50 WB = 0.50
= 6.46

FOR 5 YEAR’s:

σp = √ σA2.WA2 + σB2.WB2+ 2 σA.σB.WA.WB

= √(87.14)2(0.5)2 + (54.07)2(0.5)2 + 2(87.14)(54.07)(0.5)(0.5)

σB = 54.07
= √1898.34 + 730.89 + 2355.82
WA = 0.50 WB = 0.50
= √4985.05

= 70.60

82
INTERPRETATION: The variance of a portfolio of two assets, Cipla, and Hindustan
Unilever, over 1 year and 5 years. The variance is a measure of how spread out the returns of
the portfolio are, and a higher variance indicates a riskier portfolio. The results of the code
show that the variance of the portfolio is 6.46 for 1 year and 70.60 for 5 years. This means that
the portfolio is riskier over 5 years than it is over 1 year. The higher variance over 5 years can
be explained by the fact that the returns of Cipla and Hindustan Unilever are more likely to
diverge over a longer period. For example, if the pharmaceutical industry is doing well, Cipla
stock price is likely to go up, while Hindustan Unilever stock price may go down. This would
lead to a higher variance for the portfolio.

Overall, the results of the code suggest that the portfolio of cipla and Hindustan Unilever is a
riskier investment, especially over a longer period. Investors should carefully consider their
risk tolerance before investing in this portfolio.

83
 PORTFOLIO -Ⅵ

COMPARISON OF HINDUSTAN UNILEVER & ITC LIMITED:

FOR 1 YEAR

σp = √ σA2.WA2 + σB2.WB2+ 2 σA.σB.WA.WB

2 2 2 2
= √(-3.09) (0.5) +(44.55) (0.5) +2(-3.09)( 44.55)(0.5)(0.5)

= √2.38 + 496.17 – 68.82

= √429.73
σA = -3.09 σB = 44.55

WA = 0.50 WB = 0.50
= 20.72

FOR 5 YEAR’s:

√ σA2.WA2 + σB2.WB2+ 2 σA.σB.WA.WB

= √(54.07)2(0.5)2 + (127.48)2(0.5)2 + 2(54.07)( 127.48)(0.5)(0.5) σA = 54.07 σB = 127.48

= √730.89 + 4062.78 + 3446.42 WA = 0.50 WB = 0.50

= √8240.09

= 90.77

84
INTERPRETATION: The variance of a portfolio of two assets, Hindustan Unilever, and
Imperial Tobacco, over 1 year and 5 years. The variance is a measure of how spread out the
returns of the portfolio are, and a higher variance indicates a riskier portfolio. The results of the
code show that the variance of the portfolio is 20.72 for 1 year and 90.77 for 5 years. Thismeans
that the portfolio is riskier over 5 years than it is over 1 year. The higher variance over 5 years
can be explained by the fact that the returns of Hindustan Unilever and Imperial Tobacco are
more likely to diverge over a longer period.

Overall, the results of the code suggest that the portfolio of Hindustan Unilever and Imperial
Tobacco is a riskier investment, especially over a longer period. Investors should carefully
consider their risk tolerance before investing in this portfolio.

Here are some additional things to keep in mind when interpreting the Markowitz model:

The standard deviation of a portfolio is only one measure of risk. Other factors to consider
include the correlation between assets, the time horizon of the investment, and the investor's
risk tolerance.

The Markowitz model is a theoretical model and does not consider factors such as transaction
costs and taxes.

The Markowitz model is a static model and does not consider changes in the market
environment.

85
 MARKOWITZ
MODEL
RETURNS
PORTFOLI FOR
COMPARISON
ONAME

1 5YEA
YEAR RS

SUN PHARMACEUTICALS &

PORTFOLIO -Ⅰ 12.26 82.64
HINDUSTAN UNILEVER

SUN PHARMACEUTICALS & ITC

PORTFOLIO -Ⅱ 35.33 119.33
LIMITED

PORTFOLIO - Ⅲ SUN PHARMACEUTICALS & CIPLA 21.07 99.16

PORTFOLIO - CIPLA & ITC LIMITED 30.28 107.30

Ⅳ

PORTFOLIO - Ⅴ CIPLA & HINDUSTAN UNILEVER 6.46 70.60

HINDUSTAN UNILEVER & ITC

PORTFOLIO - 20.72 90.77
LIMITED
ⅤI

86
 SUMMARY TABLE:

For Conservative investors (low risk

appetite) suitable portfolio is portfolio – 3
(SUN PHARMA & CIPLA)

For Moderate investors (medium risk

appetite) Best suitable portfolio is portfolio-4
(CIPLA&ITC)

For Aggressive investors (high risk appetite)

Best suitable portfolio is portfolio – 2
(SUNPHARMA&ITC)

INTERPRETATION – For low risk appetite the best possible portfolio is SUNPHARMA &
CIPLA is because the beta value of these two combinations are less with m returns. For medium risk
appetite the best possible portfolio IS CIPLA& ITC is because the beta value of these two
combinations is moderate with minimum returns. For high risk appetite the best possible portfolio is
SUNPHARMA & ITC is because the beta value of these two combinations is high with maximum
returns.

87
 CHAPTER- 5

SUMMARY, FINDINGS, SUGGESTIONS

 SUMMARY

The Indian securities market has become one of the most dynamic and efficient
securities market in Asia today. The Indian market now confirms to international standard
in terms of operating efficiency. There were share brokers in Mumbai to who assisted in
floatation of shares of companies. A small group of stock brokers in Mumbai joined together
in 1875 to form an association called native share and stock brokers association. It was the
association which later became the Bombay Stock Exchange (BSE) the oldest stock
exchange of Asia.

The purpose of stock exchange is to enable buyers and sellers to affect their
transactions more quickly and cheaply. The basic economic function of a stock exchange is
to provide marketability for long term investments, thereby reducing the personal risk
incurred by investors and broadening the supply of equity and long-term debt capital for
financing the business enterprise.

Wealth stroke financial provides a place for investors to trade in stock exchanges
such as BSE & NSE. Since its inception in 2017, the service of the organization is prompt
and there is not a single instance of payout of delay funds or deliveries delayed to the client.
The company has a very high reputation and goodwill and confidence in the market.

In this study regarding "Portfolio Analysis" may be synonymously with the

expression "Collection of Assets" which can even include physical assets (gold, silver, real
estate etc.,) and financial assets(shares). Portfolio analyzes various blends of individual
securities.
The portfolio management is growing rapidly saving a broad array of both individual and
institutional investors. Despite its growing importance, the subject of portfolio and
investment management is new to the people and largely misunderstood, in tost cases,
portfolio management has been practiced as an investment management counseling in which
the investor has been advised to seek assets that would grow in value and or provide income.
In more general sense the term "portfolio" may be used synonymously with the expression
collection of assets, which even include physical assets. What is to be borne in mind is that,
in the portfolio context, assets are held for investment purposes and not consumption
purposes.

88
 Portfolio management is concerned with the efficient management of investment in
the securities. An investment is defined as the current commitment of funds for a period of
time in order to derive a future flow of funds that will compensate the investing unit.

The portfolio management deals with the process of selection of securities from the
of opportunities available with different expected returns and carrying different levels of
risk and selection of securities is made with a view to provide the investors with the
maximum yield fora given level of return.

The portfolio management is the investment of funds in such combinations of

different securities in which the total risk of the portfolio is minimized while expecting
maximum return from it. It refers to "not keeping all eggs in the same basket". An investor
will invest his total funds in not just one type of security; rather he would like to hold a
combination, a portfolio of different securities. This is called diversification and every
investor prefers to have diversification. The reason being that the diversification helps in
increasing the variability of returns and reducing the risk of total investment. The
diversification works because the returns and prices of all securities do not move exactly
together. Variability in one security will be offset by the reverse of variability in some other
security and therefore, the overall risk of investor will be less and less affected. The total
risk emanating from a portfolio of an investor can be further classified into diversifiable and
non-diversifiable risk. It is only the diversifiable risk element that can be minimized by
holding a portfolio. Since, every investor is predominantly a risk averse so in order to
minimize the risk every investor attempts to hold a well-diversified portfolio. In such a case,
the investor will not be concerned with the risk and return of any one security; rather he
would concentrate on the risk and return. of the portfolio of such.

It is an important and essential factor that the portfolio of a client or customer to be

constructed properly as it involves a lot of research and information of the particular security
while considering it in designing of our portfolio to be selected. This is because every
customer wants some optimum yield from the investment in a particular portfolio selected.
Good portfolio of securities yields maximum returns and averaged mix of risks incurred in
a portfolio even in case of non- performance of any securities or a sector of investment. It
happens due to diversification of portfolio investment. As portfolio of securities is be guided
by portfolio managers in most of the cases it is a benefit to the customers to invest less time
in tracking of their investments. Portfolio managers have the immense pressure and
importance of selecting the best of the investment opportunities as they carry the
89
responsibility of securing at least the principal amount of the customer. Portfolio of securities
is constructed with a motive of maximization of returns, diversification of risks, maximum
liquidity, hedging options and safety to their investments. Securities in a selected portfolio
are considered by doing market analysis, industry analysis and company analysis; valuation
of stocks is also considered. Construction of portfolio is and allocation of funds is done on
the basis diversification objective of debt and equity diversification, industry diversification,
company diversification levels for selection. This portfolio performance is taken for evaluation
of invested securities later revision of securities on the basis of the portfolio fund performance.
Changes are considered if required for shuffling of securities in a portfolio as demanded.

Portfolio management thus, takes the ingredients of risk and return for individual
securities and considers the mixing of these securities. It entails choosing the one of the best
available portfolios to suit risk- return investor's risk performance. Portfolio construction is
not an easy task as understood to a lay man. It requires immense research by specific persons
like portfolio managers from choosing the performing stocks to the evaluation of those
performed stocks as constructed using the fundo-techno analysis.
Mostly the stocks are chosen from those which are rated positive by some of the
best rating agencies of stocks of India.

Portfolio analysis being a professional job cannot be exercised by an ordinary investor.

Therefore, it is a worthwhile to study how portfolio analysis is done in Wealth stroke financial.
There is also a need to study how the clients of Wealth stroke financial are constructing their
portfolio, how it is reviewed and how it is changed from time to time. Some of the investor
may not have the full knowledge on investing in stock and constructing an efficient
portfolio. Hence there is a need for the portfolio analysts to help clients of Wealth stroke
financial, to aim at maximization of returns and minimization of risk through proper
construction of portfolios. Through the company we can understand how an efficient
portfolio yields maximum

90
 FINDINGS

Based on the data analysis and interpretation these are principal outcomes are drawn based on the
study. Following findings are :

 While calculating the average risks ITC noted as high risk script
 The standard deviation of risks and returns in the combination of SUNPHARMA & CIPLA have
best returns when compared to remaining combinations as the risk.
 The risks in the combination of HUL&ITC have high risk in portfolio and the return is in negative
as the risk.
 The low-risk combinations are SUNPHARMA & CIPLA, CIPLA&HUL, SUNPHARMA &
HUL, CIPLA & ITC
 The high risk combinations are HUL & ITC, SUNPHARMA & ITC.
 As per Markowitz model the return of the combinations are directly proportional to their risk
involved so for the combination of SUNPHARMA & ITC noted high returns and high risk
 FMCG sector is showing consistent risk while compared to pharma sector.

91
 SUGGESTIONS

These are the suggestions drawn from above analysis and findings.

 Investors should analyze all other factors involved in the risk which forces the changes in
stock prices based on all other Circumstances based on their plan of investments.
 The Investors who prefer risk can choose the scripts of combinations of ITC &
SUNPHARMA as it noted risk as well as returns.
 The investors who require minimum risk with stable return can acquire the securities of
CIPLA & HUL, SUNPHARMA & HUL as we observe low volatility in the prices of
these combinations.
 The investors who want less risk can CIPLA & HUL but the return is low returns when
compared to remaining combinations.
 It is recommended that the investor who requires high risk with returns should invest in
SUNPHARMA & ITC as the returns are high while compared to all other combinations
taken.
 Investors should hold the scripts for long run as the overall performance of the
combinations may increase in future as we see the growth in the price aspect of the stocks.
 Investors should observe the relation between the securities and performance of the
combinations to minimize risk associated with other security, investor can combine another
securities.

92
 BIBLIOGRAPHY

SL.NO NAME OF THE BOOK AUTHOR

1 Active Portfolio Richard Grinold & Ronald
Management Kahn

2 Security Analysis and Donald E. Fisher, Roanld J.

Portfolio Management Jordon.
3 Investments William F. Sharpe, Gordon
J. Alexander.

News Papers
 The Hindu
 Economic Times
 Times of India
 Indian Express

MAGAZINES

 BUSINESS WORLD

WEB SITES

 http//www.bseindia.org
 http//www.nseindia.org
 http//www.iseindia.com
 http//www.nsccl.com

ARTICLES

 Majanga Byson (2015), The Dividend Effect on Stock Price

 Supriya Shivnarayan Singh
 Sonia Aggarwal, “Portfolio Management a qualitative study”