XAVIER INSTITUTE OF SOCIAL SERVICE

RANCHI
PGDM FINANCE-BATCH 2013-15
SUMMER INTERNSHIP PROJECT-SYNOPSIS
Presented by ANNESA CHAKRABORTY
Submitted to Professor A.R. BODRA


I.INTRODUCTION TO TOPIC & COMPANY PROFILE
Topic: Design & Analysis of Equity Portfolio

The term portfolio refers to any collection of financial assets such as stocks, bonds, and cash.
Portfolios may be held by individual investors and/or managed by financial professionals, hedge
funds, banks and other financial institutions. It is a generally accepted principle that a portfolio is
designed according to the investor's risk tolerance, time frame and investment objectives.
The monetary value of each asset may influence the risk/reward ratio of the portfolio and is
referred to as the asset allocation of the portfolio. When determining a proper asset allocation
one aims at maximizing the expected return and minimizing the risk. This is an example of
a multi-objective optimization problem: more "efficient solutions" are available and the preferred
solution must be selected by considering a tradeoff between risk and return.
COMPANY PROFILE
RELIGARE ENTERPRISES LIMITED

Initially RELIGARE ENTERPRISES LTD.(REL) was a stock brokerage firm called Religare Securities
Ltd. (RSL) and was admitted to the National Stock Exchange (NSE) in 1994. In 2000, it secured
membership of the Futures and Options segment of the NSE and also registered with National Securities
Depository Limited (NSDL) as a depository participant.
Religare Finvest, a group company, was founded in 2001 as a private non-banking financial institution.
RSL registered with Central Depository Services Limited (CDSL) as a depository participant in 2003. It
also became a stock broker at the Bombay Stock Exchange (BSE) in 2004. In the same year, Religare
Commodities Ltd., a commodities broking company, started operations as a trading cum clearing
member at both the Multi Commodity Exchange (MCX) and the National Commodity and Derivatives
Exchange (NCDEX).
An office was established in London in 2006. Religare announced a joint venture with Macquarie Bank
Ltd. in October 2007 to expand its wealth management business. REL went public with an initial public
offering of its stock in November, 2007. AEGON Religare, a life insurance joint venture between
AEGON, Religare and Bennett, Coleman & company, launched its pan-India operations in 2008. Religare
Asset Management Company was formed on the back of Religares acquisition of Lotus India AMC from
majority shareholders, Alexandra Fund Management. Religare Capital Markets and Religare Global Asset
Management were formed for international expansion. Religare Health Insurance Company Limited
started operations in the year 2012.
Religare runs an Investor Awareness Program which, through a number of awareness and education led
initiatives, helps people understand the economy and the financial markets. One of such investor
education initiative is www.smarterwithmoney.in portal. It partners with the Save LIFE Foundation, a
non- profit NGO that focuses on bystander care for road accident victims in India, the Akshaya Patra
Foundation, a school meal program to facilitate the education of underprivileged children in India, and the
SOS Childrens Villages of India which provides care to orphaned children.
II. LITERATURE REVIEW
In this section we will review the aspects of portfolio Analysis.
The practice of managing a portfolio of projects was initially crafted after the concepts of Financial
Portfolio Management. However gradually and continually, it has evolved into a separate entity which
deals with the specifies of a Project Management Environment. Portfolio Theory was introduced by
Harry Markowitz (1952) with his paper on Portfolio selection. Before this work individuals focused on
the risks and benefits of individual securities. Investment analysts identified securities that offered the
most promising opportunities with gain of a least amount of risk and then construction of a portfolio
from the securities.
Markowitz instead suggested that investors focus on selecting portfolios based on their overall risk
characteristics, rather than only compiling portfolio from securities that had attractive risk reward
characteristics. Markowitz noted that if single period returns for various securities were treated as
random variables, they could be assigned expected values, standard deviations and correlation. This
lead to the ability to calculate the expected return and volatility of any Portfolio constructed with
securities. in 1981,
McFarland provided the basis for the modern field of PPM for IT projects. According to McFarland,
management should also employ a risk-based approach to the selection and management of IT project
portfolios. He observed that risk-unbalanced portfolios could lead an organization to suffer operational
disruptions, or leave gaps for competitors to step in.

In 1992, Wheelwright and Clark developed a framework for categorizing projects that they called the
Aggregate Project Plan. This plan allows for an overview of the project portfolio along two dimensions,
(1) the extent of changes made to the product, and (2) the degree of process change, leading to four
categories of projects (in increasing order of change): derivative projects, platform projects,
breakthrough projects and R&D projects. This framework can be used to identify gaps in the portfolio, or
potential resource shortages.
PPM objectives and scope: The majority of literature in the PPM field provides similar lists of objectives
to be achieved through the adoption of PPM approaches. Five main goals Dominate the literature,
namely (1) defining goals and objectives, i.e. clearly Articulating what the portfolio is expected to
achieve, (2) understanding, accepting, and Making trade-offs, (3) identifying, eliminating, minimizing and
diversifying risk, (4) monitoring Portfolio performance, i.e. understanding the progress that portfolio is
making towards the Achievement of the goals and objectives and (5) establishing confidence in
achieving a Desired objective.
III. METHODOLOGY
There seems to be an agreement among experts that organisations are in different stages of the
adoption of PPM approaches, even when organizations do not explicitly and formally adopt them.It is to
believe that there are 5 levels of PPM adoption from the simplest to the more complex:
1. Put all projects in one database;
2. Prioritize the projects in the database;
3. Divide the projects into two or three budgets based on type of investment;
4. Automate the repository;
5. Apply Modern Portfolio Theory.
A. RESEARCH PROBLEM AND BASIC OBJECTIVES
Yet, benefits could be achieved at every level. At level 1, for example, the project overview allows
spotting redundancies. At level 2, prioritization allows for an improvement in the relationship between
business leaders and IT people, since the projects are seen as investments with economic value. At level
3, by separating projects by type, organizations can apply a more appropriate set of criteria to each type
of investments, facilitating the prioritization and selection process. At level 4, one of the main benefits
is to ensure that information will be updated when needed without people spending too much time
collecting it. Finally, level 5 provides a better balance between risk and reward. framework comprised
of three stages: 1. Defining 2. Managing 3. Optimizing
B. RESEARCH OBJECTIVES

The following research questions will be answered in this thesis with regards to active portfolio
management. The research objective of this thesis is to devise an investment strategy by assembling
diversified portfolio by altering positions of portfolio assets on a short-term basis The purpose of this
investigation is to determine whether return generated from such strategy is warranted by its
systematic market risk. In that regard, the aim is to determine whether active portfolio management is
more attractive than high performing benchmark investing on a long-term basis.
In order to accommodate the superior research objectives, a portfolio will be constructed, subjected to
active portfolio management and compared to the portfolios benchmark the following subordinate
research questions must be answered.
1. How does the mean-variance portfolio model conduct asset allocation in the context of active
portfolio management?
2. Does active portfolio management performance indicate investment skill on the part of the investor?
3. With regards to portfolio and benchmark systematic risk, does active portfolio management add value
to the investor?
C.HYPOTHESIS
Hypothesis 1:The adoption level of PPM processes and techniques varies across organisations, allowing
for classification of organisations according to their level of adoption. In addition, the PPM processes
and techniques adoptedby organizations having a higher adoption level are supersets in that they
comprise the processes and techniques also adopted by organisations in lower categories, but also
include more enhanced processes and methods.
Hypothesis 2 :Higher adoption levels of PPM methods and techniques results in fewer project related
problems, and increased value gained from information technology projects.
D. RESEARCH DESIGN AND SAMPLING
Areas to focus on theoretical framework:
Investment Strategy
Active Portfolio Management
Return and Risk Management
Portfolio Construction
Portfolio Performance Evaluation
Conclusion
Sampling : The vast majority of the respondents have a centralised view of its projects and have a
central point responsible for collecting, analysing and distributing information.
Interviews:
interviews were conducted in order to uncover relevant areas of study. Also, practical reviews were
applied, as some exercised concepts of investment theory carry universal definitions or conditions
for execution. Empirical and practical data have been obtained through interviews and consultation
with investment professionals, who provided relevant information, relating to the research
objective.
Data :
Equity Sector Return Data Sector Indices & Monthly Return
E. TOOLS AND TECHNIQUES OF RESEARCH ANALYSIS
A number of types of models and tools are needed to accomplish the
goals described.
Using Product Life Cycle Model
Various Portfolio Matrices
IV. EXPECTED OUTCOMES & FINDINGS
A set of projects that are related by sharing common objectives or client, or that are related
through interdependencies and common resources, PPM considers the entire portfolio of
projects a company is engaged in, in order to make decisions in terms of which projects are to
be given priority, and which projects are to be added to or removed from the portfolio.
Projects within program share a common, overarching objective and projects in portfolio share
the same set of resources
V. SUMMARY & CONCLUSION
It is selectively reviewed that the theoretical literature deal- ing with the analytical issues arising
from delegated portfolio management as a principal-agent re The fact that in a delegated
portfolio management setting the agent controls eort and can inuence risk makes it more
dicult for the principal to write incentive compatible contracts which are optimal from her
stand- point. In particular, we have shown how the fact that the portfolio manager can control
the scale of his response to the information signals in a linear (and potentially also nonlinear)
way makes the quest for an optimal linear (and perhaps also nonlinear) contract for the
principal very dicult. Indeed, this is a literature where negative results tend to prevail over
constructive.We have also seen how reputation concerns in a multi-period set- ting may aect
the incentives faced by portfolio managers and in some cases make the job of explicit incentives.
At the same time, reputation concerns may also have distortionary eects insofar as they may
lead managers to take on more risk or to discard private information and herd with the market,
none of which necessarily goes to the benet of investors. Finally, the literature has emphasised
that (implicit or ex- plicit) benchmarking might have signicant implications for asset prices and
volatilities at a macro level. Ones. relationship between an investor (the principal) and a
portfolio manager (the agent).