CHAPTER-I

INTRODUCTION

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PORTFOLIO MANAGEMENT

MEANING:A portfolio is a collection of assets. The assets may be physical or financial like

Shares, Bonds, Debentures, Preference Shares, etc. The individual investor or a fund

manager would not like to put all his money in the shares of one company that would

amount to great risk. He would therefore, follow the age old maxim that one should not

put all the eggs into one basket. By doing so, he can achieve objective to maximize

portfolio return and at the same time minimizing the portfolio risk by diversification.

Portfolio management is the management of various financial assets which

comprise the portfolio.

Portfolio management is a decision – support system that is designed with a view

to meet the multi-faced needs of investors.

According to Securities and Exchange Board of India Portfolio Manager is defined

as: “Portfolio means the total holdings of securities belonging to any person”.

PORTFOLIO MANAGER means any person who pursuant to a contract

or arrangement with a client, advises or directs or undertakes on behalf of the

client (whether as a discretionary portfolio manager or otherwise) the management

or administration of a portfolio of securities or the funds of the client.

DISCRETIONARY PORTFOLIO MANAGER means a portfolio

manager who exercises or may, under a contract relating to portfolio management

exercises any degree of discretion as to the investments or management of the

portfolio of securities or the funds of the client.

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RESEARCH(e.g. SecurityAnalysis)

PORTFOLIOMANAGERS

OPERATIONS(e.g. buying and selling of Securities)

CLIENTS

FUNCTIONS OF PORTFOLIO MANAGEMENT: To frame the investment strategy and select an investment mix to achieve the

desired investment objectives

To provide a balanced portfolio which not only can hedge against the inflation but

can also optimize returns with the associated degree of risk

To make timely buying and selling of securities

To maximize the after-tax return by investing in various tax saving investment

instruments.

STRUCTURE / PROCESS OF TYPICAL PORTFOLIO

MANAGEMENT

In the small firm, the portfolio manager performs the job of security analyst.

In the case of medium and large sized organizations, job function of portfolio manager

and secu

rity analyst are separate.

\

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CHARACTERISTICS OF PORTFOLIO MANAGEMENT:

Individuals will benefit immensely by taking portfolio management services for

the following reasons:

Whatever may be the status of the capital market, over the long period capital

markets have given an excellent return when compared to other forms of

investment. The return from bank deposits, units, etc., is much less than from the

stock market.

The Indian Stock Markets are very complicated. Though there are thousands of

companies that are listed only a few hundred which have the necessary liquidity.

Even among these, only some have the growth prospects which are conducive for

investment. It is impossible for any individual wishing to invest and sit down and

analyze all these intricacies of the market unless he does nothing else.

Even if an investor is able to understand the intricacies of the market and separate

chaff from the grain the trading practices in India are so complicated that it is

really a difficult task for an investor to trade in all the major exchanges of India,

look after his deliveries and payments

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NEED & IMPORTANCE OF STUDY:

Portfolio management has emerged as a separate academic discipline in India.

Portfolio theory that deals with the rational investment decision-making process has now

become an integral part of financial literature.

Investing in securities such as shares, debentures & bonds is profitable well as

exciting. It is indeed rewarding but involves a great deal of risk & need artistic skill.

Investing in financial securities is now considered to be one of the most risky avenues of

investment. It is rare to find investors investing their entire savings in a single security.

Instead, they tend to invest in a group of securities. Such group of securities is called as

PORTFOLIO. Creation of portfolio helps to reduce risk without sacrificing returns.

Portfolio management deals with the analysis of individual securities as well as with the

theory & practice of optimally combining securities into portfolios.

The modern theory is of the view that by diversification, risk can be reduced. The

investor can make diversification either by having a large number of shares of companies

in different regions, in different industries or those producing different types of product

lines. Modern theory believes in the perspective of combinations of securities under

constraints of risk and return.

SCOPE OF STUDY:This study covers the Markowitz model. The study covers the calculation of

correlations between the different securities in order to find out at what percentage funds

should be invested among the companies in the portfolio. Also the study includes the

calculation of individual Standard Deviation of securities and ends at the calculation of

weights of individual securities involved in the portfolio. These percentages help in

allocating the funds available for investment based on risky portfolios.

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OBJECTIVES OF THE STUDY:

To study the investment pattern and its related risks & returns In ING Group.

To find out optimal portfolio of ING Group, which gave optimal return at a

minimize risk to the investor in ING Group.

To see whether the portfolio risk is less than individual risk on whose basis the

portfolios are constituted

To see whether the selected portfolios is yielding a satisfactory and constant return

to the investor

To understand, analyze and select the best portfolio

STEPS IN PORTFOLIO MANAGEMENT:

Specification and qualification of investor objectives, constraints, and preferences in the form of an investment policy statement.

Determination and qualification of capital market expectations for the economy, market sectors, industries and individual securities.

Allocation of assets and determination of appropriate portfolio strategies for each asset class and selection of individual securities.

Performance measurement and evaluation to ensure attainment of investor objectives.

Monitoring portfolio factors and responding to changes in investor objectives, constrains and / or capital market expectations.

Rebalancing the portfolio when necessary by repeating the asset allocation, portfolio strategy and security selection.

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METHODOLOGY AND FRAMEWORK

DATA COLLECTION METHODSThe data collection methods include both the primary and secondary collection

methods.

Primary collection methods:

This method includes the data collection from the personal discussion with the authorized

clerks and members of the anjali financial services.

Secondary collection methods:

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

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

magazines and different books issues of this study Superintend

LIMITATIONS OF THE STUDY

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

model.

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

listings.

3. Data collection was strictly confined to secondary source. No primary data is

associated with the project.

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

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

for a period of two months.

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CHAPTER-II

INDUSTRY PROFILE

&

COMPANY PROFILE

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A bank is a financial institution that accepts deposits and channels those deposits into

lending activities. Banks primarily provide financial services to customers while

enriching investors. Government restrictions on financial activities by banks vary over

time and location. Banks are important players in financial markets and offer services

such as investment funds and loans. In some countries such as Germany, banks have

historically owned major stakes in industrial corporations while in other countries such as

the United States banks are prohibited from owning non-financial companies. In Japan,

banks are usually the nexus of a cross-share holding entity known as the keiretsu. In

France, bancassurance is prevalent, as most banks offer insurance services (and now real

estate services) to their clients.

Indian Banking Sector Outlook - 2013  

Over the past couple of years, the Indian banking sector has displayed a high level of

resiliency in the face of high domestic inflation, rupee depreciation and fiscal uncertainty

in the US and Europe. In order to stimulate the economy and support the growth of

banking sector, the Reserve Bank of India (RBI) adopted severe policy measures such as

increasing the key monetary policy rates such as repo and reverse repo 16 times since

April 2'009 to Oct 2011 and tightening provisioning requirements. Amidst this economic

scenario, the key challenge for the Indian banking system continues in improving their

operational efficiency and implement prudent risk management practices. Some of the

key trends expected to emerge in the near future are as under-Economic slowdown likely

to impact the demand for credit

High interest rates, subdued industrial production and domestic consumption impacted

the growth of the Indian economy which slowed down from 8.4% in FY11 to 6.5% dur-

ing FY12.The scheduled commercial banks' (SCBs) overall credit grew at a slower pace

during FY12 at 17% y-o-y as compared to 21.5% registered during FYll.As per the recent

RBI data, the non-food bank credit increased by 15.5% in Oct 2012 over its cor-

responding month previous year, as compared to 18.2% witnessed in Oct 2011 over its

corresponding month previous year. Similarly, credit to industry and services sector

recorded a slower growth of 15.2% and 13.7% respectively as against 23.1% and 18.4%

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during the same period. As per RBI's second quarter review of monetary policy for FY13,

the GDP growth estimates for FY13 is revised downwards from 6.5% forecasted earlier

to 5.8%.Any further slowdown in the Indian economic growth is likely to impact the

demand for bank credit.

RBI may lower key policy rates, if inflationary pressures ease

Inflation continued to remain sticky and much above the RBI's comfort zone through-out

the year. In fact headline inflation as measured by WPI remained above 7.5% from Feb to

Oct 2012. As a result the RBI has kept the repo rate at an elevated level, reducing it by 50

basis points only once during 2012, in April-12 to support growth.

However, in order to support the flow of funds to the productive sectors of the economy

and ease the liquidity crunch in the banking system the RBI has cut the CRR by 175 basis

points during the course of the year which stands at 4.25%, as on Nov 2012. Given the

easing of international commodity prices, particularly of crude, decline in core inflation

as demand conditions moderate, there has been some steady moderation in inflation in the

recent period. As a result the RBI might decide to ease the policy rate during end Jan 13.

Asset quality will need to be closely monitored

During FY12, asset quality of banks was severely impaired, as revealed by the steep

increase in non-performing assets (NPAs) of SCBs, particularly for public sector banks

(PSBs) owing to their significant exposure to troubled sectors such as power, aviation,

real estate and telecom. There was a significant increase noted in the NPA levels during

FY12. Gross NPAs value recorded a y-o-y growth of

45.3% and net NPAs registered a y-o-y growth of 55.6% during FY12. As per RBI, this

increase was due to inadequate credit appraisal process coupled with unfavorable

economic situation in the domestic as well as foreign market.

Apart from increase in NPAs, the weakening asset quality trend was also apparent from

the significant increase in restructured assets. Restructured standard advances of the

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SCBs, recorded a y-o-y growth of around 58.5% during FY12 and the ratio of restruc-

tured standard advances to gross advances also increased from about 3.5% in FY11 to

4.7% in FY12.

As per the recent data available with CDR cell as on Sep 2012, a total of 466 cases have

been referred to the cell, with 327 cases amounting to Rs. 1,873.9 bn have been approved

since the start of CDR mechanism. Of the total cases referred, 64 cases corresponding to

Rs. 311.2 bn were under finalisation of restructuring packages as on Sep 2012 as

compared to 34 cases amounting to Rs. 264.5 bn as on Sep 2011.

The slowdown in the economy increases in the risk of default and restructuring of loans

can increase which could further lead to deterioration of asset quality. However, imple-

mentation of stringent policies could prevent a sharp deterioration in asset quality.

More impetus on fee based and non-interest income services

Traditionally, banks have derived limited income from fee based services such as wealth

management, credit card services, treasury services, investment banking and advisory

services. However, as the economy is showing signs of slowdown and the demand for

credit is slowed banks are struggling to keep their margins intact. Also, with changing

times, consumer needs have changed with various avenues of investment available. This

is likely to increase banks focus on offering fee based services as the earnings from such

services are more stable than interest bearing products and it also helps in mitigating risk

via diversification of products and services.

Financial inclusion to play a key role in the near future

As per census 2011, huge section of Indian population is still unbanked. The overall per-

centage of households availing banking services in India stood at around 59% as on 2011,

which means still over 40% of total households, lacks access to formal banking services.

This is largely driven by rural areas and/or low income group (LIG) population, due to

their financial illiteracy, low level of income and savings, lack of collateral and absence

of verifiable credit history.

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Thus, in recent years, the RBI and Gol have increased its focus on providing formal

banking/financial services to the huge unbanked population. It is encouraging banks to

develop low cost products and services designed to suit the requirements of this group of

population.

RBI has undertaken several policy initiatives to promote financial inclusion, such as

encouraging opening of no-frills accounts, engaging intermediaries to provide financial

and banking services. In the course of action, there has been increase in number of no-

frill accounts frorh 50.3 mn in FY10 to 105.5 mn in FY12, registering a CAGR of 44.8%

during this period. Similarly, the number of business correspondent (BC) agents also

noted a CAGR of 70.2% during the same period.

RBI also advised banks to allocate minimum 25% of the total new branches in unbanked

rural centres during a year. In the process, the number of banking outlets in villages with

population above 2,000 and less than 2,000 also witnessed a CAGR of 73.5% and 55.7%

during FY10 to FY12.

Further, in India there are several micro-finance institutions (MFIs) and self-help groups

(SHGs) which lend credit to the LIG. This is expected to play a significant role in

achieving financial inclusion by extending' credit to the LIG.

The level of government regulation of the banking industry varies widely, with countries

such as Iceland, having relatively light regulation of the banking sector, and countries

such as China having a wide variety of regulations but no systematic process that can be

followed typical of a communist system.

The oldest bank still in existence is Monte dei Paschi di Siena, headquartered in Siena,

Italy, which has been operating continuously since 1472.

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History

Origin of the word

The name bank derives from the Italian word banco "desk/bench", used during the

Renaissance by Jewish Florentine bankers, who used to make their transactions above a

desk covered by a green tablecloth. However, there are traces of banking activity even in

ancient times, which indicates that the word 'bank' might not necessarily come from the

word 'banco'.

In fact, the word traces its origins back to the Ancient Roman Empire, where

moneylenders would set up their stalls in the middle of enclosed courtyards called

macella on a long bench called a bancu, from which the words banco and bank are

derived. As a moneychanger, the merchant at the bancu did not so much invest money as

merely convert the foreign currency into the only legal tender in Rome—that of the

Imperial Mint.

The earliest evidence of money-changing activity is depicted on a silver drachm coin

from ancient Hellenic colony Trapezus on the Black Sea, modern Trabzon, c. 350–325

BC, presented in the British Museum in London. The coin shows a banker's table

(trapeza) laden with coins, a pun on the name of the city.

In fact, even today in Modern Greek the word Trapeza (Τράπεζα) means both a table and

a bank.

Traditional banking activities

Banks act as payment agents by conducting checking or current accounts for customers,

paying cheques drawn by customers on the bank, and collecting cheques deposited to

customers' current accounts. Banks also enable customer payments via other payment

methods such as telegraphic transfer, EFTPOS, and ATM.

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Banks borrow money by accepting funds deposited on current accounts, by accepting

term deposits, and by issuing debt securities such as banknotes and bonds. Banks lend

money by making advances to customers on current accounts, by making installment

loans, and by investing in marketable debt securities and other forms of money lending.

Banks provide almost all payment services, and a bank account is considered

indispensable by most businesses, individuals and governments. Non-banks that provide

payment services such as remittance companies are not normally considered an adequate

substitute for having a bank account.

Banks borrow most funds from households and non-financial businesses, and lend most

funds to households and non-financial businesses, but non-bank lenders provide a

significant and in many cases adequate substitute for bank loans, and money market

funds, cash management trusts and other non-bank financial institutions in many cases

provide an adequate substitute to banks for lending savings to.

Entry regulation

Currently in most jurisdictions commercial banks are regulated by government entities

and require a special bank licence to operate.

Usually the definition of the business of banking for the purposes of regulation is

extended to include acceptance of deposits, even if they are not repayable to the

customer's order—although money lending, by itself, is generally not included in the

definition.

Unlike most other regulated industries, the regulator is typically also a participant in the

market, i.e. a government-owned (central) bank. Central banks also typically have a

monopoly on the business of issuing banknotes. However, in some countries this is not

the case. In the UK, for example, the Financial Services Authority licences banks, and

some commercial banks (such as the Bank of Scotland) issue their own banknotes in

addition to those issued by the Bank of England, the UK government's central bank.

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Definition

The definition of a bank varies from country to country.

Under English common law, a banker is defined as a person who carries on the business

of banking, which is specified as:

conducting current accounts for his customers

paying cheques drawn on him, and

collecting cheques for his customers.

In most English common law jurisdictions there is a Bills of Exchange Act that codifies

the law in relation to negotiable instruments, including cheques, and this Act contains a

statutory definition of the term banker: banker includes a body of persons, whether

incorporated or not, who carry on the business of banking' (Section 2, Interpretation).

Although this definition seems circular, it is actually functional, because it ensures that

the legal basis for bank transactions such as cheques do not depend on how the bank is

organised or regulated.

The business of banking is in many English common law countries not defined by statute

but by common law, the definition above. In other English common law jurisdictions

there are statutory definitions of the business of banking or banking business. When

looking at these definitions it is important to keep in mind that they are defining the

business of banking for the purposes of the legislation, and not necessarily in general. In

particular, most of the definitions are from legislation that has the purposes of entry

regulating and supervising banks rather than regulating the actual business of banking.

However, in many cases the statutory definition closely mirrors the common law one.

Examples of statutory definitions:

"banking business" means the business of receiving money on current or deposit

account, paying and collecting cheques drawn by or paid in by customers, the

making of advances to customers, and includes such other business as the

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Authority may prescribe for the purposes of this Act; (Banking Act (Singapore),

Section 2, Interpretation).

"banking business" means the business of either or both of the following:

1. receiving from the general public money on current, deposit, savings or other

similar account repayable on demand or within less than [3 months] ... or with a

period of call or notice of less than that period;

2. paying or collecting cheques drawn by or paid in by customers[6]

Since the advent of EFTPOS (Electronic Funds Transfer at Point Of Sale), direct credit,

direct debit and internet banking, the cheque has lost its primacy in most banking systems

as a payment instrument. This has led legal theorists to suggest that the cheque based

definition should be broadened to include financial institutions that conduct current

accounts for customers and enable customers to pay and be paid by third parties, even if

they do not pay and collect cheques.

Accounting for bank accounts

Bank statements are accounting records produced by banks under the various accounting

standards of the world. Under GAAP and IFRS there are two kinds of accounts: debit and

credit. Credit accounts are Revenue, Equity and Liabilities. Debit Accounts are Assets

and Expenses. This means you credit a credit account to increase its balance, and you

debit a debit account to decrease its balance.

This also means you debit your savings account every time you deposit money into it

(and the account is normally in deficit), while you credit your credit card account every

time you spend money from it (and the account is normally in credit).

However, if you read your bank statement, it will say the opposite—that you credit your

account when you deposit money, and you debit it when you withdraw funds. If you have

cash in your account, you have a positive (or credit) balance; if you are overdrawn, you

have a negative (or deficit) balance.

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The reason for this is that the bank, and not you, has produced the bank statement. Your

savings might be your assets, but the bank's liability, so they are credit accounts (which

should have a positive balance). Conversely, your loans are your liabilities but the bank's

assets, so they are debit accounts (which should also have a positive balance).

Where bank transactions, balances, credits and debits are discussed below, they are done

so from the viewpoint of the account holder—which is traditionally what most people are

used to seeing.

Economic functions

1. issue of money, in the form of banknotes and current accounts subject to cheque

or payment at the customer's order. These claims on banks can act as money

because they are negotiable and/or repayable on demand, and hence valued at par.

They are effectively transferable by mere delivery, in the case of banknotes, or by

drawing a cheque that the payee may bank or cash.

2. netting and settlement of payments – banks act as both collection and paying

agents for customers, participating in interbank clearing and settlement systems to

collect, present, be presented with, and pay payment instruments. This enables

banks to economise on reserves held for settlement of payments, since inward and

outward payments offset each other. It also enables the offsetting of payment

flows between geographical areas, reducing the cost of settlement between them.

3. credit intermediation – banks borrow and lend back-to-back on their own account

as middle men.

4. credit quality improvement – banks lend money to ordinary commercial and

personal borrowers (ordinary credit quality), but are high quality borrowers. The

improvement comes from diversification of the bank's assets and capital which

provides a buffer to absorb losses without defaulting on its obligations. However,

banknotes and deposits are generally unsecured; if the bank gets into difficulty

and pledges assets as security, to raise the funding it needs to continue to operate,

this puts the note holders and depositors in an economically subordinated

position.

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5. maturity transformation – banks borrow more on demand debt and short term

debt, but provide more long term loans. In other words, they borrow short and

lend long. With a stronger credit quality than most other borrowers, banks can do

this by aggregating issues (e.g. accepting deposits and issuing banknotes) and

redemptions (e.g. withdrawals and redemptions of banknotes), maintaining

reserves of cash, investing in marketable securities that can be readily converted

to cash if needed, and raising replacement funding as needed from various sources

(e.g. wholesale cash markets and securities markets).

Law of banking

Banking law is based on a contractual analysis of the relationship between the bank

(defined above) and the customer—defined as any entity for which the bank agrees to

conduct an account.

The law implies rights and obligations into this relationship as follows:

1. The bank account balance is the financial position between the bank and the

customer: when the account is in credit, the bank owes the balance to the

customer; when the account is overdrawn, the customer owes the balance to the

bank.

2. The bank agrees to pay the customer's cheques up to the amount standing to the

credit of the customer's account, plus any agreed overdraft limit.

3. The bank may not pay from the customer's account without a mandate from the

customer, e.g. a cheque drawn by the customer.

4. The bank agrees to promptly collect the cheques deposited to the customer's

account as the customer's agent, and to credit the proceeds to the customer's

account.

5. The bank has a right to combine the customer's accounts, since each account is

just an aspect of the same credit relationship.

6. The bank has a lien on cheques deposited to the customer's account, to the extent

that the customer is indebted to the bank.

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7. The bank must not disclose details of transactions through the customer's account

—unless the customer consents, there is a public duty to disclose, the bank's

interests require it, or the law demands it.

8. The bank must not close a customer's account without reasonable notice, since

cheques are outstanding in the ordinary course of business for several days.

These implied contractual terms may be modified by express agreement between the

customer and the bank. The statutes and regulations in force within a particular

jurisdiction may also modify the above terms and/or create new rights, obligations or

limitations relevant to the bank-customer relationship.

Some types of financial institution, such as building societies and credit unions, may be

partly or wholly exempt from bank licence requirements, and therefore regulated under

separate rules.

The requirements for the issue of a bank licence vary between jurisdictions but typically

include:

1. Minimum capital

2. Minimum capital ratio

3. 'Fit and Proper' requirements for the bank's controllers, owners, directors, and/or

senior officers

4. Approval of the bank's business plan as being sufficiently prudent and plausible.

Types of banks

Banks' activities can be divided into retail banking, dealing directly with individuals and

small businesses; business banking, providing services to mid-market business; corporate

banking, directed at large business entities; private banking, providing wealth

management services to high net worth individuals and families; and investment banking,

relating to activities on the financial markets. Most banks are profit-making, private

enterprises. However, some are owned by government, or are non-profit organizations.

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Central banks are normally government-owned and charged with quasi-regulatory

responsibilities, such as supervising commercial banks, or controlling the cash interest

rate. They generally provide liquidity to the banking system and act as the lender of last

resort in event of a crisis.

Types of retail banks

Commercial bank : the term used for a normal bank to distinguish it from an

investment bank. After the Great Depression, the U.S. Congress required that

banks only engage in banking activities, whereas investment banks were limited

to capital market activities. Since the two no longer have to be under separate

ownership, some use the term "commercial bank" to refer to a bank or a division

of a bank that mostly deals with deposits and loans from corporations or large

businesses.

Community Banks : locally operated financial institutions that empower

employees to make local decisions to serve their customers and the partners.

Community development banks : regulated banks that provide financial services

and credit to under-served markets or populations.

Postal savings banks : savings banks associated with national postal systems.

Private banks : banks that manage the assets of high net worth individuals.

Offshore banks : banks located in jurisdictions with low taxation and regulation.

Many offshore banks are essentially private banks.

Savings bank : in Europe, savings banks take their roots in the 19th or sometimes

even 18th century. Their original objective was to provide easily accessible

savings products to all strata of the population. In some countries, savings banks

were created on public initiative; in others, socially committed individuals created

foundations to put in place the necessary infrastructure. Nowadays, European

savings banks have kept their focus on retail banking: payments, savings

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products, credits and insurances for individuals or small and medium-sized

enterprises. Apart from this retail focus, they also differ from commercial banks

by their broadly decentralised distribution network, providing local and regional

outreach—and by their socially responsible approach to business and society.

Building societies and Landesbanks: institutions that conduct retail banking.

Ethical banks : banks that prioritize the transparency of all operations and make

only what they consider to be socially-responsible investments.

Islamic banks : Banks that transact according to Islamic principles.

Types of investment banks

Investment banks "underwrite" (guarantee the sale of) stock and bond issues,

trade for their own accounts, make markets, and advise corporations on capital

market activities such as mergers and acquisitions.

Merchant banks were traditionally banks which engaged in trade finance. The

modern definition, however, refers to banks which provide capital to firms in the

form of shares rather than loans. Unlike venture capital firms, they tend not to

invest in new companies.

Both combined

Universal banks , more commonly known as financial services companies, engage

in several of these activities. These big banks are very diversified groups that,

among other services, also distribute insurance— hence the term bancassurance, a

portmanteau word combining "banque or bank" and "assurance", signifying that

both banking and insurance are provided by the same corporate entity.

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COMPANY PROFILE

ING Brand

ING is a global financial services brand offering a range of banking and insurance

services in over fifty countries. The ING brand dates from 1991 when a Dutch bank and

insurer merged into the Internationale Nederlanden Groep ‘I-N-G’, and the lion in the

logo is derived from various logos of predecessor companies. Over the years over fifty

labels have been rebranded to ING and worldwide brand awareness and reputation have

steadily grown.

Today, many millions of private, corporate and institutional customers in Europe, North

and Latin America, Asia and Australia are putting their faith in ING to help them manage

their financial future.

In the years to come the structure of the company will change significantly. In light of the

2009 Back to Basics strategy the decision has been made to separate the banking and

insurance activities and to focus on a smaller number of stronger businesses going

forward.

For the ING brand this will most probably mean that we will be even more committed to

be a brand that stands out and leads the way in making finance easier. Our businesses

share much more than just their name and logo. At ING, we combine a desire to do the

right thing for our customers with a can-do mentality.

We aim to provide smart, reliable and sustainable products and services to build and

protect financial futures. And we do so in a way that assures our customers that they have

all the right information and insight to make their own decisions. With every transaction,

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we communicate in plain language, respond quickly and try to keep things clear, simple

and straightforward.

That’s what making finance easier is all about. That’s what the ING brand is about.

Company Overview

ING Vysya Bank Ltd., is an entity formed with the coming together of erstwhile, Vysya

Bank Ltd, a premier bank in the Indian Private Sector and a global financial powerhouse,

ING of Dutch origin, during Oct 2002.

The origin of the erstwhile Vysya Bank was pretty humble. It was in the year 1930 that a

team of visionaries came together to form a bank that would extend a helping hand to

those who weren't privileged enough to enjoy banking services.

It's been a long journey since then and the Bank has grown in size and stature to

encompass every area of present-day banking activity and has carved a distinct identity of

being India's Premier Private Sector Bank.

In 1980, the Bank completed fifty years of service to the nation and post 1985; the Bank

made rapid strides to reach the coveted position of being the number one private sector

bank. In 1990, the bank completed its Diamond Jubilee year. At the Diamond Jubilee

Celebrations, the then Finance Minister Prof. Madhu Dandavate, had termed the

performance of the bank ‘Stupendous’. The 75th anniversary, the Platinum Jubilee of the

bank was celebrated during 2005.

The long journey of seventy-five years has had several milestones…

1930Set up in Bangalore

1948Scheduled Bank

1985Largest Private Sector Bank

1987The Vysya Bank Leasing Ltd. Commenced

1988Pioneered the concept of Co branding of Credit Cards

1990Promoted Vysya Bank Housing Finance Ltd.

1992Deposits cross Rs.1000 crores

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1993Number of Branches crossed 300

1996Signs Strategic Alliance with BBL., Belgium. Two National Awards by Gem &

Jewellery Export Promotion Council for excellent performance in Export Promotion

1998

Cash Management Services, & commissioning of VSAT. Golden Peacock Award -

for the best HR Practices by Institute of Directors. Rated as Best Domestic Bank in

India by Global Finance (International Financial Journal - June 1998)

2000State -of - the -art Date Centre at ITPL, Bangalore.

RBI clears setting up of ING Vysya Life Insurance Company

2001ING-Vysya commenced life insurance business.

2002

The Bank launched a range of products & services like the Vys Vyapar Plus, the

range of loan schemes for traders, ATM services, Smartserv, personal assistant

service, Save & Secure, an account that provides accident hospitalization and

insurance cover, Sambandh, the International Debit Card and the mi-b@nk net

banking service.

2002ING takes over the Management of the Bank from October 7th , 2002

2002RBI clears the new name of the Bank as ING Vysya Bank Ltd, vide their letter of

17.12.02

2003Introduced customer friendly products like Orange Savings, Orange Current and

Protected Home Loans

2004Introduced Protected Home Loans - a housing loan product

2005Introduced Solo - My Own Account for youth and Customer Service Line – Phone

Banking Service

2006Bank has networked all the branches to facilitate ‘AAA’ transactions i.e. Anywhere,

Anytime & Anyhow Banking

The origin of ING Group

On the other hand, ING group originated in 1990 from the merger between Nationale –

Nederlanden NV the largest Dutch Insurance Company and NMB Post Bank Groep NV.

Combining roots and ambitions, the newly formed company called “Internationale

Nederlanden Group”. Market circles soon abbreviated the name to I-N-G. The company

24

followed suit by changing the statutory name to “ING Group N.V.”.

Corporate Social Responsibility

ING Vysya bank has always been committed to making a positive contribution to

Society. Promoting education for under-served children is one such cause which has been

very close to the bank. Through the ING Vysya Foundation, it seeks to provide less

advantaged children an opportunity to secure a better future by providing them with

education.

Born out of three business entities of ING in India, ING Vysya Bank, ING Life

Insurance, and ING Investment Management, the Foundation has been able to strike the

right balance between supporting organizations financially and contributing time and

effort of the employees to nurture and mentor these children, for a better future.

ING Vysya Foundation commenced its activities in December 2004 with a water-

harvesting project in the Udaipur and Rajasmand districts of Rajasthan, North India. The

initiative provided villagers with access to clean water and recharged ground-water wells

which in turn support the local agricultural industry.

The Foundation has also been actively involved in relief efforts following the Tsunami

that hit the South Indian coast on 26 December 2004. In cooperation with the regional

headquarters of ING at Hong Kong, ING Vysya Foundation supported a number of

projects, including the rebuilding of homes and schools, and other facilities for a number

of villages. Another project included the micro-financing for 40 fishing boats and the

attendant equipment for the villages of Mudaliyarkuppam and Arcotuthurai, in

Tamilnadu.

As part of the ING Chances for Children programme, the Foundation signed a five-year

agreement to support 100 orphans' living and schooling expenses. Additional funds, set

up enabled of a day-care centre with training facilities which is used by the community at

large.

25

Other initiatives include ING Investment Management's auctions of paintings drawn by

street children for the NGO Pratham and ING Vysya Bank's 'Run Ricky Run' in which

the bank sent a child back to school for each run the Australian cricket captain Ricky

Ponting scored in international one-day matches during a one-year period ending

September 2008.

Today, Foundation partners with thirteen local charity organizations in India. It helps

children to be in the primary schools to realize their right to education as the first step

towards breaking the cycle of poverty.

Profile

ING has gained recognition for its integrated approach of banking, insurance and asset

management. Furthermore, the company differentiates itself from other financial service

providers by successfully establishing life insurance companies in countries with

emerging economies, such as Korea, Taiwan, Hungary, Poland, Mexico and Chile.

Another specialisation is ING Direct, an Internet and direct marketing concept with

which ING is rapidly winning retail market share in mature markets. Finally, ING

distinguishes itself internationally as a provider of ‘employee benefits’, i.e. arrangements

of nonwage benefits, such as pension plans for companies and their employees.

Mission

ING`s mission is to be a leading, global, client-focused, innovative and low-cost provider

of financial services through the distribution channels of the client’s preference in

markets where ING can create value.

26

The new identity

SUNDAY STANDARD of The New Indian Express Group has named ING Vysya Bank

as the safest bank (mid-sized) with a special mention to MD & CEO Mr Shailendra

Bhandari. Union Minister for Urban Development Mr Kamal Nath gave away the award

in a ceremony held at The Taj Mahal Hotel in New Delhi on September 6.2013.

The immediate benefit to the bank, ING Vysya Bank, has been the pride of having

become a Member of the global financial giant ING. As at the end of the year December

2009, ING's total assets exceeded 1164 billion euros, employed around 110000 people,

served over 85 million customers, across 40 countries. This global identity coupled with

the back up of a financial power house and the status of being the first Indian

International Bank, would also help to enhance productivity, profitability, to result in

improved performance of the bank, for the benefit of all the stake holders.

Board of Directors (updated as of 20.12.2013)Name (Sri)Arun ThiagarajanPart-time ChairmanShailendra BhandariManaging Director & Chief Executive OfficerAditya KrishnaDirectorPhilippe DamasDirectorRichard Cox DirectorSantosh Ramesh DesaiDirectorM Damodaran DirectorVaughn Nigel Richtor DirectorPeter Henri Maria Staal Director

27

Lars KramerDirectorVikram TalwarDirector

Awards and Recognition ING Vysya Bank won the Best Private Sector Bank award in Asset Quality

category at the ‘Dun & Bradstreet – Polaris Banking Awards 2013’ announced on

August 22. Mr Shailendra Bhandari received the award from Mr. Kaushal

Sampat, President & CEO – India, Dun & Bradstreet in a ceremony held in ITC

Maratha, Mumbai. 

ING Vysya Bank was awarded the 'Safest Banker' by The New Indian Express,

one of India's premier publications, at The Sunday Standard FINWIZ 2012 - Best

Bankers’ Award.

ING was included in the 2011 DJSI World Index - the longest-running global

sustainability benchmarks worldwide and the FTSE4Good which is designed to

measure the performance of companies that meet globally recognised corporate

responsibility standards.

We were ranked among the top 5 Private Sector Banks in the country by

Economic Times Brand Equity - Most Trusted Banks Survey 2011 under 'Trusted

Brands' category.

ING Converge, our Wholesale Banking Solution, was chosen as the 'Best

Corporate Internet Banking Initiative, 2012' across Asia by the Asian Banker

Technology Awards 2011, amongst 50 banks from 14 countries.

We were rated as the 'Top Rupee Forecaster' (against US Dollar) for the trailing

six quarters finding December 2011 by Bloomberg in their rankings done across

several Asian currencies and market players.

Our Wholesale Banking Unit was ranked 12th in the Underwriter Ranking of the

Bloomberg League Table covering 'All India Private Placement of Bond

Issuances'.

28

ING Inwards, an innovative payment solution that helps large corporations

manage receivables across multiple geographies and partners, won the CIO 100

award for the 3rd consecutive year in 2011.

CIOL 2011 award for Corporate and Business Banking Portal, Debt Capital

Markets (DCM business has been ranked among the top 15 banks in India in its

first year of operations, buoyed by some high-profile transactions in the bond

markets.

29

CHAPTER-III

LITERATURE REVIEW

30

DISCRETIONARY PORTFOLIO MANAGEMENT SERVICE (DPMS):

In this type of service, the client parts with his money in favor of the manager,

who in return, handles all the paper work, makes all the decisions and gives a good return

on the investment and charges fees. In the Discretionary Portfolio Management Service,

to maximize the yield, almost all portfolio managers park the funds in the money market

securities such as overnight market, 18 days treasury bills and 90 days commercial bills.

Normally, the return of such investment varies from 14 to 18 percent, depending on the

call money rates prevailing at the time of investment.

NON-DISCRETIONARY PORTFOLIO MANAGEMENT SERVICE

(NDPMS):

The manager functions as a counselor, but the investor is free to accept or reject

the manager‘s advice; the paper work is also undertaken by manager for a service charge.

The manager concentrates on stock market instruments with a portfolio tailor-made to the

risk taking ability of the investor.

IMPORTANCE OF PORTFOLIO MANAGEMENT:

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

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

money of small investors, on their behalf.

Growth in the number and size of ingestible funds – a large part of household savings

is being directed towards financial assets.

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

continuously changing because of frequent changes in government‘s industrial and

fiscal policies, economic uncertainty and instability.

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Greater use of computers for processing mass of data.

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

quantitative techniques) in the investment decision – making

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

increased competition and greater scrutiny by investors.

CRITERIA FOR PORTFOLIO DECISIONS:

In portfolio management emphasis is put on identifying the collective importance

of all investor’s holdings. The emphasis shifts from individual assets selection to

a more balanced emphasis on diversification and risk-return interrelationships of

individual assets within the portfolio. Individual securities are important only to

the extent they affect the aggregate portfolio. In short, all decisions should focus

on the impact which the decision will have on the aggregate portfolio of all the

assets held.

Portfolio strategy should be molded to the unique needs and characteristics of the

portfolio‘s owner.

Diversification across securities will reduce a portfolio‘s risk. If the risk and

return are lower than the desired level, leverages (borrowing) can be used to

achieve the desired level.

Larger portfolio returns come only with larger portfolio risk. The most important

decision to make is the amount of risk which is acceptable.

The risk associated with a security type depends on when the investment will be

liquidated. Risk is reduced by selecting securities with a payoff close to when the

portfolio is to be liquidated.

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Competition for abnormal returns is extensive, so one has to be careful in

evaluating the risk and return from securities. Imbalances do not last long and one

has to act fast to profit from exceptional opportunities.

QUALITIES OF PORTFOLIO MANAGER:

1. SOUND GENERAL KNOWLEDGE : Portfolio management is an exciting

and challenging job. He has to work in an extremely uncertain and confliction

environment. In the stock market every new piece of information affects the value of the

securities of different industries in a different way. He must be able to judge and predict

the effects of the information he gets. He must have sharp memory, alertness, fast

intuition and self-confidence to arrive at quick decisions.

2. ANALYTICAL ABILITY : He must have his own theory to arrive at the

instrinsic value of the security. An analysis of the security‘s values, company, etc. is s

continuous job of the portfolio manager. A good analyst makes a good financial

consultant. The analyst can know the strengths, weaknesses, opportunities of the

economy, industry and the company.

3. MARKETING SKILLS : He must be good salesman. He has to convince

the clients about the particular security. He has to compete with the stock brokers in the

stock market. In this context, the marketing skills help him a lot.

4. EXPERIENCE : In the cyclical behavior of the stock market history is

often repeated, therefore the experience of the different phases helps to make rational

33

decisions. The experience of the different types of securities, clients, market trends, etc.,

makes a perfect professional manager.

PORTFOLIO BUILDING : Portfolio decisions for an individual investor are influenced by a wide variety of

factors. Individuals differ greatly in their circumstances and therefore, a financial

programme well suited to one individual may be inappropriate for another. Ideally, an

individual‘s portfolio should be tailor-made to fit one‘s individual needs.

Investor‘s Characteristics:An analysis of an individual‘s investment situation requires a study of personal

characteristics such as age, health conditions, personal habits, family responsibilities,

business or professional situation, and tax status, all of which affect the investor‘s

willingness to assume risk.

Stage in the Life Cycle:One of the most important factors affecting the individual‘s investment objective

is his stage in the life cycle. A young person may put greater emphasis on growth and

lesser emphasis on liquidity. He can afford to wait for realization of capital gains as his

time horizon is large.

Family responsibilities:

The investor‘s marital status and his responsibilities towards other members of the

family can have a large impact on his investment needs and goals.

34

Investor‘s experience:The success of portfolio depends upon the investor‘s knowledge and experience

in financial matters. If an investor has an aptitude for financial affairs, he may wish to be

more aggressive in his investments.

Attitude towards Risk:A person‘s psychological make-up and financial position dictate his ability to assume

the risk. Different kinds of securities have different kinds of risks. The higher the risk, the

greater the opportunity for higher gain or loss.

Liquidity Needs:Liquidity needs vary considerably among individual investors. Investors with

regular income from other sources may not worry much about instantaneous liquidity, but

individuals who depend heavily upon investment for meeting their general or specific

needs, must plan portfolio to match their liquidity needs. Liquidity can be obtained in two

ways:

1. By allocating an appropriate percentage of the portfolio to bank deposits, and

2. By requiring that bonds and equities purchased be highly marketable.

Tax considerations:Since different individuals, depending upon their incomes, are subjected to different

marginal rates of taxes, tax considerations become most important factor in individual‘s

portfolio strategy. There are differing tax treatments for investment in various kinds of

assets.

Time Horizon:

35

In investment planning, time horizon becomes an important consideration. It is

highly variable from individual to individual. Individuals in their young age have long

time horizon for planning, they can smooth out and absorb the ups and downs of risky

combination. Individuals who are old have smaller time horizon, they generally tend to

avoid volatile portfolios.

Individual‘s Financial Objectives:In the initial stages, the primary objective of an individual could be to accumulate

wealth via regular monthly savings and have an investment programmed to achieve long

term capital gains.

Safety of Principal:The protection of the rupee value of the investment is of prime importance to most

investors. The original investment can be recovered only if the security can be readily

sold in the market without much loss of value.

Assurance of Income:`Different investors have different current income needs. If an individual is dependent

of its investment income for current consumption then income received now in the form

of dividend and interest payments become primary objective.

Investment Risk:All investment decisions revolve around the trade-off between risk and return. All

rational investors want a substantial return from their investment. An ability to

understand, measure and properly manage investment risk is fundamental to any

intelligent investor or a speculator. Frequently, the risk associated with security

investment is ignored and only the rewards are emphasized. An investor who does not

fully appreciate the risks in security investments will find it difficult to obtain continuing

positive results.

36

RISK AND EXPECTED RETURN:

There is a positive relationship between the amount of risk and the amount of

expected return i.e., the greater the risk, the larger the expected return and larger the

chances of substantial loss. One of the most difficult problems for an investor is to

estimate the highest level of risk he is able to assume.

Risk is measured along the horizontal axis and increases from the left to right.

Expected rate of return is measured on the vertical axis and rises from bottom to

top.

The line from 0 to R (f) is called the rate of return or risk less investments

commonly associated with the yield on government securities.

37

The diagonal line form R (f) to E(r) illustrates the concept of expected rate of

return increasing as level of risk increases.

TYPES OF RISKS: Risk consists of two components. They are

1. Systematic Risk

2. Un-systematic Risk

1. Systematic Risk:

Systematic risk is caused by factors external to the particular company and

uncontrollable by the company. The systematic risk affects the market as a whole.

Factors affect the systematic risk are

economic conditions

political conditions

sociological changes

The systematic risk is unavoidable. Systematic risk is further sub-divided into three types.

They are

a) Market Risk

b) Interest Rate Risk

c) Purchasing Power Risk

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a). Market Risk

One would notice that when the stock market surges up, most stocks post higher

price. On the other hand, when the market falls sharply, most common stocks will drop.

It is not uncommon to find stock prices falling from time to time while a company‘s

earnings are rising and vice-versa. The price of stock may fluctuate widely within a short

time even though earnings remain unchanged or relatively stable.

b). Interest Rate Risk:

Interest rate risk is the risk of loss of principal brought about the changes in the

interest rate paid on new securities currently being issued.

c). Purchasing Power Risk:

The typical investor seeks an investment which will give him current income

and / or capital appreciation in addition to his original investment.

2. Un-systematic Risk:Un-systematic risk is unique and peculiar to a firm or an industry. The nature and

mode of raising finance and paying back the loans, involve the risk element. Financial

leverage of the companies that is debt-equity portion of the companies differs from each

other. All these factors affect the un-systematic risk and contribute a portion in the total

variability of the return.

Managerial inefficiently

Technological change in the production process

Availability of raw materials

Changes in the consumer preference

39

Labour problems

The nature and magnitude of the above mentioned factors differ from industry to

industry and company to company. They have to be analyzed separately for each industry

and firm. Un-systematic risk can be broadly classified into:

a) Business Risk

b) Financial Risk

a. Business Risk:Business risk is that portion of the unsystematic risk caused by the operating environment

of the business. Business risk arises from the inability of a firm to maintain its

competitive edge and growth or stability of the earnings. The volatility in stock prices

due to factors intrinsic to the company itself is known as Business risk. Business risk is

concerned with the difference between revenue and earnings before interest and tax.

Business risk can be divided into.

i). Internal Business RiskInternal business risk is associated with the operational efficiency of the firm. The

operational efficiency differs from company to company. The efficiency of operation is

reflected on the company‘s achievement of its pre-set goals and the fulfillment of the

promises to its investors.

ii).External Business RiskExternal business risk is the result of operating conditions imposed on the firm by

circumstances beyond its control. The external environments in which it operates exert

some pressure on the firm. The external factors are social and regulatory factors,

monetary and fiscal policies of the government, business cycle and the general economic

environment within which a firm or an industry operates.

b. Financial Risk:

40

It refers to the variability of the income to the equity capital due to the debt capital.

Financial risk in a company is associated with the capital structure of the company.

Capital structure of the company consists of equity funds and borrowed funds.

PORTFOLIO ANALYSIS:

Various groups of securities when held together behave in a different manner and

give interest payments and dividends also, which are different to the analysis of

individual securities. A combination of securities held together will give a beneficial

result if they are grouped in a manner to secure higher return after taking into

consideration the risk element.

There are two approaches in construction of the portfolio of securities. They are

Traditional approach

Modern approach

TRADITIONAL APPROACH:

Traditional approach was based on the fact that risk could be measured on each

individual security through the process of finding out the standard deviation and that

security should be chosen where the deviation was the lowest. Traditional approach

believes that the market is inefficient and the fundamental analyst can take advantage of

the situation. Traditional approach is a comprehensive financial plan for the individual.

It takes into account the individual need such as housing, life insurance and pension

plans. Traditional approach basically deals with two major decisions. They are

a) Determining the objectives of the portfolio

b) Selection of securities to be included in the portfolio

41

MODERN APPROACH:Modern approach theory was brought out by Markowitz and Sharpe. It is the

combination of securities to get the most efficient portfolio. Combination of securities

can be made in many ways. Markowitz developed the theory of diversification through

scientific reasoning and method. Modern portfolio theory believes in the maximization of

return through a combination of securities. The modern approach discusses the

relationship between different securities and then draws inter-relationships of risks

between them. Markowitz gives more attention to the process of selecting the portfolio. It

does not deal with the individual needs.

MARKOWITZ MODEL:Markowitz model is a theoretical framework for analysis of risk and return and

their relationships. He used statistical analysis for the measurement of risk and

mathematical programming for selection of assets in a portfolio in an efficient manner.

Markowitz apporach determines for the investor the efficient set of portfolio through

three important variables i.e.

Return

Standard deviation

Co-efficient of correlation

Markowitz model is also called as an “Full Covariance Model“. Through this

model the investor can find out the efficient set of portfolio by finding out the trade off

between risk and return, between the limits of zero and infinity. According to this theory,

the effects of one security purchase over the effects of the other security purchase are

taken into consideration and then the results are evaluated. Most people agree that

holding two stocks is less risky than holding one stock. For example, holding stocks from

textile, banking and electronic companies is better than investing all the money on the

textile company‘s stock.

42

Markowitz had given up the single stock portfolio and introduced diversification.

The single stock portfolio would be preferable if the investor is perfectly certain that his

expectation of highest return would turn out to be real. In the world of uncertainty, most

of the risk adverse investors would like to join Markowitz rather than keeping a single

stock, because diversification reduces the risk.

ASSUMPTIONS: All investors would like to earn the maximum rate of return that they can achieve

from their investments.

All investors have the same expected single period investment horizon.

All investors before making any investments have a common goal. This is the

avoidance of risk because Investors are risk-averse.

Investors base their investment decisions on the expected return and standard

deviation of returns from a possible investment.

Perfect markets are assumed (e.g. no taxes and no transition costs)

The investor assumes that greater or larger the return that he achieves on his

investments, the higher the risk factor surrounds him. On the contrary when risks

are low the return can also be expected to be low.

The investor can reduce his risk if he adds investments to his portfolio.

An investor should be able to get higher return for each level of risk “by

determining the efficient set of securities“.

43

An individual seller or buyer cannot affect the price of a stock. This assumption is

the basic assumption of the perfectly competitive market.

Investors make their decisions only on the basis of the expected returns, standard

deviation and covariance’s of all pairs of securities.

Investors are assumed to have homogenous 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.

Investors are risk-averse, so when given a choice between two otherwise identical

portfolios, they will choose the one with the lower standard deviation.

Individual assets are infinitely divisible, meaning that an investor can buy a

fraction of a share if he or she so desires.

There is a risk free rate at which an investor may either lend (i.e. invest) money or

borrow money.

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 dividend.

THE EFFECT OF COMBINING TWO SECURITIES:

44

It is believed that holding two securities is less risky than by having only one

investment in a person‘s portfolio. When two stocks are taken on a portfolio and if they

have negative correlation then risk can be completely reduced because the gain on one

can offset the loss on the other. This can be shown with the help of following example:

INTER- ACTIVE RISK THROUGH COVARIANCE:

Covariance of the securities will help in finding out the inter-active risk. When the

covariance will be positive then the rates of return of securities move together either

upwards or downwards. Alternatively it can also be said that the inter-active risk is

positive. Secondly, covariance will be zero on two investments if the rates of return are

independent.

Holding two securities may reduce the portfolio risk too. The portfolio risk can be

calculated with the help of the following formula:

CAPITAL ASSET PRICING MODEL (CAPM):

Markowitz, William Sharpe, John Lintner and Jan Mossin provided the basic

structure of Capital Asset Pricing 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. un-diversifiable or systematic risk (i.e. market

related risk) because non market risk can be eliminated by diversification and systematic

risk measured by beta. Therefore, the relationship between an assets return and its

systematic risk can be expressed by the CAPM, which is also called the Security Market

Line.

R = Rf Xf+ Rm(1- Xf)

45

Rp = Portfolio return

Xf =The proportion of funds invested in risk free assets

1- Xf = The proportion of funds invested in risky assets

Rf = Risk free rate of return

Rm = Return on risky assets

Formula can be used to calculate the expected returns for different situations, like

mixing risk less assets with risky assets, investing only in the risky asset and mixing the

borrowing with risky assets.

THE CONCEPT:

According to CAPM, all investors hold only the market portfolio and risk less

securities. The market portfolio is a portfolio comprised of all stocks in the market. Each

asset is held in proportion to its market value to the total value of all risky assets.

For example, if wipro Industry share represents 15% of all risky assets, then the

market portfolio of the individual investor contains 15% of wipro Industry shares. At this

stage, the investor has the ability to borrow or lend any amount of money at the risk less

rate of interest.

E.g.: assume that borrowing and lending rate to be 12.5% and the return from the

risky assets to be 20%. There is a trade off between the expected return and risk. If an

investor invests in risk free assets and risky assets, his risk may be less than what he

invests in the risky asset alone. But if he borrows to invest in risky assets, his risk would

increase more than he invests his own money in the risky assets. When he borrows to

invest, we call it financial leverage. If he invests 50% in risk free assets and 50% in risky

assets, his expected return of the portfolio would be

Rp= Rf Xf+ Rm(1- Xf)

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= (12.5 x 0.5) + 20 (1-0.5)

= 6.25 + 10

= 16.25%

if there is a zero investment in risk free asset and 100% in risky asset, the

return is

Rp= Rf Xf+ Rm(1- Xf)

= 0 + 20%

= 20%

if -0.5 in risk free asset and 1.5 in risky asset, the return is

Rp= Rf Xf+ Rm(1- Xf)

= (12.5 x -0.5) + 20 (1.5)

= -6.25+ 30

= 23.75%

EVALUATION OF PORTFOLIO:

Portfolio manager evaluates his portfolio performance and identifies the sources

of strengths and weakness. The evaluation of the portfolio provides a feed back about the

performance to evolve better management strategy. Even though evaluation of portfolio

performance is considered to be the last stage of investment process, it is a continuous

process. There are number of situations in which an evaluation becomes necessary and

important.

i. Self Valuation : An individual may want to evaluate how well he has done.

This is a part of the process of refining his skills and improving his performance

over a period of time.

47

ii. Evaluation of Managers : A mutual fund or similar organization might want

to evaluate its managers. A mutual fund may have several managers each running

a separate fund or sub-fund. It is often necessary to compare the performance of

these managers.

iii. Evaluation of Mutual Funds : An investor may want to evaluate the various

mutual funds operating in the country to decide which, if any, of these should be

chosen for investment. A similar need arises in the case of individuals or

organizations who engage external agencies for portfolio advisory services.

iv. Evaluation of Groups : have different skills or access to different

information. Academics or researchers may want to evaluate the performance of a

whole group of investors and compare it with another group of investors who use

different techniques or who

NEED FOR EVALUATION OF PORTFOLIO:

We can try to evaluate every transaction. Whenever a security is brought or sold,

we can attempt to assess whether the decision was correct and profitable.

We can try to evaluate the performance of a specific security in the portfolio to

determine whether it has been worthwhile to include it in our portfolio.

We can try to evaluate the performance of portfolio as a whole during the period

without examining the performance of individual securities within the portfolio.

48

PORTFOLIO REVISION:

The portfolio which is once selected has to be continuously reviewed over a

period of time and then revised depending on the objectives of the investor. The care

taken in construction of portfolio should be extended to the review and revision of the

portfolio. Fluctuations that occur in the equity prices cause substantial gain or loss to the

investors.

The investor should have competence and skill in the revision of the portfolio.

The portfolio management process needs frequent changes in the composition of stocks

and bonds. In securities, the type of securities to be held should be revised according to

the portfolio policy.

An investor purchases stock according to his objectives and return risk

framework. The prices of stock that he purchases fluctuate, each stock having its own

cycle of fluctuations. These price fluctuations may be related to economic activity in a

country or due to other changed circumstances in the market.

If an investor is able to forecast these changes by developing a framework for the

future through careful analysis of the behavior and movement of stock prices is in a

position to make higher profit than if he was to simply buy securities and hold them

through the process of diversification. Mechanical methods are adopted to earn better

profit through proper timing. The investor uses formula plans to help him in making

decisions for the future by exploiting the fluctuations in prices.

FORMULA PLANS: The formula plans provide the basic rules and regulations for the purchase and

sale of securities. The amount to be spent on the different types of securities is fixed.

49

The amount may be fixed either in constant or variable ratio. This depends on the

investor‘s attitude towards risk and return. The commonly used formula plans are

i. Average Rupee Plan

ii. Constant Rupee Plan

iii. Constant Ratio Plan

iv. Variable Ratio Plan

v.

ADVANTAGES: Basic rules and regulations for the purchase and sale of securities are provided.

The rules and regulations are rigid and help to overcome human emotion.

The investor can earn higher profits by adopting the plans.

A course of action is formulated according to the investor‘s objectives

It controls the buying and selling of securities by the investor.

DISADVANTAGES: The formula plan does not help the selection of the security. The selection of the

security has to be done either on the basis of the fundamental or technical

analysis.

It is strict and not flexible with the inherent problem of adjustment.

The formula plans should be applied for long periods, otherwise the transaction

cost may be high.

Even if the investor adopts the formula plan, he needs forecasting. Market

forecasting helps him to identify the best stocks.

1. OVERVIEW : The main purpose of studying is to examine

the policy adopted for decision making in

the area of Portfolio management in General

Insurance Company with a special focus on

Portfolio.

50

2. SCOPE : In the presence study cover through

examination of procedures of decision

making portfolio management

environment, selection of securities

Weights of different securities and

Earning of Portfolio.

3. FINDINGS : The trend of Stock Exchange, securities in

India has shown increasing trend on an

Average the investments in such securities

increased by 153.47% yearly over the study

period. How ever the trend of investment in

stock exchange, securities both in India and

Outside India has shown investment incase

Is 154.77% per year over the study period.

PORTFOLIO MANAGEMENT USING CAPM

1. OVERVIEW : Portfolio analysis to measure this actual risk

And return of securities and to calculate the

Expected returns of securities using

Security market line to compare the expected

Return with actual return to assist investor in

Making rational investment decision to which

Security to buy or sell using security market

Line which is to suggested the best portfolio

Mix .

2. SCOPE : The scope of the study is limited to this use of

Security market line as a tool of selecting

Security and advising the investors about the

51

Best portfolio mix.

3. FINDINGS : There is a significant difference between the

Expected returns and actual returns. The next

Step is to identify the securities which are under

Value when their expected returns is more than

Actual returns, it can be observed undervalued

Securities like Cipla, Dr. Reddy Labs,

wipro etc., wipro is linear since the

Weights (X) are the variables

INVESTMENT

Investment may be defined as an activity that commits funds in any financial form

in the present with an expectation of receiving additional return in the future. The

expectations bring with it a probability that the quantum of return may vary from a

minimum to a maximum. This possibility of variation in the actual return is known as

investment risk. Thus every investment involves a return and risk.

Investment is an activity that is undertaken by those who have savings. Savings

can be defined as the excess of income over expenditure. An investor earns/expects to

earn additional monetary value from the mode of investment that could be in the form of

financial assets.

The three important characteristics of any financial asset are:

Return-the potential return possible from an asset.

52

Risk-the variability in returns of the asset form the chances of its value going

down/up.

Liquidity-the ease with which an asset can be converted into cash.

Investors tend to look at these three characteristics while deciding on their

individual preference pattern of investments. Each financial asset will have a certain level

of each of these characteristics.

Investment avenuesThere are a large number of investment avenues for savers in India. Some of them

are marketable and liquid, while others are non-marketable. Some of them are highly

risky while some others are almost risk less.

Investment avenues can be broadly categorized under the following head.

1. Corporate securities

2. Equity shares.

3. Preference shares.

4. Debentures/Bonds.

5. Derivatives.

6. Others.

Corporate Securities

Joint stock companies in the private sector issue corporate securities. These

include equity shares, preference shares, and debentures. Equity shares have variable

dividend and hence belong to the high risk-high return category; preference shares and

debentures have fixed returns with lower risk.The classification of corporate securities

that can be chosen as investment avenues can be depicted as shown below:

53

CHAPTER-IV

DATA ANALYSES AND INTERPRETATION

54

Equity Shares

Preference shares

Bonds Warrants Derivatives

RETURNS, VARIANCE, AND STANDARD DEVIATION, OF ICICI INCOMEFUNDS FOR THE MONTH OF JULY-2013

S NO Date NAV RETURNS (X-XBAR) (X-XBAR)2 SD1 1-July-13 1402 3-July-13 147.29 5.20 4.76 22.683 4-July-13 148.07 0.53 0.53 0.284 5-July-13 147.74 -0.22 0.20 0.045 6-July-13 147.40 -0.23 0.19 0.046 8-July-13 145.68 -1.17 -0.74 0.557 10-July-13 144.72 -0.66 -0.23 0.058 11-July-13 143.58 -0.78 -0.36 0.13 9 12-July-13 146.01 1.69 2.12 4.48

10 13-July-13 148.87 1.96 2.38 5.6911 15-July-13 150.55 1.12 1.55 2.4012 17-July-13 151.02 0.32 0.74 0.5513 18-July-13 152.25 0.82 1.24 1.5414 19-July-13 152.74 0.32 0.75 0.5615 20-July-13 151.61 -0.74 -0.32 0.1016 22-July-13 151.86 0.17 0.59 0.3517 24-July-13 150.67 -0.78 -0.36 0.1318 25-July-13 151.30 0.42 0.85 0.7219 29-July-13 152.60 0.85 1.28 1.6420 31-july-13 151.95 -0.43 0.00 0.00

MEAN 0.44 VAREANCE 2.21 1.49

55

GRAPHICAL REPRESENTATION

The above graph represents the returns of ICICI income fund it shows that there is

continuous rise and fall in net asset value. If we see the table the monthly mean is 0.44

with price variation of 2.21and risk factor being 1.49. Thus it can be said that risk is very

high when compared to returns.

RETURNS, VARIANCE, AND STANDARD DEVIATION, OF ICICI INCOMEFUNDS FOR THE MONTH OF AUGUST-2013

S NO Date NAV RETURNS (X-XBAR) (X-XBAR)2 SD1 1-Aug-13 152.42 0.31 0.69 0.472 2-Aug-13 153.66 0.82 1.20 1.433 3-Aug-13 154.57 0.59 0.97 0.934 6-Aug-13 154.47 -0.06 0.31 0.105 7-Aug-13 155.35 0.57 0.95 0.896 8-Aug-13 154.96 -0.25 0.13 0.027 9-Aug-13 153.79 -0.76 -0.38 0.148 10-Aug-13 150.46 -2.17 -1.79 3.209 13-Aug-13 149.50 -0.64 -0.26 0.07

10 14-Aug-13 149.33 -0.11 0.27 0.0711 17-Aug-13 153.19 2.58 2.96 8.7512 21-Aug-13 153.28 0.06 0.44 0.1913 22-Aug-13 151.62 -1.08 -0.71 0.5014 23-Aug-13 150.85 -0.51 -0.13 0.0215 26-Aug-13 148.96 -1.25 -0.87 0.7616 27-Aug-13 145.58 -2.27 -1.89 3.5917 28-Aug-13 145.88 0.21 0.58 0.3418 29-Aug-13 145.43 -0.31 0.07 0.0019 31-Aug-13 141.23 -2.89 -2.51 6.32

MEAN -0.38 VAREANCE 1.46 1.21

GRAPHICAL REPRESENTATION OF RETURNS OF ICICI GROTH FUND FOR THE

MONTH OF JULY-2013

-2.00

0.00

2.00

4.00

6.00

1 3 5 7 9 11 13 15 17 19

56

GRAPHICAL REPRESENTATION

The above graph represents the returns of ICICI income fund it shows that there is

continuous rise and fall in net asset value. If we see the table the monthly mean is -0.38

with price variation of 1.46 and risk factor being 1. Thus it can be said that risk is very

high when compared to returns.

GRAPHICAL REPRESENTATION OF RETURNS OF ICICI INCOME FUND FOR THE

MONTH OF AUG-2013

-4.00

-3.00

-2.00

-1.00

0.00

1.00

2.00

3.00

1 3 5 7 9 11 13 15 17 19 Series1

57

RETURNS, VARIANCE, AND STANDARD DEVIATION, OF ICICI INCOMEFUNDS FOR THE MONTH OF SEP-2013

S NO Date NAV RETURNS (X-XBAR) (X-XBAR)2 SD1 3-Sep-13 143.68 1.73 1.75 3.082 4-Sep-13 140.53 -2.19 -2.17 4.723 5-Sep-13 134.74 -4.12 -4.10 16.814 6-Sep-13 136.86 1.58 1.60 2.555 7-Sep-13 135.17 -1.24 -1.22 1.486 9-Sep-13 138.69 2.60 2.62 6.897 10-Sep-13 138.03 -0.47 -0.45 0.218 11-Sep-13 139.39 0.99 1.01 1.029 12-Sep-13 140.46 0.77 0.79 0.62

10 13-Sep-13 136.75 -2.64 -2.62 6.8811 14-Sep-13 137.87 0.82 0.84 0.7112 17-Sep-13 136.66 -0.88 -0.86 0.7413 18-Sep-13 138.28 1.19 1.21 1.4614 20-Sep-13 139.42 0.82 0.84 0.7115 21-Sep-13 141.30 1.35 1.38 1.8916 24-Sep-13 144.22 2.06 2.08 4.3417 25-Sep-13 144.18 -0.03 -0.01 0.0018 26-Sep-13 142.96 -0.85 -0.83 0.6819 28-Sep-13 140.26 -1.89 -1.87 3.48

MEAN -0.02 VAREANCE 3.07 1.75

GRAPHICAL REPRESENTATION

The above graph represents the returns of ICICI income fund it shows that there is

continuous rise and fall in net asset value. If we see the table the monthly mean is -0.02

with price variation of 3.07 and risk factor being 1.75 Thus it can be said that risk is very

high when compared to returns.

RETURNS, VARIANCE, AND STANDARD DEVIATION, OF ICICI INCOME

GRAPHICAL REPRESENTATION OF RETURNS OF ICICI INCOME FOR THE MONTH OF SEP-2013

-5.00

-4.00

-3.00

-2.00

-1.00

0.00

1.00

2.00

3.00

1 3 5 7 9 11 13 15 17 19 Series1

58

FUNDS FOR THE MONTH OF OCT-2013

S NO Date NAV RETURNS (X-XBAR) (X-XBAR)2 SD1 2-Oct-13 136.75 -2.50 -2.87 8.252 3-Oct-13 137.88 0.83 0.46 0.213 4-Oct-13 140.01 1.54 1.17 1.384 5-Oct-13 141.04 0.74 0.37 0.145 8-Oct-13 144.22 2.25 1.88 3.546 10-Oct-13 144.48 0.18 -0.19 0.047 11-Oct-13 144.62 0.10 -0.26 0.078 12-Oct-13 143.40 -0.85 -1.22 1.489 15-Oct-13 146.36 2.07 1.70 2.89

10 16-Oct-13 149.17 1.92 1.55 2.4111 17-Oct-13 148.13 -0.70 -1.07 1.1312 18-Oct-13 148.28 0.10 -0.26 0.0713 19-Oct-13 147.67 -0.41 -0.78 0.6114 22-Oct-13 149.70 1.37 1.00 1.0015 23-Oct-13 149.69 -0.01 -0.38 0.1416 24-Oct-13 151.08 0.93 0.57 0.3217 25-Oct-13 151.56 0.31 -0.05 0.0018 26-Oct-13 151.76 0.13 -0.23 0.0519 29-Oct-13 150.19 -1.03 -1.40 1.96

MEAN 0.37 VAREANCE 1.35 1.16

GRAPHICAL REPRESENTATION

The above graph represents the returns of ICICI income fund it shows that there is

continuous rise and fall in net asset value. If we see the table the monthly mean is 0.37

with price variation of 1.35 and risk factor being 1.16. Thus it can be said that risk is very

high when compared to returns.

GRAPHICAL REPRESENTATION OF RETURNS OF ICICI INCOME FOR THE

MONTH OF OCT-2013

-3.00

-2.00

-1.00

0.00

1.00

2.00

3.00

1 3 5 7 9 11 13 15 17 19Series1

59

RETURNS, VARIANCE, AND STANDARD DEVIATION, OF ICICI INCOMEFUNDS FOR THE MONTH OF NOV-2013

S NO Date NAV RETURNS (X-XBAR) (X-XBAR)2 SD1 1-Nov-13 153.17 1.98 1.64 2.692 2-Nov-13 151.52 -1.07 -1.42 2.013 5-Nov-13 151.31 -0.14 -0.48 0.234 6-Nov-13 150.17 -0.75 -1.10 1.205 8-Nov-13 150.14 -0.02 -0.37 0.136 9-Nov-13 149.40 -0.49 -0.83 0.697 12-Nov-13 149.98 0.39 0.05 0.008 13-Nov-13 152.09 1.40 1.06 1.129 15-Nov-13 152.67 0.39 0.04 0.00

10 16-Nov-13 154.31 1.07 0.73 0.5311 19-Nov-13 155.09 0.50 0.16 0.0312 20-Nov-13 154.67 -0.27 -0.61 0.3813 21-Nov-13 156.18 0.98 0.64 0.4114 22-Nov-13 156.70 0.33 -0.01 0.0015 23-Nov-13 156.26 -0.28 -0.62 0.3916 26-Nov-13 155.37 -0.57 -0.91 0.8417 27-Nov-13 156.35 0.63 0.29 0.0818 29-Nov-13 158.64 1.47 1.12 1.2619 30-Nov-13 160.17 0.96 0.62 0.39

MEAN 0.34 VAREANCE 0.65 0.81

GRAPHICAL REPRESENTATION

The above graph represents the returns of ICICI income fund it shows that there is

continuous rise and fall in net asset value. If we see the table the monthly mean is 0.34

with price variation of 0.65 and risk factor being 0.81. Thus it can be said that risk is very

high when compared to returns.

GRAPHICAL REPRESENTATION OF RETURNS OF ICICI INCOME FUND FOR THE

MONTH OF NOV-2013

-1.50

-1.00-0.50

0.00

0.50

1.001.50

2.00

2.50

1 3 5 7 9 11 13 15 17 19

Series1

60

RETURNS, VARIANCE, AND STANDARD DEVIATION, OF ICICI INCOMEFUNDS FOR THE MONTH OF DEC-2013

S NO Date NAV RETURNS (X-XBAR) (X-XBAR)2 SD1 3-Dec-13 161.90 1.08 0.97 0.942 4-Dec-13 160.88 -0.63 -0.74 0.553 5-Dec-13 161.66 0.48 0.36 0.134 6-Dec-13 159.35 -1.43 -1.54 2.375 7-Dec-13 158.50 -0.53 -0.65 0.426 10-Dec-13 157.93 -0.36 -0.48 0.237 11-Dec-13 158.85 0.59 0.47 0.228 12-Dec-13 158.75 -0.07 -0.18 0.039 13-Dec-13 157.55 -0.76 -0.87 0.76

10 14-Dec-13 159.78 1.42 1.30 1.6911 17-Dec-13 159.94 0.10 -0.02 0.0012 18-Dec-13 159.06 -0.55 -0.66 0.4413 19-Dec-13 160.97 1.20 1.08 1.1714 20-Dec-13 162.68 1.06 0.95 0.9015 21-Dec-13 163.95 0.78 0.67 0.4416 24-Dec-13 163.00 -0.58 -0.69 0.4817 26-Dec-13 163.48 0.29 0.18 0.0318 28-Dec-13 164.29 0.50 0.38 0.1519 31-Dec-13 163.61 -0.42 -0.53 0.28

MEAN 0.11 VAREANCE 0.59 0.77

GRAPHICAL REPRESENTATION

The above graph represents the returns of ICICI income fund it shows that there is

continuous rise and fall in net asset value. If we see the table the monthly mean is 0.11

with price variation of 0.59 and risk factor being 0.77 thus it can be said that risk is very

high when compared to returns.

RETURNS, VARIANCE, AND STANDARD DEVIATION, OF KOTAK INCOME

GRAPHICAL REPRESENTATION OF RETURNS OF ICICI INCOME FUND FOR THE

MONTH OF DEC-2013

-2.00

-1.50

-1.00

-0.50

0.00

0.50

1.00

1.50

2.00

1 3 5 7 9 11 13 15 17 19

Series1

61

FUNDS FOR THE MONTH OF JULY-2013

S.NO Date NAV RETURN (X-XBAR)(X-XBAR)2 SD

1 2-July-13 27.32 3-July-13 27.52 0.81 0.72 0.523 4-July-13 27.76 0.87 0.79 0.624 5-July-13 27.82 0.22 0.13 0.025 6-July-13 27.72 -0.36 -0.45 0.206 9-July-13 27.4 -1.15 -1.24 1.547 10-July-13 27.22 -0.66 -0.74 0.558 11-July-13 26.7 -1.91 -2.00 3.999 12-July-13 27.23 1.99 1.90 3.61

10 13-July-13 27.75 1.91 1.82 3.3311 16-July-13 27.9 0.54 0.45 0.2112 17-July-13 28.03 0.47 0.38 0.1413 18-July-13 28.14 0.39 0.31 0.0914 19-July-13 28.26 0.43 0.34 0.1215 20-July-13 28.03 -0.81 -0.90 0.8116 23-July-13 28.00 -0.11 -0.19 0.0417 24-July-13 27.42 -2.07 -2.16 4.6518 25-July-13 27.55 0.47 0.39 0.1519 29-July-13 27.79 0.87 0.79 0.6220 31-july-13 27.72 -0.25 -0.34 0.11

MEAN 0.09 VARIANCE 1.12 1.06

GRAPHICAL REPRESENTATION

The above graph represents the returns of KOTAK income fund it shows that there is

continuous rise and fall in net asset value. If we see the table the monthly mean is 0.09

with price variation of 1.12 and risk factor being 1.06 Thus it can be said that risk is very

high when compared to returns.

RETURNS, VARIANCE, AND STANDARD DEVIATION, OF KOTAK INCOME

GRAPHICAL REPRESENTATION OF RETURNS OF KOTAK INCOME FUND FOR THE

MONTH OF JULY-2013

-2.50-2.00-1.50-1.00-0.500.000.501.001.502.002.50

1 3 5 7 9 11 13 15 17 19Series1

62

FUNDS FOR THE MONTH OF AUG-2013

S.NO Date NAV RETURN (X-XBAR)(X-XBAR)2 SD

1 1-Aug-13 27.5 -0.79 -0.26 0.072 2-Aug-13 27.7 0.73 1.27 1.603 3-Aug-13 27.86 0.58 1.12 1.244 6-Aug-13 27.86 0.00 0.54 0.295 7-Aug-13 28.06 0.72 1.26 1.586 8-Aug-13 27.98 -0.29 0.25 0.067 9-Aug-13 27.49 -1.75 -1.21 1.478 10-Aug-13 26.31 -4.29 -3.75 14.109 13-Aug-13 26.11 -0.76 -0.22 0.05

10 14-Aug-13 26.04 -0.27 0.27 0.0711 17-Aug-13 26.77 2.80 3.34 11.1612 21-Aug-13 26.9 0.49 1.02 1.0513 22-Aug-13 26.67 -0.86 -0.32 0.1014 23-Aug-13 26.79 0.45 0.99 0.9815 26-Aug-13 26.43 -1.34 -0.81 0.6516 27-Aug-13 25.75 -2.57 -2.03 4.1417 28-Aug-13 25.79 0.16 0.69 0.4818 29-Aug-13 25.81 0.08 0.62 0.3819 31-Aug-13 24.96 -3.29 -2.76 7.59

MEAN -0.54 VARIANCE 2.48 1.57

GRAPHICAL REPRESENTATION

The above graph represents the returns of KOTAK income fund it shows that there is

continuous rise and fall in net asset value. If we see the table the monthly mean is -0.54

with price variation of 2.48 and risk factor being 1.57. Thus it can be said that risk is very

high when compared to returns.

GRAPHICAL REPRESENTATION OF RETURNS OF KOTAK INCOME FUND FOR THE

MONTH OF AUG-2013

-5.00-4.00-3.00-2.00-1.000.001.002.003.004.00

1 3 5 7 9 11 13 15 17 19Series1

63

RETURNS, VARIANCE, AND STANDARD DEVIATION, OF KOTAK INCOMEFUNDS FOR THE MONTH OF SEP-2013

S.NO Date NAV RETURN (X-XBAR) (X-XBAR)2 SD1 3-Sep-13 25.06 0.40 0.42 0.182 4-Sep-13 24.49 -2.27 -2.25 5.073 5-Sep-13 23.29 -4.90 -4.88 23.784 6-Sep-13 23.73 1.89 1.91 3.665 7-Sep-13 23.35 -1.60 -1.58 2.496 9-Sep-13 24.17 3.51 3.53 12.497 10-Sep-13 23.97 -0.83 -0.80 0.658 11-Sep-13 24.27 1.25 1.27 1.629 12-Sep-13 24.67 1.65 1.67 2.79

10 13-Sep-13 24.05 -2.51 -2.49 6.2011 14-Sep-13 24.23 0.75 0.77 0.6012 17-Sep-13 24.05 -0.74 -0.72 0.5213 18-Sep-13 24.36 1.29 1.31 1.7214 20-Sep-13 24.64 1.15 1.17 1.3715 21-Sep-13 24.85 0.85 0.88 0.7716 24-Sep-13 25.41 2.25 2.28 5.1817 25-Sep-13 25.44 0.12 0.14 0.0218 26-Sep-13 25.19 -0.98 -0.96 0.9219 28-Sep-13 24.76 -1.71 -1.68 2.84

MEAN -0.02 VAREANCE 3.84 1.96

GRAPHICAL REPRESENTATION

The above graph represents the returns of KOTAK income fund it shows that there is

continuous rise and fall in net asset value. If we see the table the monthly mean is -0.02

with price variation of 3.84 and risk factor being 1.96 Thus it can be said that risk is very

high when compared to returns.

GRAPHICAT REPRESENTATION OF RETURNS OF KOTAK INCOME FOND FOR THE

MONTH OF SEP-2013

-6.00

-4.00

-2.00

0.00

2.00

4.00

1 3 5 7 9 11 13 15 17 19 Series1

64

RETURNS, VARIANCE, AND STANDARD DEVIATION, OF KOTAK INCOMEFUNDS FOR THE MONTH OF OCT-2013

S.NO Date NAV RETURN (X-XBAR) (X-XBAR)2 SD1 2-Oct-13 24.07 -2.79 -3.26 10.642 3-Oct-13 24.26 0.79 0.31 0.103 4-Oct-13 24.39 0.54 0.06 0.004 5-Oct-13 24.65 1.07 0.59 0.355 8-Oct-13 25.29 2.60 2.12 4.506 10-Oct-13 25.41 0.47 0.00 0.007 11-Oct-13 25.43 0.08 -0.40 0.168 12-Oct-13 25.3 -0.51 -0.99 0.979 15-Oct-13 26.01 2.81 2.33 5.44

10 16-Oct-13 26.55 2.08 1.60 2.5611 17-Oct-13 26.23 -1.21 -1.68 2.8212 18-Oct-13 26.24 0.04 -0.44 0.1913 19-Oct-13 26.33 0.34 -0.13 0.0214 22-Oct-13 26.91 2.20 1.73 2.9915 23-Oct-13 26.89 -0.07 -0.55 0.3016 24-Oct-13 27.43 2.01 1.53 2.3517 25-Oct-13 27.59 0.58 0.11 0.0118 26-Oct-13 27.55 -0.14 -0.62 0.3819 29-Oct-13 27.04 -1.85 -2.33 5.41

MEAN 0.47 VAREANCE 2.06 1.44

The above graph represents the returns of KOTAK income fund it shows that there is

continuous rise and fall in net asset value. If we see the table the monthly mean is 0.47

with price variation of 2.06 and risk factor being 1.44 Thus it can be said that risk is very

high when compared to returns.

GRAPHICAL REPRESENTATION OF RETURNS OF KOTAK INCOME FOND FOR THE

MONTH OF OCT-2013

-4.00

-3.00

-2.00

-1.00

0.00

1.00

2.00

3.00

4.00

1 3 5 7 9 11 13 15 17 19Series1

65

RETURNS, VARIANCE, AND STANDARD DEVIATION, OF KOTAK INCOMEFUNDS FOR THE MONTH OF NOV-2013

S.NO Date NAV RETURN (X-XBAR) (X-XBAR)2 SD1 1-Nov-13 27.59 2.03 1.55 2.412 2-Nov-13 27.35 -0.87 -1.35 1.823 5-Nov-13 27.19 -0.59 -1.07 1.134 6-Nov-13 26.99 -0.74 -1.22 1.485 8-Nov-13 27.26 1.00 0.52 0.276 9-Nov-13 27.15 -0.40 -0.88 0.787 12-Nov-13 27.33 0.66 0.18 0.038 13-Nov-13 27.77 1.61 1.13 1.289 15-Nov-13 27.9 0.47 -0.01 0.00

10 16-Nov-13 28.59 2.47 1.99 3.9711 19-Nov-13 28.94 1.22 0.74 0.5512 20-Nov-13 28.94 0.00 -0.48 0.2313 21-Nov-13 29.24 1.04 0.56 0.3114 22-Nov-13 29.36 0.41 -0.07 0.0015 23-Nov-13 29.07 -0.99 -1.47 2.1616 26-Nov-13 28.83 -0.83 -1.31 1.7117 27-Nov-13 29.04 0.73 0.25 0.0618 29-Nov-13 29.38 1.17 0.69 0.4819 30-Nov-13 29.59 0.71 0.23 0.05

MEAN 0.48 VAREANCE 0.99 0.99

GRAPHICAL REPRESENTATION

The above graph represents the returns of KOTAK income fund it shows that there is

continuous rise and fall in net asset value. If we see the table the monthly mean is 0.48

with price variation of 0.99 and risk factor being 0.99 thus it can be said that risk is very

high when compared to returns.

GRAPHICAL REPRESENTATION OF RETURNS GOF KOTAK INCOME FOND FOR THE

MONTH OF NOV-2013

-1.50-1.00-0.500.000.501.001.502.002.503.00

1 3 5 7 9 11 13 15 17 19

Series1

66

RETURNS, VARIANCE, AND STANDARD DEVIATION, OF KOTAK INCOMEFUNDS FOR THE MONTH OF DEC-2013

S.NO Date NAV RETURN (X-XBAR) (X-XBAR)2 SD1 3-Dec-13 29.7 0.37 0.24 0.062 4-Dec-13 29.49 -0.71 -0.84 0.713 5-Dec-13 29.62 0.44 0.31 0.094 6-Dec-13 28.87 -2.53 -2.67 7.115 7-Dec-13 28.62 -0.87 -1.00 1.006 10-Dec-13 28.35 -0.94 -1.08 1.167 11-Dec-13 28.42 0.25 0.11 0.018 12-Dec-13 28.19 -0.81 -0.94 0.899 13-Dec-13 28.08 -0.39 -0.52 0.28

10 14-Dec-13 28.71 2.24 2.11 4.4511 17-Dec-13 28.75 0.14 0.00 0.0012 18-Dec-13 28.67 -0.28 -0.41 0.1713 19-Dec-13 29.18 1.78 1.64 2.7014 20-Dec-13 29.69 1.75 1.61 2.6015 21-Dec-13 30.04 1.18 1.04 1.0916 24-Dec-13 30.12 0.27 0.13 0.0217 26-Dec-13 30.21 0.30 0.16 0.0318 28-Dec-13 30.4 0.63 0.49 0.2419 31-Dec-13 30.32 -0.26 -0.40 0.16

MEAN 0.13 VAREANCE 1.20 1.09

GRAPHICAL REPRESENTATION

The above graph represents the returns of KOTAK income fund it shows that there is

continuous rise and fall in net asset value. If we see the table the monthly mean is 0.13

with price variation of 1.20 and risk factor being 1.09 Thus it can be said that risk is very

high when compared to returns.

GRAPHICAL REPRESENTATION OF RETUNS OF KOTAK INCOME FOR THE MONTH

OF DEC-2013

-3.00

-2.00

-1.00

0.00

1.00

2.00

3.00

1 3 5 7 9 11 13 15 17 19Series1

67

RETURNS, VARIANCE, AND STANDARD DEVIATION, OF TATA INCOMEFUNDS FOR THE MONTH OF JULY-2013

S NO Date NAV RETURN (X-XBAR) (X-XBAR)2 SD1 2-July-13 11.1 0.91 0.75 0.572 3-July-13 11.22 1.08 0.93 0.863 4-July-13 11.19 -0.27 -0.42 0.184 5-July-13 11.13 -0.54 -0.69 0.485 6-July-13 11.03 -0.90 -1.05 1.116 9-July-13 10.91 -1.09 -1.24 1.547 10-July-13 10.81 -0.92 -1.07 1.158 11-July-13 10.92 1.02 0.86 0.759 12-July-13 11.05 1.19 1.04 1.07

10 13-July-13 11.12 0.63 0.48 0.2311 16-July-13 11.15 0.27 0.12 0.0112 17-July-13 11.23 0.72 0.56 0.3213 18-July-13 11.33 0.89 0.74 0.5414 19-July-13 11.28 -0.44 -0.60 0.3515 20-July-13 11.33 0.44 0.29 0.0816 23-July-13 11.17 -1.41 -1.57 2.4517 24-July-13 11.24 0.63 0.47 0.2218 25-July-13 11.32 0.71 0.56 0.3119 29-July-13 11.32 0.00 -0.15 0.02

MEAN 0.15 VAREANCE 0.64 0.80

GRAPHICAL REPRESENTATION

The above graph represents the returns of TATA income fund it shows that there is

continuous rise and fall in net asset value. If we see the table the monthly mean is 0.15

with price variation of 0.64 and risk factor being 0.80 thus it can be said that risk is very

high when compared to returns.

RETURNS, VARIANCE, AND STANDARD DEVIATION, OF TATA INCOME

GRAPHICAL REPRESENTATION OF RETURNS OF TATA INCOME FUND FOR THE

MONTH OF July-2013

-2.00

-1.50

-1.00

-0.50

0.00

0.50

1.00

1.50

1 3 5 7 9 11 13 15 17 19 Series1

68

FUNDS FOR THE MONTH OF AUG-2013

S NO Date NAV RETURN (X-XBAR) (X-XBAR)2 SD1 1-Aug-13 11.32 0.00 0.48 0.232 2-Aug-13 11.47 1.33 1.80 3.263 3-Aug-13 11.49 0.17 0.65 0.434 6-Aug-13 11.44 -0.44 0.04 0.005 7-Aug-13 11.53 0.79 1.27 1.606 8-Aug-13 11.51 -0.17 0.31 0.097 9-Aug-13 11.28 -2.00 -1.52 2.318 10-Aug-13 10.87 -3.63 -3.16 9.969 13-Aug-13 10.82 -0.46 0.02 0.00

10 14-Aug-13 10.83 0.09 0.57 0.3311 17-Aug-13 11.1 2.49 2.97 8.8312 21-Aug-13 11.12 0.18 0.66 0.4313 22-Aug-13 11.06 -0.54 -0.06 0.0014 23-Aug-13 11 -0.54 -0.06 0.0015 26-Aug-13 10.91 -0.82 -0.34 0.1116 27-Aug-13 10.7 -1.92 -1.45 2.0917 28-Aug-13 10.77 0.65 1.13 1.2818 29-Aug-13 10.74 -0.28 0.20 0.0419 31-Aug-13 10.31 -4.00 -3.52 12.42

MEAN -0.48 VAREANCE 2.29 1.51

GRAPHICAL REPRESENTATION

The above graph represents the returns of TATA income fund it shows that there is

continuous rise and fall in net asset value. If we see the table the monthly mean is -0.48

with price variation of 2.29 and risk factor being 1.51 thus it can be said that risk is very

high when compared to returns.

GRAPHICAL REPRESENTATION OF RETURNS OF TATA INCOME FUND FOR THE

MONTH OF AUG-2013

-5.00

-4.00

-3.00

-2.00-1.00

0.00

1.00

2.00

3.00

1 3 5 7 9 11 13 15 17 19 Series1

69

RETURNS, VARIANCE, AND STANDARD DEVIATION, OF TATA INCOMEFUNDS FOR THE MONTH OF SEP-2013

S NO Date NAV RETURN (X-XBAR) (X-XBAR)2 SD1 3-Sep-13 10.44 1.26 1.26 1.602 4-Sep-13 10.34 -0.96 -0.95 0.913 5-Sep-13 9.94 -3.87 -3.86 14.934 6-Sep-13 9.98 0.40 0.41 0.175 7-Sep-13 9.84 -1.40 -1.40 1.966 9-Sep-13 10.1 2.64 2.65 7.007 10-Sep-13 10.06 -0.40 -0.39 0.158 11-Sep-13 10.07 0.10 0.10 0.019 12-Sep-13 10.19 1.19 1.20 1.43

10 13-Sep-13 9.99 -1.96 -1.96 3.8411 14-Sep-13 10.02 0.30 0.30 0.0912 17-Sep-13 9.91 -1.10 -1.09 1.2013 18-Sep-13 10.02 1.11 1.11 1.2414 20-Sep-13 10.12 1.00 1.00 1.0015 21-Sep-12 10.21 0.89 0.89 0.8016 24-Sep-13 10.4 1.86 1.86 3.4817 25-Sep-13 10.49 0.87 0.87 0.7618 26-Sep-13 10.43 -0.57 -0.57 0.3219 28-Sep-13 10.28 -1.44 -1.43 2.06

MEAN 0.00 VAREANCE 2.26 1.50

GRAPHICAL REPRESENTATION

The above graph represents the returns of TATA income fund it shows that there is

continuous rise and fall in net asset value. If we see the table the monthly mean is 0.00

with price variation of 2.26 and risk factor being 1.50 thus it can be said that risk is very

high when compared to returns.

GRAPHICAL REPRESENTATION OF RETURNS OF TATA INCOME FUND FOR THE

MONTH OF SEP-2013

-5.00

-4.00-3.00

-2.00-1.00

0.00

1.002.00

3.00

1 3 5 7 9 11 13 15 17 19 Series1

70

RETURNS, VARIANCE, AND STANDARD DEVIATION, OF TATA INCOMEFUNDS FOR THE MONTH OF OCT-2013

S NO Date NAV RETURN (X-XBAR) (X-XBAR)2 SD1 2-Oct-13 9.98 -2.92 -3.23 10.452 3-Oct-13 10.05 0.70 0.39 0.153 4-Oct-13 10.09 0.40 0.08 0.014 5-Oct-13 10.18 0.89 0.58 0.335 8-Oct-13 10.4 2.16 1.85 3.416 10-Oct-13 10.48 0.77 0.45 0.217 11-Oct-13 10.56 0.76 0.45 0.208 12-Oct-13 10.54 -0.19 -0.50 0.259 15-Oct-13 10.72 1.71 1.39 1.94

10 16-Oct-13 10.83 1.03 0.71 0.5111 17-Oct-13 10.79 -0.37 -0.68 0.4712 18-Oct-13 10.79 0.00 -0.31 0.1013 19-Oct-13 10.81 0.19 -0.13 0.0214 22-Oct-13 10.88 0.65 0.33 0.1115 23-Oct-13 10.85 -0.28 -0.59 0.3516 24-Oct-13 11.00 1.38 1.07 1.1417 25-Oct-13 11.09 0.82 0.50 0.2518 26-Oct-13 11.01 -0.72 -1.04 1.0719 29-Oct-13 10.9 -1.00 -1.31 1.73

MEAN 0.31 VAREANCE 1.19 1.09

GRAPHICAL REPRESENTATION

The above graph represents the returns of TATA income fund it shows that there is

continuous rise and fall in net asset value. If we see the table the monthly mean is 0.31

with price variation of 1.19 and risk factor being 1.09 thus it can be said that risk is very

high when compared to returns.

GRAPHICAL REPRESENTATION OF RETURNS OF TATA INCOME FUND FOR THE

MONTH OF OCT-2013

-4.00

-3.00

-2.00

-1.00

0.00

1.00

2.00

3.00

1 3 5 7 9 11 13 15 17 19 Series1

71

RETURNS, VARIANCE, AND STANDARD DEVIATION, OF TATA INCOMEFUNDS FOR THE MONTH OF NOV-2013

S NO Date NAV RETURN (X-XBAR) (X-XBAR)2 SD1 1-Nov-13 11.21 2.84 2.30 5.282 2-Nov-13 11.32 0.98 0.44 0.193 5-Nov-13 11.27 -0.44 -0.99 0.974 6-Nov-13 11.18 -0.80 -1.34 1.815 8-Nov-13 11.26 0.72 0.17 0.036 9-Nov-13 11.34 0.71 0.16 0.037 12-Nov-13 11.41 0.62 0.07 0.018 13-Nov-13 11.56 1.31 0.77 0.599 15-Nov-13 11.53 -0.26 -0.81 0.65

10 16-Nov-13 11.68 1.30 0.76 0.5711 19-Nov-13 11.75 0.60 0.05 0.0012 20-Nov-13 11.76 0.09 -0.46 0.2113 21-Nov-13 11.86 0.85 0.30 0.0914 22-Nov-13 11.92 0.51 -0.04 0.0015 23-Nov-13 11.91 -0.08 -0.63 0.4016 26-Nov-13 11.84 -0.59 -1.13 1.2817 27-Nov-13 11.9 0.51 -0.04 0.0018 29-Nov-13 12 0.84 0.29 0.0919 30-Nov-13 12.08 0.67 0.12 0.01

MEAN 0.55 VAREANCE 0.64 0.80

GRAPHICAL REPRESENTATION

The above graph represents the returns of TATA income fund it shows that there is

continuous rise and fall in net asset value. If we see the table the monthly mean is 0.55

with price variation of 0.64 and risk factor being 0.80 thus it can be said that risk is very

high when compared to returns.

GRAPHICAL REPRESENTATION OF RETURNS OF TATA INCOME FUND FOR THE

MONTH OF NOV-2013

-1.00-0.500.000.501.001.502.002.503.003.50

1 3 5 7 9 11 13 15 17 19

Series1

72

RETURNS, VARIANCE, AND STANDARD DEVIATION, OF TATA INCOMEFUNDS FOR THE MONTH OF DEC-2013

S NO Date NAV RETURN (X-XBAR) (X-XBAR)2 SD1 3-Dec-13 12.2 0.99 0.92 0.842 4-Dec-13 12.08 -0.98 -1.06 1.123 5-Dec-13 12.09 0.08 0.01 0.004 6-Dec-13 11.98 -0.91 -0.99 0.975 7-Dec-13 11.97 -0.08 -0.16 0.036 10-Dec-13 11.87 -0.84 -0.91 0.837 11-Dec-13 11.85 -0.17 -0.24 0.068 12-Dec-13 11.73 -1.01 -1.09 1.199 13-Dec-13 11.65 -0.68 -0.76 0.58

10 14-Dec-13 11.82 1.46 1.38 1.9111 17-Dec-13 11.9 0.68 0.60 0.3612 18-Dec-13 11.84 -0.50 -0.58 0.3413 19-Dec-13 11.95 0.93 0.85 0.7314 20-Dec-13 12.11 1.34 1.26 1.5915 21-Dec-13 12.17 0.50 0.42 0.1816 24-Dec-13 12.19 0.16 0.09 0.0117 26-Dec-13 12.23 0.33 0.25 0.0618 28-Dec-13 12.23 0.00 -0.08 0.0119 31-Dec-13 12.25 0.16 0.09 0.01

MEAN 0.08 VAREANCE 0.57 0.75

GRAPHICAL REPRESENTATION

The above graph represents the returns of TATA income fund it shows that there is

continuous rise and fall in net asset value. If we see the table the monthly mean is 0.08

with price variation of 0.57 and risk factor being 0.75 thus it can be said that risk is very

high when compared to returns.

GRAPHICAL REPRESENTATION OF RETURNS OF TATA INCOME FUND FOR THE

MONTH OF DEC-2013

-1.50

-1.00

-0.50

0.00

0.50

1.00

1.50

2.00

1 3 5 7 9 11 13 15 17

Series1

73

CORRELATION OF RETURNS BETWEEN KOTAK & TATA FROM JULY – 13 TO DECEMBER – 13

S.NO KOT(X) TATA(Y)X=(X-MEAN) Y=Y(-MEAN) X*Y x^2 Y^2

1 JUL 0.09 0.15 -0.02 0.05 0.00 0.00 0.002 AUG -0.54 -0.48 -0.64 -0.58 0.37 0.41 0.343 SEP -0.02 0.00 -0.13 -0.11 0.01 0.02 0.014 OCT 0.47 0.31 0.37 0.21 0.08 0.14 0.055 NOV 0.48 0.55 0.38 0.44 0.17 0.14 0.206 DEC 0.13 0.08 0.03 -0.02 0.00 0.00 0.00

mean X 0.10 ∑X ∑Y ∑XY ∑x^2 ∑Y^2mean Y 0.10 0.00 0.00 0.63 0.71 0.59

correlation∑XY 0.63∑X^2∑Y^2 0.42 0.65CORRELATION( r ) 0.97

GRAPHICAL REPRESENTATION OF KOTAK & TATA

74

CORRELATION OF RETURNS BETWEEN KOTAKTATAFROM JULY-13 TO DEC-13

-0.60-0.40

-0.200.000.20

0.400.60

1 2 3 4 5 6

KOT(x)

TATA(y)

The above graph represents the correlation between KOTAK & TATA; it reveals that there exists a positive correlation between both the companies in the half of the year. Here the correlation lies below 1 which indicates a good correlation, thus we can say that both the companies are going according to market conditions.

CORRELATION OF RETURNS BETWEEN KOTAK & ICICI FROM JULY – 13 TO DECEMBER – 13

S NO KOTAK ICICI X=(X-MEAN) Y=(Y-MEAN) X*Y X^2 Y^2

1 JUL 0.09 0.44 -0.02 0.30 0.00 0.00 0.092 AUG -0.54 -0.38 -0.64 -0.52 0.33 0.41 0.273 SEP -0.02 -0.02 -0.13 -0.17 0.02 0.02 0.034 OCT 0.47 0.37 0.37 0.22 0.08 0.14 0.055 NOV 0.48 0.34 0.38 0.20 0.07 0.14 0.046 DEC 0.13 0.11 0.03 -0.03 0.00 0.00 0.00

MEAN X 0.10 ∑X ∑Y ∑XY ∑X^2 ∑Y^2MEAN Y 0.14 0.00 0.00 0.51 0.71 0.48

CORRELATION

∑XY 0.51

∑X^2∑Y^2 0.34 0.581513842

CORRELATION( r ) 0.871275

GRAPHICAL REPRESENTATION OF KOTAK & ICICI

CORRELTION OF RETURNS BETWEEN KOTAK & ICICI FOR THE PERIOD OF JULY-13 TO DEC-13

-0.60

-0.40

-0.20

0.00

0.20

0.40

0.60

1 2 3 4 5 6

Series1

Series2

75

The above graph represents the correlation between KOTAK & ICICI; it reveals that

there exists a positive correlation between both the companies in the half of the year.

Here the correlation lies below 1 which indicates a good correlation, thus we can say that

both the companies are going according to market conditions.

CORRELATION OF RETURNS BETWEEN ICICI & TATA FROM JULY – 13 TO DECEMBER – 13

S NO ICICI TATA X=(X-MEAN) Y=(Y-MEAN) X*Y X^2 Y^21 JUL 0.44 0.15 0.30 0.05 0.02 0.09 0.002 AUG -0.38 -0.48 -0.52 -0.58 0.30 0.27 0.343 SEP -0.02 0.00 -0.17 -0.11 0.02 0.03 0.014 OCT 0.37 0.31 0.22 0.21 0.05 0.05 0.055 NOV 0.34 0.55 0.20 0.44 0.09 0.04 0.206 DEC 0.11 0.08 -0.03 -0.02 0.00 0.00 0.00

MEAN X 0.14 ∑X ∑Y ∑XY ∑X^2 ∑Y^2MEAN Y 0.10 0.00 0.00 0.47 0.48 0.59

CORRELATION

∑XY 0.47

∑X^2∑Y^2 0.28 0.532525268

CORRELATION( r ) 0.886362

GRAPHICAL REPRESENTATION OF ICICI & TATA

The above graph represents the correlation between ICICI & TATA; it reveals that there

exists a positive correlation between both the companies in the first of the year. Here the

CORRELTION OF RETURNS BETWEEN ICICI & TATA FOR THE PERIOD OF JULY -13 TO DEC -13

-1.00

-0.50

0.00

0.50

1.00

1 2 3 4 5 6

Series1

Series2

76

correlation lies below 1 which indicates a good correlation, thus we can say that both the

companies are going according to market conditions.

CHAPTER-V FINDINGS

SUGGESSIONS

CONCLUSIONS

BIBLIOGRAPHY

77

FINDINGS The correlation between ICICI & KOTAK; it reveals that there exists a positive

correlation between both the companies in the second half of the year. Here the

correlation lies below 1 which indicates a good correlation, thus we can say that

both the companies are going according to market conditions.

Correlation between ICICI & KOTAK; it reveals that there exists a positive

correlation between both the companies in the half of the year. Here the

correlation lies below 1 which indicates a good correlation, thus we can say that

both the companies are going according to market conditions.

The correlation between KOTAK & TATA; it reveals that there exists a positive

correlation between both the companies in the second half of the year. Here the

correlation lies below 1 which indicates a good correlation, thus we can say that

both the companies are going according to market conditions.

The correlation between KOTAK & TATA; it reveals that there exists a positive

correlation between both the companies in the half of the year. Here the

correlation lies below 1 which indicates a good correlation, thus we can say that

both the companies are going according to market conditions

The correlation between ICICI & TATA; it reveals that there exists a positive

correlation between both the companies in the second half of the year. Here the

correlation lies below 1 which indicates a good correlation, thus we can say that

both the companies are going according to market conditions.

The correlation between ICICI & TATA; it reveals that there exists a positive

correlation between both the companies in the half of the year. Here the

78

correlation lies below 1 which indicates a good correlation, thus we can say that

both the companies are going according to market conditions

CONCLUSION

In the six month July - dec there exists a positive correlation between kotak

&Tata ( 0.97)

In the first half year July - dec there exists a positive correlation between kotak

&icici (0.871275)

In the first six month July - dec there exists a positive correlation between icici

&Tata (0.886362)

79

SUGGESTIONS

Select your investments on economic grounds.

Buy stock with a disparity and discrepancy between the situation of the firm - and

the expectations and appraisal of the public (Contrarian approach vs. Consensus

approach).

Buy stocks in companies with potential for surprises.

Take advantage of volatility before reaching a new equilibrium.

Don’t put your trust in only one investment. It is like “putting all the eggs in one

basket “. This will help lessen the risk in the long term.

The investor must select the right advisory body which is has sound knowledge

about the product which they are offering.

Professionalized advisory is the most important feature to the investors.

Professionalized research, analysis which will be helpful for reducing any kind of

risk to overcome.

80

BIBILOGRAPHY

1.SECURITY ANALYSIS AND PORTFOLIO MANAGEMENT-donald.E.Fisher,Ronald.J.Jordan

2.INVESTMENTS -William .F.Sharpe,gordon,J Allexander and Jeffery.V.Baily 3.PORTFOLIOMANAGEMENT -Strong R.A

WEB REFERENCES

http;//www.nseindia.com

http;//www.bseindia.comhttp;//www.economictimes.comhttp;//www.answers.comhttp;//www.ing.com

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