Part B PDF

EXECUTIVE SUMMARY
For every organisation, the Financial resource is of great asset the success and failure of any
organisation also depends on the performance of the organisation. For an organisation to
perform well, it should have a good Financial background. And the employees are must be
motivated towards achieving the common goal of the organisation.
The report focuses on the efficient construction of portfolio for the investors. The study was
conducted at Pentad Securities Pvt Ltd, Bangalore. The study helps in understanding the
volatility risk of the investors, by considering the various factors.
The objective is to examine the effect on risk and returns on investment and understand the
investors risk volatility. The sample size of the study were 80 respondents. The data for the
study was collected through Questionnaire method and the secondary source from Stock
Market.
CHAPTER - 1
INTRODUCTION
1.1 INTRODUDCTION TO INTERNSHIP:
The internship programme at Pentad Securities Pvt Ltd., gave me an opportunity to acquire
knowledge about various aspects of business such as, business techniques, administration
ability, marketing skills etc. The main purpose of the internship was to gain practical
knowledge related to our theoretical background at the work place. It also helped me to
understand the importance of team work and how it improves the efficiency of work in the
organisation. It also helps the students to share their views, thoughts, plans etc and execute
these ideas, which helps the students to experience the professional life. It also helps students
to learn about research based on their academics.
1.2 INDUSTRY PROFILE:

The Indian Financial Services sector has witnessed many changes since 1990. In the late 70’s
& 80’s, the Commercial Banks and other financial institutions are dominating the Indian
Financial services market, which were catering to the necessities of the Indian Industry. In
fact, the capital market also played a secondary role in development of industry. The
complete revolution within the Indian monetary services business has been bought through
Economic Liberalization.
Meaning of Financial Services:
Financial services are referred to the services, that are provided in the financial market. It
consists of a wide range of companies which deal with the administration of money. The
various sectors like banks, insurance companies, credit card companies, consumer finance
companies, stock brokerages, investment funds and some government sponsored enterprises
are included.
The financial services sector, or financial services, consist of a broad range of
companies and institutions dealing with money, including various other services.
Features of Financial Services:
➢ Customer Oriented.
➢ Intangibility.
➢ Simultaneous Performance.
➢ Dominance of Human element.
➢ Perishability.
Some of the New Monetary products and services are as follows:

• Merchant -Banking
• Loan- Syndication
• Leasing
• Mutual- Funds
• Factoring
• Forfeiting
• Venture Capital
• Corporate Advisory services
• Securitization
• New Products in Forex market- Forward contracts, Options, Futures & Swaps
• Letter of Credit
History of Financial Services:
Monetary industry is the fastest growing, competitive, complex industry which has Potential.
This industry is vital as it has direct effect on the organization development and also the
economy of our country. Indian financial industry is in process of rapid transformation. It
helps in improving the productivity and efficiency of the country. Financial administration is
needed in every organization at all the stages as it helps to reduce the organization’s expenses
while improving the client’s nature on decision & administration.
Indian Scenario of Financial Service Industry:

The Indian Financial sector was underdeveloped by many aspects, which weakened the
progress of this sector, before the Economic Liberalisation. Some of the important factors
were:
• Extreme control by the government, by laying down many regulations on interest
rates, money rates etc.
• Numerous gearshifts on the prices of securities through the erstwhile controller of
capital issues.
• Lack of Financial tools to a large extent.
• Non-appearance of independent agencies like credit rating agencies & credit research
agencies.
• Strict regulations by the foreign exchange market with more boundaries on foreign
savings and also on the foreign equity holder by the Indian companies.
• Lack of data about foreign developments by the Indian financial sector.
• Absenteeism of Developed Securities market by Government & the presence of
motionless capital market are deprived of much reformation.
• Non-availability of Debt instruments on a Large Scale.
Indian Financial System:

It refers to a system that enables the flow of reserves from the households i.e., savers
to business firms i.e., investors to encourage in wealth creation and also in the development
of economy.
According to Robinson, Financial system refers “to deliver a relationship between reserves
and investment for wealth creation and to allow portfolio modification in the arrangement of
existing wealth”.
The major players are:
➢ The individuals.
➢ The firms or corporates.
➢ Government.
➢ Regulators.
➢ Market intermediaries.
SEBI:
The “Securities and Exchange Board of India” was recognized in 1992 in accordance
with the provisions of the ‘Securities and Exchange Board of India Act’, 1992.
Role of SEBI:
➢ To safeguard the investors interest and promote & regulate the growth of the
securities market.
➢ To control the corporate in stock exchanges
➢ To incorporate and control the working of stock brokers, sub – brokers, share transfer
agent etc.
➢ To register and regulate the working of venture capital funds, mutual funds etc.
➢ To enhance the investor’s education and training mediators.
➢ To promote & regulate self-regulatory organisations
➢ To prohibit deceitful and unfair trade practices
➢ To call for information from various departments and other persons associated with
the securities market.
Reserves/Expansions:
• The reserves made by the Foreign Portfolio Investors (FPIs) in our Indian investment
markets have stretched Rs 6,310 crore till November 22, 2018.
• By October 2018, the ‘Financial Inclusion Lab’ was able to select 11 fintech
innovators which have a savings of US$ 9.5 million, sponsored by the IIM-
Ahmedabad's Bharat Inclusion Initiative (BII) along with many other companies like
JP Morgan, the Bill and Melinda Gates Foundation, and Michael and Susan Dell
Foundation.
• The Private Equity funds and Venture Capital funds have stretched US$ 25.20 billion
from January to October 2018.
Way Ahead:
• India today has been recognised as one of the liveliest global economies, on the basis
of strong banking and insurance segments. The amendment made through Foreign
investment rules has witnessed a optimistic response in the insurance sector jointly
with many other companies, with the plans to increase stakes in joint ventures with
the Indian companies.
• The “Association of Mutual Funds in India” (AMFI) has now started aiming at nearly
fivefold progress through funds under management up to Rs 95 lakh crore and more
than 3 times progress in investors’ accounts of about 130 millions by 2025.
• India's advance mobile wallet industry has projected to progress at a Compound
Annual Growth Rate (CAGR) of 150% to reach US$ 4.4 billion by 2022.
However, after the Economic Liberalization, the whole financial sector has witnessed lot of
changes and now people/investors are witnessing the development of new and innovative
financial services and products almost every day. Thus, the current scenario consists of
financial innovation and financial creativity.
1.3 COMPANY PROFILE
Pentad Securities Pvt Ltd was started with an aim of providing multi -dimensional services to
investors. It is not just a broker providing services, but are partners of investors and
enfranchise them to create wealth through various financial services and products viz Equity,
Derivatives, Currency Derivatives and Mutual Fund.
The promoters of this company started their journey in the financial markets by associating
with various brokerage firms. After a decade of relevant experience and knowledge, they
took on the initiative of spreading key equity-related insights amongst investors. With this
thought, the birth of Pentad Securities came into existence, which in a short span of time,
became a recognized brokerage firm with “Bombay Stock Exchange and National Stock
Exchange” of India. Research being the core strength of Pentad, they have acquired an
Investment advisory license from SEBI. Today, Pentad deals in equity and derivatives, and
cater to domestic as well as HNI and NRI clients.
1.4 Nature of Business:
Nature of Business Finance
Stockhathon Academy Pvt Ltd

Additional Business
7Hills Printers and Publishers.
Company CEO Nikhil Gopalakrishnan
Level 4, 32nd E Cross Rd, Next -Bharath Petroleum, 4th T Block East,
Registered Address
Jayanagar, Bengaluru - 560 041, Karnataka, India
Industry Financial Services
Total Number of Employees 150 employees.
Year of Formation 2012
Legal Status of the Firm Private Limited
Company Category Company Limited by Shares
Company Sub- Category Non- Government Company
1.5 VISION:
“To be a preferred financial partner in wealth creation for our clients.”
1.6 MISSION:
➢ “Adding new clients to capital market.

➢ Promoting long – term and discipline investment.
➢ Developing Entrepreneurship”.
1.7 VALUES:
“A good company culture creates happier employees & when this culture becomes
a part of a person core value system at work the results are revolutionary. At Pentad
Securities, we aim to imbibe such values.
Our five START values are the bedrock of our organization:

• Speed– Act with speed to deliver desired results.
• Team– Be a team player and leader in all situations. Always put team before
individual.
• Accountability– Take ownership of your actions in all situations. Be answerable to
your commitments.
• Results Matter – Evaluate performance only with results. Results must
be measurable and driven by numbers.
• Trust– Be knowledgeable and service oriented, and be trustworthy among all stake
holders”.
1.8 SEVICE PROFILE:

• Broking Services.
• Investment Advisory Services.
• Equity SIP.
• Mutual Funds.
• Research Services.
• Portfolio Management.
• Futures and Options (Derivatives).
1.9 AREA OF OPERATION:

The company operates in different branches across India, they are:
• Mumbai.
• Bangalore.
• Cochin.
• Calicut.
• Kasargoud.
• Hyderabad.
1.10 OWNERSHIP PATTERN:
BOARD OF DIRECTORS
NAME DESIGNATION
Sajid Ahamed Chairman and Managing Director.
Praveen Pathiyil Co-Founder and Chief Investment Officer.
Nikhil Gopalakrishnan Chief Executive Officer
Abhisanker P S Director
Kallatra Ahammed Rafi Director
1.11 COMPETITORS INFORMATION:

➢ Sharekhan Ltd.
➢ Motilal Oswal Securities Ltd.
➢ Kotak Securities Ltd.
➢ JM Financials Ltd.
➢ Zerodha.
➢ Sharekhan Ltd:
Sharekhan has been recognised as one of the biggest impartial retail brokerages
in India, also the 3rd largest firm, in terms of customer base by putting back ICICI Direct and
HDFC Securities. It has pioneered itself in online trading. The company is also engaged in
offering a wide range of financial services and products, including various securities such as
brokerage, mutual fund distribution, loan against shares, ESOP financing, IPO financing and
wealth management.
➢ Motilal Oswal Securities Ltd:
Motilal Oswal Securities Ltd also provides financial services. This company
offers- private wealth and asset management, retail broking and distribution, investment
banking, private equity, principal strategies, and home finance. Motilal Oswal Securities Ltd
mainly concentrate on serving customers in India.
➢ Kotak Securities Limited:
Kotak Securities Ltd is also engaged in offering stock broking services in India.
The company prominently functions in two segments namely, Broking and Other Related
Activities; & Trading and Principal Investments. It also offers other secondary market
broking services, such as cash equity, equity and currency derivative, mutual fund, initial
public offering, exchange trading fund, bond, gold exchange trading fund, stock lending and
borrowing mechanism, and future, as well as online trading services. The company is also
engaged in providing portfolio management services; and depository participant services.
Adding to this, it also offers various products of primary market and insurance. Currently, the
company is operating through a network of 1,281 branches and satellite offices.
➢ JM Financials Limited:
JM Financial Ltd has been considered as one of the India’s projecting financial
services groups, engaged in offering a variety of businesses to companies, financial
establishments, retail investors, high net-worth individuals. The company is also known for
their diverse businesses like Investment Banking, Equity, Debt, Commodity Sales, Wealth
Management, Portfolio Management Services, Asset Management, Financing and Lending
and Housing Finance.
The company has also been pioneered in framing several strategies, for a broad client base,
which has been spread across India and thus the company has advanced great experience and
expertise. Each and every idea established by the company is considered to be unique,
catering to the needs of the customer and also supported by their superior execution to render
extreme benefits.
The company has equipped a skilled professional, who bring in diverse talents, information
and involvement to the workplace, by greatly contributing to the development of the
businesses. Currently, the company is honored to be recognized by several national and
international accolades leading to insightful guidance and implementation of skills. Thus,
they are now striving hard to return back to the society, what they have received by them, by
supporting various issues related to various sectors like education, health care, skill
development, entrepreneurship promotion, disaster relief and animal welfare.
➢ Zerodha:
It is one of the prominent Indian financial service company, a associate

of NSE, BSE, MCX, MCX-SX, engaged in offering trade and formal broking services,
trading of currencies and commodities, benefits of mutual funds, and bonds etc. The company
is also well recognized for its new discount pricing model and technology, implemented in
the company for the first time. It has its physical presence in all major Indian cities, with its
headquarters at Bangalore.
As of 2019, Zerodha Ltd has been considered as one of the major retail stock broker firm in
India by its dynamic client base, and also witnessed in contributing upwards of 10% of its
daily trade volumes across Indian stock exchanges.
1.12 ACHIEVEMENTS:
➢ Pentad Securities Pvt Ltd has been the most trusted management company among the
investors group since 2012.
➢ It’s wide presence among south region with B2B model has helped to grow rapidly
and face competition.
1.13 INFRASTRUCTURAL FACILITIES:

➢ Located at Cochin, Kerala.
➢ 2500 sq. ft built in area with ample garden area and cafeteria.
➢ IAS certified.
➢ Good trading platform.
➢ Financial wealth check-up for employees.
➢ Clean rooms for employees.
➢ Classroom Training for employees.
1.14 SWOT ANALYSIS:
SWOT analysis refers to a framework, which is used by the company to analyse a

company’s competitive position by recognising its Strengths, Weakness, Opportunities and
Threats in the market. Precisely, SWOT analysis is considered as a foundational assessment
model in the, market, which is used by the companies to measure- what an organisation can
do and cannot do, by identifying its potential opportunities and threats.
STRENGTHS:
➢ First stock broker company across India to acquire Investment Advisory Service
(IAS) Licence.
➢ Certified Research support team to handle client’s intimation or call confirmation for
trading.
➢ Total turnover of Rs 700/- crores.
➢ Strong Technical Support.
➢ Customer Loyalty.
WEAKNESS:
➢ Lack of sales penetration.

➢ Lack of market penetration.
OPPORTUNITIES:
➢ Adding new clients to capital markets.

➢ Introducing new products (as per client’s financial goals).
➢ Customer/clients opportunities.
THREATS:
➢ Tough competition in market.

➢ Stringent Government Policies.
➢ Change in customers preferences.
1.15 FUTURE GROWTH AND PROSPECTS:
➢ The future plan of the company is to acquire Portfolio Management Service license.
➢ Stair up-to Rs. 10,000/- crores of Asset Control Management.
➢ Developing new products such as short-term, mid-term and long-term products as per
client’s financial goals.
➢ Establishing an NBFC for Pentad Securities Pvt Ltd.
➢ Financial Wealth Camp to be benefited to minimum 25lakhs people for the financial
year 2019-20.
1.16 FINANCIAL STATEMENTS:
CHAPTER – 2
CONCEPTUAL BACKGROUNGD AND LITERATURE REVIEW
2.1 Theoretical Background of The Study:
Meaning of Portfolio Construction:
A portfolio is termed as a combination of various securities. This includes Stocks,

Money market instruments, Bonds and Government securities.
Portfolio Construction refers to the process of allocating the funds among a wide
assortment of financial assets, which are open for investment, by the investors. Portfolio
theory is also concerned itself with the values, which help in leading such allocations.
The main objective of the theory was to elaborate the principles, which govern in
minimising the risk, which are subjected to a return on the portfolio, at a desired level or to
maximize the return on investments, which are subjected to the constraint of a tolerable risk
level. Thus, the main basic objective of portfolio construction was to maximize yield and
minimize risk.
The 2 approaches of Portfolio Construction are:
1. Traditional Approach. and

2. Modern Approach.
1. Traditional Approach:
• It helps to determine the main aims of the portfolio.
• It helps in selecting the securities to be included in the portfolio.
Analyses of Constrains
Determination of Objectives
Selection of Portfolio
Assesment of risk and return
Diversification
2. Modern Portfolio:
It is also known as Markowitz Approach, under which the selection of
companies and assets are based on the market risk and return analysis. The investor
mainly expects return on his investment and the return may be in the form of market
return or dividend by minimising the risk.
Assumptions of Portfolio Construction:
• Investors are risk averse.

• Investors have full information about all the securities in the market.
• Investors try to estimate their risk, based on the of fluctuations of expected returns.
• Investors also take decisions to invest based on 2 factors namely – expected risk and
expected return.
• Investors have homogeneous expectations of risk and return.
Advantages of Portfolio Construction:
• Minimising risk of loss.

• Preserving Capital.
• Generating Returns.
Disadvantages of Portfolio Construction:
• Difficulty in defining product/market segments.

• Opportunities can be missed by establishing standard strategies.
• Delusion of scientific rigor.
• Value-laden terms.
2.2 LITERATURE REVIEW:
For a better understanding of the research by the researchers, regarding research

methodology used, limitations of the study & database, and logical interpretation and
reconciliation of the results, “Literature Review” acts as a guide.
Studies on Portfolio Construction for Mid-term and long- term:
Author: Brain. M. Rom and Kathleen. W. Ferguson
Published: 1989
Journal: AFIR International Colloquium
Topic: Post – Modern Portfolio Theory Comes of Age
The author in this article says that, the age of the investors matters a lot while
constructing an efficient portfolio. The article also reveals that people/ investors of young
group are the risk takers compared to the aged people. The portfolio is construct using
Markowitz model and CAPM model, keeping in mind the investors age and their risk bearing
ability. Thus, the research reveals that the investors age is a very important factor to be
considered, while constructing the portfolio.
Author: Jie Cai, Todd Houge

Published: 2000
Journal: CFA Institute.
Topic: Long term impact of Rusell 2000 index rebalancing.
In this research, the author found out that by buying and selling of portfolio helps
to perform better and also discloses that, by additions and deletions of small cap and
replacing them with mid-caps, helps to perform better and construct an efficient
portfolio using time series method and regression method.
Author: Momtchil Pojarliev, Wilfgang Polasek
Published: 2003
Journal: Financial Market and Portfolio Management.
Topic: Portfolio Construction by volatility forecast: does the Co- variance structure
matters?
The main purpose of the study was to analyse whether co-variance matter? And
to forecast volatility. They found the need for portfolio strategies to evaluate
performance using univariate modelling, multi- variate modelling, SD and t-tests.
Author: Riza Demirer, Ronald. R. Mau, and Catherine Shenoy
Published: 2006
Journal: Journal of Applied Finance
Topic: Bayesian Networks: A Tool of decision to Improve the Portfolio Risk Analysis
The study suggests how the Bayesian networks, a graphical modelling tool has
helped to analyse, forecast and suggest to construct a portfolio efficiently. In this
article, the author analyses the behaviour of the investors before constructing a
portfolio, by the data collected through a survey using questionnaire, considering the
Descriptive research method and Analytical research method. Thus, the survey helps to
improve the decision-making ability of the investors.
Author: Egon Kalotay, , Philip Gray, Judy Qiu, Karen- Benson
Published: 2008
Journal: Australian Journal of Management.
Topic: The Portfolio Construction and the performance measurement, when the
Returns are non-normal.
The purpose of this research was to measure the performance of portfolio and
explore the potential usefulness to the investors, by the recently – proposed portfolio
performance index of Stutzer over mean- variance theory and Sharpe’s ratio and
CAPM model.
Author: Micheal P Haydock
Published: 2008
Journal:
Topic: Portfolio Construction: The efficient diversification of marketing investment.
The purpose of the study was to analyse the strategic asset allocation theory and
also analyse different methods (data mining, multi-variate data) to formulate unique
investable asset classes. The author found out that the reduction in promotion activities
results in achieving an investment equilibrium state using Markowitz model and Co-
variance.
Author: Philip Saks, Jinhui Luo and Steve Satchell
Published: 2009
Journal: Journal of Asset Management
Topic: Implementing the Risk Appetite in the Management of Currency Portfolio
In this article, the author says that, analysing/ understanding the investors is
very essential to construct an efficient portfolio. The risk appetite of the investors helps
to understand their risk volatility and to select assets based on their risk to construct
portfolio using CAPM model. Thus, the article reveals that the risk appetite of the
investors plays a very important role in constructing an efficient portfolio.
Author: Jr., Eli Kraulis, John. B. Guerard, Manish Kumar
Published: 2012
Journal: The journal of investing.
Topic: Further Analysis of Efficient portfolios with the USER data.
The purpose of the study was to test the issue of Markowitz Mean - variance Portfolio
Construction and found out that the data produced statistically significant asset selection, to
construct an efficient portfolio using CAPM and Mean- Variance techniques.
Author: John.B. Guerard, Ganlin Xu, Jr., Harry Markowitz
Published: 2013
Journal: The Journal of Investing.
Topic: Global Stock selection modelling and the efficient portfolio construction and
modelling.
The purpose of the study was to identify the effect of using multi factor risk-
controlled portfolio returns, in order to reject the data mining through an effective usage of
Mean- variance model.
Author: Roger- Clarke,Steven Thorley, Harindra De Silva.
Published: 2013
Journal: The Journal of the Portfolio Management.
Topic: Risk parity, minimum variance and maximum diversification: An analytic

perspective.
The purpose of the study was to analyse the risk, diversification impact, while
constructing portfolio. In this article the author also provides solutions to risk- parity through
maximising- diversification and also minimising- variance portfolio using beta model/ CAPM
model.
Author: Jason. C. Hsu, Tzee-Man Chow, Feifei Li and Li-Lan Kuo.
Published: 2014
Journal: The Journal of Portfolio Management.
Topic: A study of the Low-Volatility Portfolio Construction Methods.
The research is conducted to analyse the investors risk volatility rate by conducting a
survey. The author here, in this article, explains the construction of an efficient portfolio, by
considering the beta values and risk-free returns and maximum market risk premium i.e., the
CAPM model. Thus, the article finally reveals that, an investors risk-volatility can be reduced
by considering the beta index of the stocks and by investing efficiently in that stocks, whose
index are in positive trend in the market.
Author: Jon R G M Lekander
Published: 2015
Journal: Journal of property investment and finance.
Topic: Real estate portfolio construction for a multi -asset portfolio.
The main objective of the research was to explore the effect of tenant demand and
market segmentation on real estate portfolio and found that the investors are benefited by
investing in real estate assets than other. The tool used here to measure is mean- variance
model.
Author: Kathryn Kaminski
Published: 2015
Journal: Modern Trader
Topic: All About Risk
In this article, the author explains that risk matters a lot while constructing an efficient
portfolio. The article also reveals that people/ investors of young group are the risk takers
compared to the aged people. The portfolio is construct using Markowitz model and CAPM
model, keeping in mind the investors age and their risk bearing ability. Thus, the research
reveals that the investors age is a very important factor to be considered, while constructing
the portfolio.
Author : Che Keong Lee

Published : 2016
Journal : The journal of wealth management.
Topic : The expected drawdown management: an ex- ante. Long -term approach to the
Portfolio Construction.
The objectives of the study were to determine a new portfolio construction for measuring
risk and to allocate volatility and produce a return profile to have risk – adjusted returns and
found that the approach enhanced the portfolio management process and improved the
likelihood of returns through Calmer ratio.
Author: Laxmi Kanta Giri
Published: 2016
Journal: Splint International journal of professionals.
Topic: Optimum portfolio construction using Markowitz model.
In this research, the purpose of the study was to construct an optimum portfolio and to
determine the weightage of each stocks in the portfolio, using Sharpe’s ratio and co-variance
and found out that the sectors (Maruti, Lupin, BPCL, Infratel and Hindustan Uniliver) to be
considered to construct an efficient portfolio.
Author: Arnav Sheth and Jivendra. K. Kale
Published: 2016
Journal: The Journal of Investing.

Topic: Power – Log Optimisation and Positively Skewed Option Returns, reduce Risk and
raise Portfolio Performance.
In this article, the author says that, by understanding the risk of securities and returns,
an efficient portfolio can be construct by using CAPM model. The main purpose of the study
was to understand the link between risk and returns associated with the securities.
Author: Daiva Jureviciene
Published: 2017
Journal: International scientific Journal.
Topic: Forecasting of the influence of financial institutions loan portfolio change, for the
economic sectors of the country.
The objective of the study was to forecast the interrelationship between the change
of monetary establishments loan portfolio and happenings of economy and found that by
establishing a solid link between monetary establishments and economic growth, an effective
portfolio can be constructed using trend line and econometric method.
Author: Yuan Ding, Ou Liu, Yiwei Yao, Chi On Chan

Published: 2017
Journal: International journal of analysis, design and tools for integrated circuits and
systems.
Topic: Multi- Objective Portfolio optimisation in Stock market.
This paper proposes a new approach for an efficient portfolio construction, including
stock selection and stock allocation. The author also says that the return on multi objective
portfolio is greater than single portfolio, by analysing the data through Quantitative method
(Mean returns).
Author: Ritika Sinha, Prabhat Kumar Tripathi
Published: 2017
Journal: IJMBF.
Topic: A comparison of Markowitz and Sharpe’s model of Portfolio analysis.
The main objectives of the study were to calculate risk and return of portfolio, to
analyse an optimal portfolio and to evaluate & compare the portfolios using appropriate
techniques - Markowitz model and Sharpe’s index model. The author found that the Sharpe’s
index model works better than the Markowitz model.
Author: Miroslav Spacek, Emil Vacik, Lukas Kracik and Jiri Fotr.
Published: 2018
Journal: Business Administration and Management
Topic: Project Portfolio Optimisation as a part of the strategy implementation process in

small and medium-sized enterprises: A methodology of the selection of projects with
the aim to balance strategy, risk and performance.
The main purpose of the study was to maximize the investors returns by analysing
their risk- taking ability through a survey. The author here uses Efficient Frontier model and
CAPM model to construct an effect portfolio. Thus, the author fount that, an efficient and
required portfolio can be constructed by understanding the investors volatility capacity and
their expected returns.
CHAPTER – 3
RESEARCH DESIGN
3.1 Statement of the Problem:
A study on Portfolio Construction for Mid-term and Long term returns of 6 different
sectors of 2 companies each selected from NSE CNX nifty stocks.
3.2 Need for the Study:
1. Portfolio construction is a perfect method, which presents the “Best Investment

Strategy” based on the demographic profile of investors, such as their age, their
income, their risk-taking capacity and investment budget.
2. It also helps to keep a measure on the risk taken by investors, as the process of
Portfolio construction mainly focuses on “Risk Minimization”.
3. “Customization” can also be achieved by keeping in mind an individual’s needs and
choices i.e. when the person is in need of some return, it mainly depends on two
aspects namely: how much return he expects out of his investment and the investment
period an individual selects.
4. By considering changes in tax laws, the investments of the investors can be analysed.
5. When an investment is made in some fixed income securities, an investor is generally
exposed to certain interest rate risk and price risk of different securities. Thus,
Portfolio construction helps to consider duration or convexity to immunize the
portfolio.
3.3 Objectives:
1. To examine the effect of risks and returns on investment.

2. To understand the factors that the investor considers while investing.
3. To understand the investors potential to invest in long term and mid-term returns.
4. To understand the investors risk volatility.
5. To understand the importance of CAPM Model
3.4 Scope of the Study:
The current study is restricted to the Portfolio Construction on 6 sectors of 4 companies

each listed in NSE CNX nifty. The study will reveal the effect of risks and returns of
investors on their investment. This study will tell about the investors interest to invest in long
term and mid-term returns. It helps to analyse whether the return earned per unit of volatility,
using CAPM Model.
3.5 Research Method:
The study is based on Descriptive and Analytical Research Method, where

descriptive research refers to describing the characteristics of a population used to study and
analytical research method refers to a particular type of research, which involves skills for
critical thinking and reasoning and for evaluating the facts and information related to the
study being conducted.
3.6 Research Design:
The research is based on Primary and Secondary Data method. This study will
analyse the returns of selected companies under different sectors in reference to understand
the investors potential to invest in mid- term and long-term returns.
3.7 Sample Frame:
The study is based on the public responses (Investors & Non- Investors).
3.8 Sample Size:
The sample size is Eighty.
3.9 Limitations:
1. The study is also limited to the sample size of 80 respondents.

2. It is relevant only for the specified period of time.
Chapter Scheme:
CHAPTER 1 : Introduction
CHAPTER 2 : Conceptual Background and Literature Review
CHAPTER 3 : Research Design
CHAPTER 4 : Analysis and Interpretation
CHAPTER 5 : Findings, Conclusion and Suggestions

CHAPTER – 4
ANALYSIS AND INTERPRETATION
The most important step after data collection is to analyse and interpret the data on the basis
of the data collected. The primary data is collected through questionnaire method, by 80
respondents. This data is represented using tables and graphs.
PRIMARY DATA:
Table 4.1
Table name: Table showing age of the respondents.
Sl. No. Age No. of respondents

1 21 - 30 years 44
2 31 - 40 years 13
3 41 - 50 years 18
4 Above 50 years 5
Total 80
Analysis:
It is observed from the Table 4.1 that 44respondents fall under the age group of 21-30 years,
18 respondents fall under the age group of 41-50 years, 13 respondents fall under the age
group of 31-40 years, whereas, only 5 respondents fall under the age group of above 50 years.
Graph No. 4.1:
Age
60 44
respondents
Number of
40
13 18
20 5
0 no. of respondents
21 - 30 31 - 40 41 - 50 Above
years years years 50 years
Age
Interpretation:
The question on age was asked to understand how risk will impact different age group of
investors. To analyse this question, different age range were given. As a result, it is found
that, majority of the investors age between 21years to 30years. Thus, it is found that most of
the investors are young and are ready to invest.
Table no: 4.2
Table name: Table showing income of the respondents
Sl. No Current income No. of respondents

1 Below 20K 40
2 21K - 30K 11
3 31K - 40K 6
4 41K - 50K 3
5 Above 50K 20
Total 80
Analysis:
It is observed from the Table 4.2 that 40 respondents are earning below 20K, 20 respondents
are earning above 50K, 11 respondents are earning between 21K – 30K, 6 respondents are
earning between 31K – 40K, whereas, only 3 respondents are earning between 41K – 50K.
Graph no.: 4.2
Current income
50
Number of respondents
40
40
30
20
20
10 6
3
0
Below 20K 21K - 30K 31K - 40K 41K - 50K Above 50K
Current income
Interpretation:
The above question on current income was asked to know the investment capability of
investors. To analyse this question, different incomes ranging from below 20K to above 50K
were given. As a result, it is found that, majority of the investors earn below 20K and are
ready to invest.
Table no.: 4.3
Table name: Table showing percentage of amount, that respondents are planning on
investing, out of their liquid assets
Sl.No.: Percentage of amount that

investors are planning to invest No. of respondents
1 Less than 20% 38
2 21% - 40% 32
3 41% - 60% 8
4 Above 60% 2
Total 80
Analysis:
It is observed from the Table 4.3 that 38 respondents are planning to invest less than 20% of
their liquid assets, 32 respondents are planning to invest between 21% - 40% of their liquid
assets, 8 respondents are planning to invest between 41% - 60% of their liquid assets,
whereas, only 2 respondents are planning to invest above 60% of their total liquid assets.
Graph no.: 4.3
Percentage of amount that investors are planning to invest

38
40
32
No of respondents
30
20
10
2
0
Less than 20% 21% - 40% 41% - 60% Above 60%
Interpretation:
The above question was asked to know the percentage of amount that investors are planning
to invest. To analyse this question, 4 responses were given ranging from less than 20% to
more than 60%. As a result, it is found that, majority of the investors are ready to invest less
than 20% of their liquid assets.
Table no.: 4.4
Table name: Table showing primary goal to invest
Sl.No.
Primary goal to invest No. of respondents
1 To minimize the risk 11
2 To generate regular income 26
3 Additional source of income 41
4 Others 2
Total 80
Analysis:
It is observed from the Table 4.4 that 4 respondents primary goal to invest is to earn
additional income, 26 respondents primary goal to invest is to generate regular income, 11
respondents primary goal to invest is to minimize the risk, whereas, only 2 respondents
primary goal is not defined clearly.
Graph no.: 4.4
Primay goal to invest

45 41
40
No of respondents
35
30 26
25
20
15 11 no. of respondents
10
5 2
0
To minimize the To generate Additional Others
risk regular income source of
income
Interpretation:
The above question was asked to know the investors primary goal to invest. To analyse this
question, 4 responses were given. As a result, it is found that, majority of the investors
primary goal to invest is to earn additional income and minimise their risks.
Table no.: 4.5
Table name: Table showing the expectation of investment returns.
Sl.No. Duration No. of respondents

1 Less than 1 year 13
2 1 year to 3 years 35
3 4 years to 6 years 16
4 More than 6 years 16
Total 80
Analysis:
It is observed from the Table 4.5 that 35 respondents are expecting their returns between 1
year to 3 years, 16 respondents are expecting their returns between 4 years to 6 years, 16
respondents are expecting their returns more than 6 years, whereas, only 13 respondents are
expecting their returns less than 1 year.
Graph no.: 4.5
Expectation of investment returns

40 35
35
No of respondents
30
25
20 16 16
15 13 no. of respondents
10
5
0
Less than 1 yr 1 year to 3 years 4 years to 6 years More than 6
years
Interpretation:
The above question was asked to know the investors expectation on their investments. To
analyse this question, 4 responses were given ranging from less than 1year to more than
6years. As a result, it is found that, majority of the investors expect their returns between
1year to 3years of their investment period.
Table no.: 4.6
Table name: Table showing the investors preference of products.
Sl No. Investors product preference No of respondents

1 Equity 77
2 Mutual Funds 37
3 Derivatives 5
4 Government Securities 24
5 Fixed Deposit 43
Analysis:
It is observed from the Table 4.6 that 77 respondents have preferred to invest in equity,43
respondents have preferred to invest in fixed deposit, 37 respondents have preferred to invest
in mutual funds, 24 respondents have preferred to invest in government securities, whereas,
only 5 respondents have preferred to invest in derivatives.
Graph No.: 4.6
Investors preference of products

90
77
80
70
No of respondents
60
50 43
37
40
30 24
20
10 5
0
Equity Mutual Funds Derivatives Government Fixed Deposit
Securities
Interpretation:
The above question was asked to know the products that investors prefer to invest. To analyse
this question, 5 responses were given. As a result, it is found that majority of the investors
prefer to invest in equity assets.
Table no.: 4.7
Table name: Table showing the products in which the respondents have invested.
Sl .No. Products invested by

respondents No of respondents
1 Equity 17
2 Mutual Funds 11
3 Derivatives 3
4 Government Securities 7
5 Fixed Deposit 5
6 None 0
Analysis:
It is observed from the Table 4.7 that 17 respondents have invested in equity, 11 respondents
have invested in mutual funds, 7 respondents have invested in government securities, 5
respondents have invested in fixed deposits, whereas, only 3 respondents have invested in
derivatives.
Graph No.: 4.7
Products invested by investors

18 17
16
No of respondents
14
12 11
10
8 7
6 5
4 3
2
0
0
Equity Mutual Funds Derivatives Government Fixed Deposit None
Securities
Interpretation:
The above question was asked to know in which products the investors have already invested.
To analyse this question, 5 responses were given. As a result, it is found that, majority of the
investors have already invested in equity assets.
Table no.: 4.8
Table name: Table showing the investors investment volatility comfort level.
Sl. No. Investors investment

volatility comfort level No. of respondents
1 Less than 10% 38
2 11% - 20% 35
3 21% - 30% 7
4 31% - 40% 0
Total 80
Analysis:
It is observed from the Table 4.8 that 38 respondents are comfort with less than 10%
investment volatility, 35 respondents are comfort with 11% - 20% investment volatility, 7
respondents are comfort with 21% - 30% investment volatility, whereas, none of the
respondents are ready to take up 31% - 40% investment volatility.
Graph no.: 4.8
Investors investment volatiity comfort level

40 38
35
35
30
No of respondents
25
20
no. of respondents
15
10 7
5
0
0
Less than 10% 11% - 20% 21% - 30% 31% - 40%
Interpretation:
The above question was asked to know the investors volatility comfort level. To analyse this
question, 4 responses were given. As a result, it is found that, majority of the investors are
ready to accept or are comfortable with less than 10% of volatility in the market.
Table no.: 4.9
Table name: Table showing the uncomfortable feeling of respondents towards drop in
the value of their investments.
Sl. No. Drop in the value of

investment No. of respondents
1 Less than 10% 42
2 11% - 20% 28
3 21% - 30% 8
4 31% - 40% 2
Total 80
Analysis:
It is observed from the Table 4.9 that, 42 respondents are ready to accept less than 10% drop
in the value of their investment, 28 respondents are ready to accept 11% - 20% drop in the
value of their investment, 8 respondents are ready to accept 21% - 30% drop in the value of
their investment, whereas, only, 2 respondents are ready to accept 31% - 40% drop in the
value of their investment.
Graph no.: 4.9
Drop in the value of investment

45 42
40
35
No of respondents
30 28
25
15
10 8
5 2
0
Less than 10% 11% - 20% 21% - 30% 31% - 40%
Interpretation:
The above question was asked to know the investors comfortability towards a drop in the
value of their investments. To analyse this question, 4 responses were given. As a result, it is
found that, majority of the investors are ready to accept less than 10% of drop in the value of
their investments.
Table no.: 4.10
Table name: Table showing investors likely period to invest.
Sl. No. Investors likely period to

invest No. of respondents
1 When market is peak 11
2 When market is low 27
3 When market is moderate 42
Total 80
Analysis:
It is observed from the Table 4.10 that 42 respondents are ready to invest when the market is
moderate, 27 respondents are ready to invest when market is low, whereas, only 11
respondents are ready to invest when the market is at peak.
Graph No.: 4.10
Investors likely period to invest

45 42
40
No of respondents
35
30 27
25
20
no. of respondents
15 11
10
5
0
When market is peak When market is low When market is
moderate
Interpretation:
The above question was asked to know the investors likely period to invest. To analyse this
question, 3 responses were given. As a result, it is found that, majority of the investors would
like to invest when the market is moderate and minimise their risks.
Table no.: 4.11
Table name: Table showing investors preference to invest their savings.
Sl. No. Investors preference to

invest their savings No. of respondents
1 Lumpsum 10
2 SIP 49
3 Recurring deposit 21
Total 80
Analysis:
It is observed from the Table 4.11 that 49 respondents are ready to invest their savings in SIP,
21 respondents are ready to invest in recurring deposit, whereas, only, 10respondents are
ready to invest in lumpsum.
Graph No.: 4.11
Investors preference to invest their savings

60
49
50
No of respondents
40
30
no. of respondents
21
20
10
10
0
Lumpsum SIP Recurring deposit
Interpretation:
The above question was asked to know the investors preference to invest their savings. To
analyse this question, 3 responses were given. As a result, it is found that majority of the
investors would like to invest their savings in SIP and earn profits in long – term.
Table no.: 4.12
Table name: Table showing investors preference to invest.
Sl.No. Investors preference to

invest No. of respondents
1 To earn tax benefits 20
2 To create wealth 60
Total 80
Analysis:
It is observed from the Table 4.12 that 60 respondents invest to create wealth, whereas, only,
20 respondents invest to earn tax benefits.
Graph no.: 4.12
Investors prefernce to invest

70
60
60
No of respondents
50
40
no. of respondents
30
20
20
10
0
To earn tax benefits To create wealth
Interpretation:
The above question was asked to know the investors preference to invest. To analyse this
question, 2 responses were given. As a result, it is found that, majority of the investors would
like to invest to create wealth and minimise their risks.
SECONDARY DATA:
The following companies are analysed based on five different sectors. These sectors are
selected based on three main categories namely:
❖ Established Sectors.
❖ Consistent Sectors.
❖ Emerging Sectors.
Two industries are selected from each sector. Four companies are selected from each
industry. On the basis of the Market cap, the corporations are classified as:
❖ Large- cap.
❖ Mid- cap.
❖ Small- cap.
Table No 4.13: The following is the list of companies selected to construct Portfolio:
Sectors Companies Large Cap (RS Mid Cap (Rs Small Cap (Rs
in Cr) in Cr) in Cr)
1. Established
Sectors:
MNC: TCS Ltd 708506.52
Infosys Ltd 296958.84
Newgen 2112.04
Software
Technologies
Ltd
Hinduja 1346.17
Global
Solutions Ltd
Automobile Maruti 223114.82

Suzuki Ltd
M & M Ltd 91163.31
Federal 2898.43
Mogul
VST Tillers 1362.19
Ltd
2.Consistent
sectors:
Telecom: Bharati Airtel 134812.32
Vodafone 32364.61
idea
Reliance 3821.97
Comm
Tata Tele 772.20
service Ltd
FMCG: Nestle Ltd 111104.65

Britannia 77443.77
Heritage 2285.10
Foods Ltd
Apex Frozen 1035.94
3.Emerging
Sectors:
Pharma Sun Pharma 106494.19
Aurobindo 45448.85
Pharma
Strides 4296.56
Pharma
Advanced 1919.80
Enzyme
NBFCs Bajaj Finserv 101565.44

ICICI 50460.65
Prudentials
Equitas 4022.31
Holding Ltd
Geojit Fin 1021.00
The following is the company analysis of different sectors selected to construct an efficient
Portfolio:
1. TCS Ltd:
Industry MNC
Market capital (Rs in crores) 708506.52
Net profit (after tax) (Rs in crores) 25241.00
TCS Ltd is considered as one of the biggest companies in India, through its market
capitalization. Currently, it has been placed amidst the most appreciated brands of IT
services, worldwide and overall, it has been ranked 64th in the Forbes ranking.
2. Infosys Ltd:
Industry MNC
Infosys Ltd is considered to be the second – largest Indian IT organisation by its market
capitalization. It has gained 596th rank as the largest public company in world in terms of its
revenue. The company has been rated A by Standard & Poor’s.
3. Newgen Software Technologies Ltd:

Industry MNC
Newgen Software Technologies Ltd is a software company involved in providing software

products. It has established a Channel Partner Network across 65 countries around the world.
Today it has been ranked as the best small or medium enterprise overall and services.
4. Hinduja Global Solutions Ltd:

Industry MNC
It is a company involved in providing information technology services. In 2003 it marked a
milestone by acquiring Customer Contact Centre Inc, a call centre company. Currently, it has
its presence in about 12 countries across world.
5. Maruti Suzuki Ltd:

Industry Automobile
It is an automobile manufacturer in India. The company has a market share of 53%. It was the
first automobile company to launch a Call Centre for internal and customer services. It also
has two new subsidiaries namely: Maruti Insurance Distributor Services and Maruti
Insurance Brokers Ltd.
6. M & M Ltd:
Industry Automobile
It is a multinational car manufacturing company. It is a part of Mahindra Group and was

ranked 21st by Fortune India 500 in 2011.It has also been ranked by the US based Reputation
Institute in its ‘Global 200: The World’s Best Corporate Reputations’, amongst the top 10
Indian companies
7. Federal Mogul Ltd:

Industry Automobile
It is an American developer, manufacturer and supplier of automotive products. It is also one

of the largest Automobile Companies, through its market capitalization. They received their
first PACE award in 2003.
8. VST Tillers Ltd:
Industry Automobile
It is a major industry in India and significantly contribute to agriculture. They are considered
to be the best manufacturers of vehicles required for agricultural purpose in India and are
performing better in the market, which are considered through their market capitalisation.
9. Bharati Airtel:
Industry Telecom
It is an Indian Telecommunications services company. It is one of the largest mobile

operators and has its presence in 20 countries across World and its market share stood at
72%.
10. Vodafone Idea Ltd:

Industry Telecom
Net profit (after tax) (Rs in crores) (4780.60)
Vodafone Idea Ltd is the largest telecom operator of India. In the year 2018, Vodafone India
has been merged with Idea cellular and was prominently renamed as Vodafone Idea Ltd.
Later, the company’s income increased by 52% compared to previous quarter.
11. Reliance Comm:

Industry Telecom
Reliance industries are considered to be one of the largest Indian Companies, through its
market capitalization. They are engaged in providing a wide range of service to its customers
and are aiming to be the Indian market leader in future.
12. Tata Teleservice Ltd:

Industry Telecom
It is a famous Indian broadband and telecommunications service provided in India. It is at

number 2 position in terms of market share and is engaged in offering a multiple rate plans in
both of its post-paid and pre-paid categories.
13. Nestle Ltd:

Industry FMCG
Nestle Ltd is the biggest food company in the world, with a market capitalisation of 231
billion. It has been ranked No.64 on the Fortune Global 500 in 2016 and also in 2017, No.33
on Forbes Global 2000, considering list of major public companies.
14. Britannia Ltd:

Industry FMCG
Britannia Ltd is a food processing company with a market share of 38% and is one among the
100 most trusted brands of India, as per “The Brand Trust Report”. Currently, 90% of the
Britannia’s annual revenue of Rs.22 billion come from biscuits.
15. Heritage Foods Ltd:

Industry FMCG
Heritage Foods Ltd is one of the largest diary sectors in India with a revenue of $300 million.
Now, it has a wide spread presence across South India. It has 3 business divisions namely,
Diary, Retail and Agri Under its flagship.
16. Apex Frozen:

Industry FMCG
Apex Frozen is one the integrated producer and exporter of food products. It has witnessed a
growth of 33.53% over last four years. The products and processes of the company comply
with stringent quality standards set by the developed markets.
17. Sun Pharma Ltd:

Industry Pharmaceutical
It is an Indian multinational pharmaceutical company with 69% stake of about $260 million
and is spread across world. It is considered as the India’s Most Reputed Brands in a study
conducted by Blue Bytes.
18. Aurobindo Pharma Ltd:

It is a pharmaceutical manufacturing company producing generic- pharmaceutical ingredients

and active- pharmaceutical ingredients. Currently, the company has spread across world and
more than 70% of its revenue are derived out of exports.
19. Strides Pharma Ltd:

Strides Pharma Ltd is a global pharmaceutical company listed in both BSE and NSE. It
operates across globe and aims at manufacturing and marketing a wide range of technically
complex pharmaceutical products for emerging markets.
20. Advanced Enzyme:

Advanced Enzymes is a pharmaceutical company operating globally with exports across six
continents. The enzymes are being used by a wide range of customers as active ingredients in
their nutraceutical and pharmaceutical formulations.
21. Bajaj Finserv:

Industry NBFC
It is an Indian Financial Services company and mainly focuses on lending, asset management,
insurance and wealth management. It has been ranked No.119 in 2014 among The Economic
Times 500.
22. ICICI Prudentials:

Industry NBFC
ICICI Prudentials is a Finance company based in India offering a variety of products to its
customers. It is listed in both BSE and NSE. It aims at catering to long-term saving needs of
customers with sensitivity.
23. Equitas Holding Ltd:

Industry NBFC
It is a small finance bank, a micro-finance lender and has a network across India with 412
branches. It is listed in both BSE and NSE. The bank made 5% of profit in 2018. Recently,
the bank has been heavily dedicated to new technology, including 83% of its overall
transactions occurring online as of 2017.
24. Geojit Fin:

Industry NBFC
It is an investment services companies in India and operated across India. It is listed in both
BSE and NSE. It was the first company to launch online – trading facilities for various
products. In 2018, the company launched Funds Genie, an investment platform and a Mutual
Funds advisory service.
Table No: 4.14: Portfolio Construction:
Age V/S Volatility

Age (in years) 21-30 31-40 41-50 Above 51
Less than10% 20 6 9 5
11% - 20% 21 6 8 0
21% - 30% 6 1 1 0
31% - 40% Nil Nil Nil Nil
Total 47 13 18 5
Age versus Volatility
25
21
20
20
No. of respondents
15
21-30
9 31-40
10 8
41-50
6 6 6
5
5 >51
1 1
0 0
0
<10 11%-20 21%-30 31%-40
Investment Volatility
Interpretation:
The above graph represents the risk takers and non-risk takers. Investors with age
between 21years to 40years are the risk takers and investors above 41years of age are non-
risk takers.
Table No: 4.15: Emerging sectors Portfolio Construction for investors, age ranging
between 21 – 30 years:
Large Cap Mid Cap Small Cap

Less than 10% 1 Pharma 1 Pharma 1 NBFC
Sun Pharma Strides Pharma Geojit Fin
1 NBFC:
Bajaj finserv
11% - 20% 1 NBFC 1 Pharma 1 Pharma
ICICI Prudentials Strides Pharma Advanced Enzyme
1 NBFC
Equitas Holding Ltd
21% - 30% 1 Pharma 1 NBFC 1 Pharma
Aurobindo Pharma Equitas Holding Ltd Advanced Enzyme
1 NBFC
Geojit Fin
Interpretation:
The investors with age between 21years to 30years are risk takers and are suggested to
invest in Emerging sectors. The Pharmaceutical companies and NBFC companies are
selected under this category for their investment portfolio and are allotted based on their risk
volatility.
Table No:4.16: Consistent sectors Portfolio Construction for investors, age ranging

Less than 10% 1 FMCG 1 FMCG 1 Telecom
Nestle Ltd Heritage Foods Ltd Tata Teleservice Ltd
1 Telecom
Bharati Airtel
11% - 20% 1 Telecom 1 FMCG 1 FMCG
Vodafone idea Heritage Foods Ltd Apex Frozen
1 Telecom
Reliance Comm
21% - 30% 1 FMCG 1 Telecom 1 FMCG
Britannia Reliance Comm Apex Frozen
1 Telecom
Tata Teleservice Ltd
Interpretation:
The investors with age between 31years to 40years are also risk takers and are suggested
to invest in Consistent sectors. The Telecom companies and FMCG companies are selected
under this category for their investment portfolio and are allotted based on their risk
volatility.
Table No: 4.17: Established sectors Portfolio Construction for investors, age ranging

Less than 10% 1 MNC 1 MNC 1 Automobile
TCS Ltd Newgen Software VST Tillers Ltd
Technologies Ltd
1 Automobile
Maruti Suzuki Ltd
11% - 20% 1 Automobile 1 MNC 1 MNC
M & M Ltd Newgen Software Hinduja Global
Technologies Ltd Solutions Ltd
1 Automobile
Federal Mogul
21% - 30% 1 MNC 1 Automobile 1 MNC
Infosys Ltd Federal Mogul Hinduja Global
Solutions Ltd
1 Automobile
VST Tillers Ltd
Interpretation:
The investors with age between 41years to 50years are non- risk takers and are
suggested to invest in Established sectors. The MNC companies and Automobile companies
are selected under this category for their investment portfolio and are allotted based on their
risk volatility.
CAPITAL ASSET PRICING MODEL (CAPM):
The ‘Capital Market’ theory is the advancement of the ‘Markowitz Portfolio’ theory. The
‘Portfolio theory’ describes the way in which the rational investors should plan their
portfolios. This method is easy to understand and has world-wide application for analysing
the market behaviour. The model works on the principle that the systematic risk is linked to
the security in the portfolio. The risk of portfolio is reduced by increasing the number of
stocks, which in-turn decreases the unsystematic risk distribution by the number of stocks in
the portfolio.
The investor who do not want to bear risk can now invest in the risk-free securities. The small
and medium investors, having a smaller number of securities have more risk. The diversified
and composed portfolio of all the securities will make the investor’s ‘Unsystematic Risk’
equal to the ‘Systematic Risk’ in the stock market.
CAPM Equation:
BETA OF CAPM:
Beta is considered as a measure of systematic risk. It helps us to analyse how the price
of a particular security responds to the changes in the market prices. Thus, the risk
contribution of an individual stock, to a portfolio is measured by the stock’s beta coefficient.
Table No: 4.18: Calculation of CAPM of the selected companies:
Companies Rf (%) Rm (%) Beta CAPM[E(Ri)]

TCS Ltd 6.00 8.50 0.28 6.70
Infosys Ltd 6.00 8.50 0.46 7.15
Newgen Software 6.00 8.50 0.68 7.70
Technologies Ltd
Hinduja Global 6.00 8.50 1.04 8.60
Solutions Ltd
Maruti Suzuki Ltd 6.00 8.50 1.14 8.85
M & M Ltd 6.00 8.50 1.24 9.10
Federal Mogul 6.00 8.50 0.57 7.43
VST Tillers Ltd 6.00 8.50 0.58 7.45
Bharati Airtel 6.00 8.50 1.18 8.95
Vodafone idea 6.00 8.50 1.38 9.45
Reliance Comm 6.00 8.50 2.23 11.58
Tata Teleservice 6.00 8.50 0.88 8.20
Ltd
Nestle Ltd 6.00 8.50 0.73 7.83
Britannia 6.00 8.50 0.89 8.23
Heritage Foods Ltd 6.00 8.50 1.04 8.60
Apex Frozen 6.00 8.50 1.54 9.85
Sun Pharma 6.00 8.50 0.95 8.38
Aurobindo Pharma 6.00 8.50 1.24 9.10
Strides Pharma 6.00 8.50 1.25 9.13
Advanced Enzyme 6.00 8.50 0.99 8.48
Bajaj Finserv 6.00 8.50 1.51 9.78
ICICI Prudentials 6.00 8.50 1.12 8.80
Equitas Holding 6.00 8.50 1.48 9.70
Ltd
Geojit Fin 6.00 8.50 1.09 8.73
Interpretation:
The above table represents the calculated values of CAPM considering the Risk-free
returns, average market risk premium and beta values of each company under different
sectors. As the beta value increases or moves in a positive trend, it is highly sensitive that the
company performs better and its growth is in the upward trend in the capital market.
CHAPTER – 5
FINDINGS, CONCLUSION AND SUGGESTIONS
5.1 FINDINGS:
1. The investors with age ranging from 21years to 30years and 31yeras to 40years are
ready to take risk.
2. The investors with age ranging between 41years to 50years are not risk takers.
3. The investors consider the risk volatility before investing.
4. The investors with medium income group are ready to invest in long – term assets.
5. The investors also consider the market price and sectors before investing.
6. The CAPM Model helps investors to know which company's stocks are moving in the
positive trend and invest accordingly, to earn profits.
5.2 SUGGESTIONS:
1. The company must concentrate more on attracting young investors for its
improvement in growth.
2. The company must conduct more wealth check up programmes to improve its
investors returns.
3. The company must create awareness about its investment plans.
5.3 CONCLUSION:
The internship program in Pentad Securities Pvt Ltd., gave me an opportunity to

experience and evaluate my learning to the classroom coaching. Pentad Securities Pvt Ltd is
an IAS certified company with variety of products and services. The company has well
equipped office and various facilities for employees.
The company has formulated new policy and program to train its employees. It gave me a
chance to know about trading in stock market and SIP plans available. It also helped to know
how employees are being co – ordinated and utilised in an optimum manner in achieving
organisation goal. It gave me a chance to know the different departments with it and their
inter-links with each other. It was a wonderful experience to interact with the people from
various departments and customers, which are definitely going to help me a lot in my
upcoming future.
Bibliography
Reference Books & Reports:
➢ Books
1. Investment Analysis and Portfolio Management – Prasanna Chandra – 4th Edition.
2. Investment Analysis and Portfolio Management – M. Ranganatham, R. Madhumathi.
3. Portfolio Management – Samir .K Barua, J . R. Varma, V .Raghunathan – 1st Revised
Edition.
➢ Company Annual Reports
Citations:
1. Vacík, E., Špaček, M., Fotr, J., &Kracík, L. (2018). Project portfolio optimization as a part
of strategy implementation process in small and medium-sized enterprises: a methodology of
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EXECUTIVE SUMMARY

1.1 INTRODUDCTION TO INTERNSHIP:

1.2 INDUSTRY PROFILE:

Meaning of Financial Services:

Some of the New Monetary products and services are as follows:

History of Financial Services:

Indian Scenario of Financial Service Industry:

Indian Financial System:

1.4 Nature of Business:

Nature of Business Finance

Stockhathon Academy Pvt Ltd

Company CEO Nikhil Gopalakrishnan

Total Number of Employees 150 employees.

Year of Formation 2012

Legal Status of the Firm Private Limited

Company Category Company Limited by Shares

Company Sub- Category Non- Government Company

“To be a preferred financial partner in wealth creation for our clients.”

➢ “Adding new clients to capital market.

Our five START values are the bedrock of our organization:

1.8 SEVICE PROFILE:

1.9 AREA OF OPERATION:

1.11 COMPETITORS INFORMATION:

➢ Motilal Oswal Securities Ltd:

It is one of the prominent Indian financial service company, a associate

1.13 INFRASTRUCTURAL FACILITIES:

SWOT analysis refers to a framework, which is used by the company to analyse a

➢ Lack of sales penetration.

➢ Adding new clients to capital markets.

➢ Tough competition in market.

1.15 FUTURE GROWTH AND PROSPECTS:

CONCEPTUAL BACKGROUNGD AND LITERATURE REVIEW

2.1 Theoretical Background of The Study:

Meaning of Portfolio Construction:

A portfolio is termed as a combination of various securities. This includes Stocks,

The 2 approaches of Portfolio Construction are:

1. Traditional Approach. and

Assesment of risk and return

Assumptions of Portfolio Construction:

• Investors are risk averse.

Advantages of Portfolio Construction:

• Minimising risk of loss.

Disadvantages of Portfolio Construction:

• Difficulty in defining product/market segments.

For a better understanding of the research by the researchers, regarding research

Studies on Portfolio Construction for Mid-term and long- term:

Author: Brain. M. Rom and Kathleen. W. Ferguson

Journal: AFIR International Colloquium

Topic: Post – Modern Portfolio Theory Comes of Age

Author: Jie Cai, Todd Houge

Journal: Financial Market and Portfolio Management.

Author: Riza Demirer, Ronald. R. Mau, and Catherine Shenoy

Journal: Journal of Applied Finance

Author: Egon Kalotay, , Philip Gray, Judy Qiu, Karen- Benson

Journal: Australian Journal of Management.

Author: Micheal P Haydock

Topic: Portfolio Construction: The efficient diversification of marketing investment.

Author: Philip Saks, Jinhui Luo and Steve Satchell

Journal: Journal of Asset Management

Topic: Implementing the Risk Appetite in the Management of Currency Portfolio

Journal: The journal of investing.

Topic: Further Analysis of Efficient portfolios with the USER data.

Author: John.B. Guerard, Ganlin Xu, Jr., Harry Markowitz