SUMMER TRAININIG REPORT ON

PORTFOLIO MANAGEMENT SERVICES -AN INVESTMENT OPTION

For

SHAREKHAN LIMITED

Under the supervision Of

Su!"itted #$%

Su!"itted to%

ACKNOWLEDGEMENT

Expression of feelings by words makes them less significant when it comes to make statement of gratitude

&ith re'(rd to "$ Pro)e*t +ith Sh(re Kh(n, Ne+ De-hi, I +ou-d -i.e to th(n. e(*h (nd ever$one +ho offered he-p, 'uide-ines (nd support +henever re/uired0 I (" e1tre"e-$ 'r(tefu- to "$ *o--e'e 'uide, ?? (nd (-- the f(*u-t$ "e"!er of "$ *o--e'e for their v(-u(!-e su''estions (nd 'uid(n*e0 I e1press "$ deep sense of 'r(titude to "$ *o"p(n$ "entors, Mr. ?? +ithout +hose support (nd *ooper(tion this pro)e*t *ou-d not h(ve !een *o"p-eted su**essfu--$0 L(st, !ut not the -e(st, "$ he(rtfe-t -ove for "$ p(rents (nd "$ friends, +hose *onst(nt support (nd !-essin's .ept "e enthusi(sti* throu'hout this pro)e*t0

Tanya Bhatnagar

DECLARATION
I Tanya Bhatnagar student of ?? Batch (??) declare that every part of the Project Report 2PORTFOLIO MANAGEMENT SER3I4ES %AN IN3ESTMENT OPTION5 th(t I h(ve su!"itted is ori'in(-. I +(s in re'u-(r *ont(*t +ith the no"in(ted 'uide (nd *ont(*ted 6 ti"es for dis*ussin' the pro)e*t.

(Tanya Bhatnagar)

Table of contents

CHAPTE R
CHAPTER1 Introduction to Study Myths About PMS Introduction to Stock Exchan ! COMPANY PROFILE "ork structur! o# Shar!khan Product and S!r$ic!s o##!r!d by %o&'any (!asons to %hoos! Shar!khan RESEARCH METHODOLOGY )b*!cti$! o# th! Pro*!ct Sco'! o# th! Study M!thodo+o y #or ,ata %o++!ction PORTFOLIO MANAGEMENT SERVICES -!!d o# PMS )b*!cti$! o# PMS Port#o+io %onstruction (isk and (isk A$!rsion (isk $!rsus (!turn Port#o+io ,i$!rsi#ication 0!chni1u!s o# PMS Shar!khan PMS DATA ANALYSIS AND INTERPRETATION CONCLUSION & SUGGESTIONS )bs!r$ation and 2indin s 3i&itations o# th! Pro*!ct %onc+usion 4Su !stions

TABLE OF CONTENTS
EXECUTIVE SUMMARY INTRODUCTION

PAGE NO.
6 7 8-9 10-11 12-17 18-19 20 21 22 27 28 29 30-31 32-33 3. 3/ 36-.2 .3-./ .6-/1 /2-// /6-60 61-67 68-82 8. 8/-86 87 88-89

CHAPTER2

CHAPTER3

CHAPTER4

CHAPTER5 CHAPTER6

ANNEXURE BIBLIOGRAPHY

90-91 92

EXECUTIVE UMMA!" Investin' is !oth Arts (nd S*ien*e0 Ever$ Individu(- h(s their o+n spe*ifi* fin(n*i(- need (nd e1pe*t(tion !(sed on their ris. t(.in' *(p(!i-ities, +here(s so"e needs (nd e1pe*t(tion (re univers(-0 Therefore, +e find th(t the s*en(rio of the Sto*. M(r.et is *h(n'in' d($ !$ d($ hours !$ hours (nd "inute !$ "inute0 The ev(-u(tion of fin(n*i(- p-(nnin' h(s !een in*re(sed throu'h de*(des, +hi*h *(n !e !est seen in *usto"ers0 No+ ( d($7s invest"ents h(ve !e*o"e ver$ i"port(nt p(rt of in*o"e s(vin'0 In order to .eep the Investor s(fe fro" "(r.et f-u*tu(tion (nd "(.e the" profit(!-e, Portfo-io M(n('e"ent Servi*es 8PMS9 is f(st '(inin' Invest"ent Option for the Hi'h Net+orth Individu(- 8HNI90 There is 'ro+in' *o"petition !et+een !ro.er('e fir"s in post refor" Indi(0 For investor it is (-+($s diffi*u-t to de*ide +hi*h !ro.er('e fir" to *hoose0 The rese(r*h desi'n is (n(-$ti*(- in n(ture0 A /uestionn(ire +(s prep(red (nd distri!uted to Investors0 The investor7s profi-e is !(sed on the resu-ts of ( /uestionn(ire th(t the Investors *o"p-eted0 The S("p-e *onsists of :;; investors fro" v(rious !ro.er7s pre"ises0 The t(r'et *usto"ers +ere Investors +ho (re tr(din' in the sto*. "(r.et0 In order to identif$ the effe*tiveness of Sh(re.h(n PMS servi*es this Rese(r*h is *(rried throu'hout the (re( of Ne+ De-hi0 At the ti"e of investin' "one$ ever$one -oo. for the Ris. f(*tor invo-ve in the Invest"ent option0 The Report is prep(red on the !(sis of Rese(r*h +or. done throu'h the different Rese(r*h Methodo-o'$ the d(t( is *o--e*ted fro" !oth the sour*e Pri"(r$ sour*es +hi*h *onsist of <uestionn(ire (nd se*ond(r$ d(t( is *o--e*ted fro" different sour*es su*h (s 4o"p(n$ +e!site, M('(=ine (nd other sour*es0 As the PMS servi*es of #are$#an L%&%te' #a(e t#e best res)lt %n %ts f%el' .It #as *%(en +,.-./ ret)rn %n Tra%l%n* sto0s1 2+.,./ret)rn %n N%ft3 an' ,4.5./ %n 6eta 7ortfol%o +hi*h is the resu-t +hen the M(r.et +(s not doin' +e-- fro" -(st one $e(r0 In this pro)e*t I h(ve sho+n the det(i-s of fin(n*i(- p-(nnin' (s +e-- (s +e(-th "(n('e"ent so (s to underst(nd (!out the *usto"er7s needs (nd +(nts +ith respe*t to

"(r.et (nd ho+ ( *-ient7s portfo-io *(n !e desi'ned (nd +h(t f(*tors ( portfo-io "(n('er "ust *onsider for desi'nin' ( portfo-io0

C8A7TE!95

INTRODUCTION

INTRODUCTION TO STUDY The fie-d of invest"ent tr(dition(--$ divided into se*urit$ (n(-$sis (nd portfo-io "(n('e"ent0 The he(rt of se*urit$ (n(-$sis is v(-u(tion of fin(n*i(- (ssets0 3(-ue in turn is the fun*tion of ris. (nd return0 These t+o *on*epts (re in the stud$ of invest"ent 0Invest"ent *(n !e defined the *o""it"ent of funds to one or "ore (ssets th(t +i-- !e he-d over for so"e future ti"e period0 In tod($ f(st 'ro+in' +or-d "(n$ opportunities (re (v(i-(!-e, so in order to "ove +ith *h(n'es (nd 'r(! the !est opportunities in the fie-d of invest"ents ( profession(fund "(n('er is ne*ess(r$0 Therefore, in the present s*en(rio the Portfo-io M(n('e"ent Servi*es 8PMS9 is f(st '(inin' i"port(n*e (s (n invest"ent (-tern(tive for the Hi'h Net+orth Investors0 Portfo-io M(n('e"ent Servi*es 8PMS9 is (n invest"ent portfo-io in sto*.s, fi1ed in*o"e, de!t, *(sh, stru*tured produ*ts (nd other individu(- se*urities, "(n('ed !$ ( profession(- "one$ "(n('er th(t *(n potenti(--$ !e t(i-ored to "eet spe*ifi* invest"ent o!)e*tives0 &hen $ou invest in PMS, $ou o+n individu(- se*urities un-i.e ( "utu(- fund investor, +ho o+ns units of the entire fund0 >ou h(ve the freedo" (nd f-e1i!i-it$ to t(i-or $our portfo-io to (ddress person(- preferen*es (nd fin(n*i(- 'o(-s0 A-thou'h portfo-io "(n('ers "($ oversee hundreds of portfo-io, $our (**ount "($ !e uni/ue0 Invest"ent M(n('e"ent So-ution in PMS *(n !e provided in the fo--o+in' +($s? i0 ii0 iii0 Dis*retion(r$ Non Dis*retion(r$ Advisor$

D%scret%onar3: Under these servi*es, the *hoi*e (s +e-- (s the ti"in's of the invest"ent de*isions rest so-e-$ +ith the Portfo-io M(n('er0

Non D%scret%onar3: Under these servi*es, the portfo-io "(n('er on-$ su''ests the invest"ent ide(s0 The *hoi*e (s +e-- (s the ti"in's of the invest"ent de*isions rest so-e-$ +ith the Investor0 Ho+ever the e1e*ution of tr(de is done !$ the portfo-io "(n('er0 A'(%sor3: Under these servi*es, the portfo-io "(n('er on-$ su''ests the invest"ent ide(s0 The *hoi*e (s +e-- (s the e1e*ution of the invest"ent de*isions rest so-e-$ +ith the Investor0 !)le ;1 *-(use 8d9 of the SE#I 8portfo-io "(n('ers9 !)les1 522, defines the ter" 2Portfo-io5 (s 2tot(- ho-din' of se*urities !e-on'in' to (n$ person50 As ( "(tter of f(*t, portfo-io is *o"!in(tion of (ssets the out*o"es of +hi*h *(nnot !e defined +ith *ert(int$ ne+ (ssets *ou-d !e ph$si*(- (ssets, re(- est(tes, -(nd, !ui-din', 'o-d et*0 or fin(n*i(- (ssets -i.e sto*.s, e/uit$, de!enture, deposits et*0 Portfo-io "(n('e"ent refers to "(n('in' effi*ient-$ the invest"ent in the se*urities he-d !$ profession(- for others0 Mer*h(nt !(n.er (nd the portfo-io "(n('e"ent +ith ( vie+ to ensure "(1i"u" return !$ su*h invest"ent +ith "ini"u" ris. of -oss of return on the "one$ invested in se*urities he-d !$ the" for their *-ients0 The (i" Portfo-io "(n('e"ent is to (*hieve the "(1i"u" return fro" ( portfo-io, +hi*h h(s !een de-e'(ted to !e "(n('ed !$ "(n'er or fin(n*i(- institution0 There (re -ots of or'(ni=(tion in the "(r.et on the -oo.out for the peop-e -i.e $ou +ho need their portfo-ios "(n('ed for the" 0The$ h(ve tr(ined (nd s.i--ed t(-ent +i-+or. on $our "one$ to "(.e it do "ore for $ou0 Therefore, if (n$ investors sti-- insist on "(n('in' their o+n portfo-io, then ensure $ou !ui-d dis*ip-ine into their invest"ent0 &or. out their str(te'$ (nd st(nd !$ it0

M"T8 A6OUT 7M There (re t+o "ost *o""on "$ths found (!out Portfo-io M(n('e"ent Servi*es 8PMS9 +hi*h +e found ("on' "ost of the Investors0 The$ (re (s fo--o+s0 Myth No. 1: PMS and Mutual Fund are Si in"e!t ent o#tion$ ilar a! the

As in the Fin(n*e #(s.et !oth the PMS (nd Mutu(- Fund (re used for "ini"i=in' ris. (nd "(1i"i=e the profit of the Investors0 The o!)e*tives (re si"i-(r (s in !oth the produ*t !ut the$ (re different fro" e(*h other in *ert(in (spe*ts0 The$ (re (s fo--o+s0 Mana*e&ent %'e In PMS, it7s on'oin' person(-i=ed (**ess to profession(- "one$ "(n('e"ent servi*es0 &here(s, in Mutu(- fund 'ives person(-i=e (**ess to "one$0 C)sto&%<at%on In PMS, Portfo-io *(n !e t(i-ored to (ddress e(*h investor@s spe*ifi* needs0 &here(s in Mutu(- Fund Portfo-io stru*tured to "eet the fund@s st(ted invest"ent o!)e*tives0 O=ners#%0 In PMS, Investors dire*t-$ o+n the individu(- se*urities in their portfo-io, (--o+in' for t(1 "(n('e"ent f-e1i!i-it$, +here(s in Mutu(- Fund Sh(reho-ders o+n sh(res of the fund (nd *(nnot inf-uen*e !u$ (nd se-- de*isions or *ontro- their e1posure to in*urrin' t(1 -i(!i-ities0 L%>)%'%t3 In PMS, "(n('ers "($ ho-d *(shA the$ (re not re/uired to ho-d *(sh to "eet rede"ptions, +here(s, Mutu(- funds 'ener(--$ ho-d so"e *(sh to "eet rede"ptions0

M%n%&)&s PMS 'ener(--$ 'ives hi'her "ini"u" invest"ents th(n "utu(- funds0 Gener(--$, "ini"u" r(n'es fro"? Rs0 : 4rore B for E/uit$ Options Rs0 C 4rore B for Fi1ed In*o"e Options Rs0 D; L(*s B for Stru*tured Produ*ts, +here(s in Mutu(- Fund Provide on'oin', person(-i=ed (**ess to profession(- "one$ "(n('e"ent servi*es0 ?le@%b%l%t3 PMS is 'ener(--$ "ore f-e1i!-e th(n "utu(- funds0 The Portfo-io M(n('er "($ "ove to :;;E *(sh if it re/uired0 The Portfo-io M(n('er "($ t(.e his o+n ti"e in !ui-din' up the portfo-io0 The Portfo-io M(n('er *(n (-so "(n('e ( portfo-io +ith disproportion(te (--o*(tion to se-e*t *o"pe--in' opportunities +here(s, in Mutu(Fund *o"p(r(tive-$ -ess f-e1i!-e0

Myth No. %: Finan(ial In!tru ent$

PMS i!

ore Ri!& 'ree than other

In Fin(n*i(- M(r.et Ris. f(*tor is *o""on in (-- the fin(n*i(- produ*ts, !ut $es it is true th(t Ris. F(*tor v(r$ fro" e(*h other due to its n(ture0 A-- invest"ents invo-ve ( *ert(in ("ount of ris., in*-udin' the possi!-e erosion of the prin*ip(- ("ount invested, +hi*h v(ries dependin' on the se*urit$ se-e*ted . For e1("p-e, invest"ents in s"(-(nd "id%si=ed *o"p(nies tend to invo-ve "ore ris. th(n invest"ents in -(r'er *o"p(nies0

10

INTRODUCTION TO STOCK E C!ANGE The e"er'en*e of sto*. "(r.et *(n !e tr(*ed !(*. to :FG;0 In #o"!($, !usiness p(ssed in the sh(res of !(n.s -i.e the *o""er*i(- !(n., the *h(rtered "er*(nti-e !(n., the *h(rtered !(n., the orient(- !(n. (nd the o-d !(n. of #o"!($ (nd sh(res of *otton presses0 In 4(-*utt(, En'-ish"(n reported the /uot(tions of HE, CE, (nd IE -o(ns of E(st Indi( 4o"p(n$ (s +e-- (s the sh(res of the !(n. of #en'(- in :FGI0 This -ist +(s ( further !ro(dened in :FGJ +hen the 4(-*utt( ne+sp(per printed the /uot(tions of !(n.s -i.e union !(n. (nd A'r( !(n.0 It (-so /uoted the pri*es of !usiness ventures -i.e the #en'(- !onded +(rehouse, the Do*.in' 4o"p(n$ (nd the stor" tu' *o"p(n$0 #et+een :FH; (nd :FC;, on-$ h(-f ( do=en !ro.ers e1isted for the -i"ited !usiness0 #ut durin' the sh(re "(ni( of :FI;%IC, the nu"!er of !ro.ers in*re(sed *onsider(!-$0 #$ :FI;, the nu"!er of !ro.ers +(s (!out I; (nd durin' the e1*itin' period of the A"eri*(n 4ivi- +(r, their nu"!er in*re(sed to (!out D;; to DC;0 The end of A"eri*(n 4ivi- +(r !rou'ht disi--usion"ent (nd "(n$ F(i-ures (nd the !ro.ers de*re(sed in nu"!er (nd prosperit$0 It +(s in those trou!-eso"e ti"es !et+een :FIF (nd :FKC th(t !ro.ers or'(ni=ed (n infor"((sso*i(tion (nd fin(--$ (s re*ited in the Indenture *onstitutin' the 2Arti*-es of Asso*i(tion of the E1*h(n'e50 On or (!out Jth d($ of Lu-$,:FKC, ( fe+ n(tive !ro.ers doin' !ro.er('e !usiness in sh(res (nd sto*.s reso-ved upon for"in' in #o"!($ (n (sso*i(tion for prote*tin' the *h(r(*ter, st(tus (nd interest of n(tive sh(re (nd sto*. !ro.ers (nd providin' ( h(-- or !ui-din' for the use of the Me"!ers of su*h (sso*i(tion0 As ( "eetin' he-d in the !ro.er7 H(-- on the Cth d($ of Fe!ru(r$, :FFK, it +(s reso-ved to e1e*ute ( for"(- de(- of (sso*i(tion (nd to *onstitute the first "(n('in' *o""ittee (nd to (ppoint the first trustees0 A**ordin'-$, the Arti*-es of Asso*i(tion of the E1*h(n'e (nd the Sto*.

11

E1*h(n'e +(s for"(--$ est(!-ished in #o"!($ on Grd d($ of De*e"!er, :FFK0 The Asso*i(tion is no+ .no+n (s 2The Sto*. E1*h(n'e50 The entr(n*e fee for ne+ "e"!er +(s Re0: (nd there +ere G:F "e"!ers on the -ist, +hen the e1*h(n'e +(s *onstituted0 The nu"!ers of "e"!ers in*re(sed to GGG in :FJI, GID in :J:I(nd HKF in :JD; (nd the entr(n*e fee +(s r(ised to Rs0C in :FKK, Rs0:;;; in :FJI, Rs0DC;; in :J:I (nd Rs0 HF,;;; in :JD;0 At present there (re ;, reco*n%<e' stoc$ e@c#an*es =%t# abo)t A... stoc$ bro$ers. Or'(ni=(tion stru*ture of sto*. e1*h(n'e v(ries0 :H sto*. e1*h(n'es (re or'(ni=ed (s pu!-i* -i"ited *o"p(nies, I (s *o"p(nies -i"ited !$ 'u(r(ntee (nd G (re non%profit vo-unt(r$ or'(ni=(tion0 Of the tot(- of DG, on-$ J sto*. e1*h(n'es h(ve !een per"(nent re*o'nition0 Others h(ve to see. re*o'nition on (nnu(- !(sis0 These e1*h(n'e do not +or. of its o+n, r(ther, these (re run !$ so"e persons (nd +ith the he-p of so"e persons (nd institution0 A-- these (re do+n (s fun*tion(ries on sto*. e1*h(n'e0 These (re? %. %%. %%%. %(. toc$bro$ers )b9bro$er Mar$et &a$ers 7ortfol%o cons)ltants etc.

5. toc$bro$ers: Sto*. !ro.ers (re the "e"!ers of sto*. e1*h(n'es0 These (re the persons +ho !u$, se-- or de(- in se*urities0 A *ertifi*(te of re'istr(tion fro" SE#I is "(nd(tor$ to (*t (s ( !ro.er0 SE#I *(n i"pose *ert(in *onditions +hi-e 'r(ntin' the *ertifi*(te of re'istr(tions0 It is o!-i'(tor$ for the person to (!ide !$ the ru-es, re'u-(tions (nd the !u$%-(+0 Sto*. !ro.ers (re *o""ission !ro.er, f-oor !ro.er, (r!itr('eur et*0 Deta%l of !e*%stere' 6ro$ers Total no. of re*%stere' bro$ers as on ,5..,..2 Total no. of s)b9bro$er as on ,5..,..2

12

2...

;+1...

;. )b9bro$er: A su!%!ro.er (*ts (s ('ent of sto*. !ro.er0 He is not ( "e"!er of ( sto*. e1*h(n'e0 He (ssists the investors in !u$in', se--in' or de(-in' in se*urities throu'h sto*.!ro.er0 The !ro.er (nd su!%!ro.er shou-d enter into (n ('ree"ent in +hi*h o!-i'(tions of !oth shou-d !e spe*ified0 Su!%!ro.er "ust !e re'istered SE#I for ( de(-in' in se*urities0 For 'ettin' re'istered +ith SE#I, he "ust fu-fi-- *ert(in ru-es (nd re'u-(tion0 ,. Mar$et Ma$ers: M(r.et "(.er is ( desi'n(ted spe*i(-ist in the spe*ified se*urities0 The$ "(.e !oth !id (nd offer (t the s("e ti"e0 A "(r.et "(.er h(s to (!ide !$ !$e%-(+s, ru-es re'u-(tions of the *on*erned sto*. e1*h(n'e0 He is e1e"pt fro" the "(r'in re/uire"ents0 As per the -istin' re/uire"ents, ( *o"p(n$ +here the p(id%up *(pit(- is Rs0 G 4rore !ut not "ore th(n Rs0 C *ore (nd h(vin' ( *o""er*i(oper(tion for -ess th(n D $e(rs shou-d (ppoint ( "(r.et "(.er (t the ti"e of issue of se*urities0 +. 7ortfol%o Cons)ltants: A *o"!in(tion of se*urities su*h (s sto*.s, !onds (nd "one$ "(r.et instru"ents is *o--e*tive-$ *(--ed (s portfo-io0 &here(s the portfo-io *onsu-t(nts (re the persons, fir"s or *o"p(nies +ho (dvise, dire*t or undert(.e the "(n('e"ent or (d"inistr(tion of se*urities or funds on !eh(-f of their *-ients0 Tr(dition(--$ sto*. tr(din' is done throu'h sto*. !ro.ers, person(--$ or throu'h te-ephones0 As nu"!er of peop-e tr(din' in sto*. "(r.et in*re(se enor"ous-$ in -(st fe+ $e(rs, so"e issues -i.e -o*(tion *onstr(ins, !us$ phone -ines, "iss *o""uni*(tion et* st(rt 'ro+in' in sto*. !ro.er offi*es0 Infor"(tion te*hno-o'$ 8Sto*. M(r.et Soft+(re9 he-ps sto*. !ro.ers in so-vin' these pro!-e"s +ith On-ine Sto*. Tr(din'0

13

On-ine Sto*. M(r.et Tr(din' is (n internet !(sed sto*. tr(din' f(*i-it$0 Investor *(n tr(de sh(res throu'h ( +e!site +ithout (n$ "(nu(- intervention fro" Sto*. #ro.er0

There (re t"# $%&&'r'nt ty(' #& tra$%ng 'n)%r#n*'nt+ (v(i-(!-e for on-ine e/uit$ tr(din'0 :0 Installable soft=are base' toc$ Tra'%n* Ter&%nals This tr(din' environ"ent re/uires soft+(re to !e inst(--ed on investor7s *o"puter0 This soft+(re is provided !$ the sto*. !ro.er0 This soft+(re re/uires hi'h speed internet *onne*tion0 These .ind of tr(din' ter"in(-s (re used !$ hi'h vo-u"e intr(d($ e/uit$ tr(ders0 D0 Web (InternetB base' tra'%n* a00l%cat%on This .ind of tr(din' environ"ent doesn@t re/uire (n$ (ddition(- soft+(re inst(--(tion0 The$ (re -i.e other internet +e!sites +hi*h investor *(n (**ess fro" (round the +or-d throu'h nor"(- internet *onne*tion0 Sto*. e1*h(n'es (re -i.e "(r.et p-(*es, +here sto*.!ro.ers !u$ (nd se-- se*urities for individu(-s or institutions0 As per the S4RA 8Se*urities 4ontr(*ts Re'u-(tion A*t9 :JCI, the definition of se*urities in*-udes sh(res, !onds, sto*.s, de!entures, 'overn"ent se*urities, deriv(tives of se*urities, units of *o--e*tive invest"ent s*he"e 84IS9 et*0 The se*urities "(r.et h(s t+o interdependent se'"ents? the pri"(r$ (nd se*ond(r$ "(r.et0 The pri"(r$ "(r.et is the *h(nne- for *re(tion of ne+ se*urities issued !$ pu!-i* -i"ited *o"p(nies or !$ 'overn"ent ('en*ies0 Ne+ se*urities issued in the pri"(r$ "(r.et (re tr(ded in the se*ond(r$ "(r.et0 The se*ond(r$ "(r.et oper(tes throu'h the over%the%*ounter 8OT49 "(r.et (nd the e1*h(n'e tr(de "(r.et0

1.

A'(anta*es of toc$s Tra'%n* 5. 6etter ret)rns A*tive-$ tr(din' sto*.s *(n produ*e !etter over(-- returns th(n si"p-$ !u$in' (nd ho-din'0 ;. 8)*e C#o%ce There (re thous(nds of sto*.s -isted on "(r.ets (round the +or-d0 There is (-+($s ( sto*. +hose pri*e is "ovin' % it7s )ust ( "(tter of findin' the"0 ,. ?a&%l%ar%t3 The "ost tr(ded sto*.s (re in the -(r'est *o"p(nies th(t "ost of us h(ve he(rd of (nd underst(nd % Mi*rosoft, I#M, (nd 4is*o et*0 D%sa'(anta*es of toc$s Tra'%n* 5. Le(era*e &ith ( "(r'ined (**ount the "(1i"u" ("ount of -ever('e (v(i-(!-e for sto*. tr(din' is usu(--$ H?:0 Me(nin' ( MDC,;;; *ou-d tr(de up to M:;;,;;; of sto*.0 This is prett$ -o+ *o"p(red to Fore1 tr(din' or futures tr(din'0

;. 7attern Da3 Tra'er !)les It re/uires (t -e(st MDC,;;; to !e he-d in ( tr(din' (**ount if the tr(der *o"p-etes "ore th(n H tr(des in ( C d($ period0 No su*h ru-e (pp-ies to Fore1 tr(din' or futures tr(din'0 ,. U0t%c$ !)le on #ort ell%n* A tr(der "ust +(it unti- ( sto*. pri*e ti*.s up !efore the$ *(n short se-- it0 A'(in there (re no su*h ru-es in Fore1 tr(din' or futures tr(din' +here 'oin' short (re (s e(s$ (s 'oin' -on'0 +. Nee' to 6orro= toc$ to #ort

1/

Sto*.s (re ph$si*(- *o""odities (nd if ( tr(der +ishes to 'o short then the !ro.er "ust h(ve (rr(n'e"ents in p-(*e to !orro+ th(t sto*. fro" ( sh(reho-der unti- the tr(der *-oses their position0 This -i"its the opportunities (v(i-(!-e for short se--in'0 4ontr(st this to futures tr(din' +here se--in' is (s e(s$ (s !u$in'0 -. Costs A-thou'h on-ine tr(din' *osts for sto*. tr(din' (re -o+ the$ sti-- (dd *onsider(!-$ to the *osts of d($ tr(din'0 On-ine futures tr(din' (re (!out :NH of the *ost for the e/uiv(-ent v(-ue0 In the UK ;0CE st("p dut$ is (-so -evied on (-- sh(re pur*h(ses "(.in' tr(din' virtu(--$ i"possi!-e, hen*e the popu-(rit$ of spre(d !ettin'0

16

17

C8A7TE!9 ;

COMPAN, PROFILE

18

COM7AN" 7!O?ILE Sh(re.h(n is one of the -e(din' ret(i- !ro.er('e of 4iti 3enture +hi*h is runnin' su**essfu--$ sin*e :JDD in the *ountr$0 E(r-ier it +(s the ret(i- !ro.in' (r" of the Mu"!(i%!(sed SSKI Group, +hi*h h(s over ei'ht de*(des of e1perien*e in the sto*. !ro.in' !usiness0 Sh(re .h(n offers its *usto"ers ( +ide r(n'e of e/uit$ re-(ted servi*es in*-udin' tr(de e1e*ution on #SE, NSE, Deriv(tives, depositor$ servi*es, on-ine tr(din', invest"ent (dvi*e et*0 E(r-ier +ith ( -e'(*$ of "ore th(n F; $e(rs in the sto*. "(r.ets, the SSKI 'roup ventured Into institution(- !ro.in' (nd *orpor(te fin(n*e :F $e(rs ('o0 SSKI is one of the -e(din' p-($ers in institution(- !ro.in' (nd *orpor(te fin(n*e (*tivities0 SSKI ho-ds ( si=e(!-e portion of the "(r.et in e(*h of these se'"ents0 SSKI7s institution(- !ro.in' (r" (**ounts for KE of the "(r.et for Forei'n Institution(- portfo-io invest"ent (nd CE of (-- Do"esti* Institution(- portfo-io invest"ent in the *ountr$0 It h(s I; institution(- *-ients spre(d over Indi(, F(r E(st, UK (nd US0 Forei'n Institution(- Investors 'ener(te (!out ICE of the or'(ni=(tion7s revenue, +ith ( d(i-$ turnover of over USM D "i--ion0 The *ontent%ri*h (nd rese(r*h oriented port(- h(s stood out ("on' its *onte"por(ries !e*(use of its ste(df(st dedi*(tion to offerin' *usto"ers !est%of%!reed te*hno-o'$ (nd superior "(r.et infor"(tion0 The o!)e*tive h(s !een to -et *usto"ers "(.e infor"ed de*isions (nd to si"p-if$ the pro*ess of investin' in sto*.s

M%ss%on of the Sh(re.h(n is CTo e')cate an' e&0o=er t#e %n'%(%')al %n(estor to &a$e better %n(est&ent 'ec%s%ons t#ro)*# DUALIT" ADVICE INNOVATIVE 7!ODUCT an' U7E!IO! E!VICE.E

19

WO!K T!UCUT!E O? 8A!EK8AN Sh(re.h(n h(s (-+($s !e-ieved in investin' in te*hno-o'$ to !ui-d its !usiness0 The *o"p(n$ h(s used so"e of the !est%.no+n n("es in the IT industr$, -i.e Sun Mi*ros$ste"s, Or(*-e, Mi*rosoft, 4("!rid'e Te*hno-o'ies, Ne1'eni1, 3i'nette, 3eriSi'n Fin(n*i(- Te*hno-o'ies Indi( Ltd, Spider Soft+(re Pvt0 Ltd0 to !ui-d its tr(din' en'ine (nd *ontent0 The 4iti 3enture ho-ds ( "()orit$ st(.e in the *o"p(n$0 HS#4, Inte- O 4(r-$-e (re the other investors0 On Apri- :K, D;;D Sh(re.h(n -(un*hed Speed Tr(de (nd Tr(de Ti'er, (re net%!(sed e1e*ut(!-e (pp-i*(tion th(t e"u-(tes the !ro.er ter"in(-s (-on' +ith host of other infor"(tion re-ev(nt to the D($ Tr(ders0 This +(s for the first ti"e th(t ( net%!(sed tr(din' st(tion of this *(-i!er +(s offered to the tr(ders0 In the -(st si1 "onths Speed Tr(de h(s !e*o"e ( de facto st(nd(rd for the D($ Tr(din' *o""unit$ over the net0 Sh(re.h(n7s 'round net+or. in*-udes over K;;B Sh(reshops in :G;B *ities in Indi(0 The fir"7s on-ine tr(din' (nd invest"ent site +++0sh(re.h(n0*o" % +(s -(un*hed on Fe! F, D;;;0 The site 'ives (**ess to superior *ontent (nd tr(ns(*tion f(*i-it$ to ret(i- *usto"ers (*ross the *ountr$0 Kno+n for its )(r'on%free, investor friend-$ -(n'u('e (nd hi'h /u(-it$ rese(r*h, the site h(s ( re'istered !(se of over G L(*s *usto"ers0 The nu"!er of tr(din' "e"!ers *urrent-$ st(nds (t over K L(*s0 &hi-e on-ine tr(din' *urrent-$ (**ounts for )ust over C per *ent of the d(i-$ tr(din' in sto*.s in Indi(, Sh(re.h(n (-one (**ounts for DK per *ent of the vo-u"es tr(ded on-ine0 The 4orpor(te Fin(n*e se*tion h(s ( -ist of ver$ presti'ious *-ients (nd h(s "(n$ Pfirsts7 to its *redit, in ter"s of the si=e of de(-, se*tor t(pped et*0 The 'roup h(s p-(*ed over USM C !i--ion in priv(te e/uit$ de(-s0 So"e of the *-ients in*-ude #PL 4e--u-(r Ho-din', Gu)(r(t Pip(v(v, Ess(r, Hut*hison, P-(net(si(, (nd Shopper7s Stop0 Fin(--$, Sh(re.h(n shifted h(nds (nd 4iti venture 'et ho-ds on it0

20

7!ODUCT AND E!VICE O??E!D 6" 8A!EK8AN :% E/uit$ Tr(din' P-(tfor" 8On-ineNOff-ine90 D% 4o""odities Tr(din' P-(tfor" 8On-ineNOff-ine90 G% Portfo-io M(n('e"ent Servi*e0 H% Mutu(- Fund Advisor$ (nd Distri!ution0 C% Insur(n*e Distri!ution0 I%Fore1

I0 Fore10

21

!EA ON TO C8OO E A8!EK8AN LIMITED E@0er%ence SSKI h(s "ore th(n ei'ht de*(des of trust (nd *redi!i-it$ in the Indi(n sto*. "(r.et0 In the Asi( Mone$ !ro.er@s po-- he-d re*ent-$, SSKI +on the @Indi(@s !est !ro.in' house for D;;H@ (+(rd0 Ever sin*e it -(un*hed Sh(re.h(n (s its ret(i- !ro.in' division in Fe!ru(r$ D;;;, it h(s !een providin' institution(-%-eve- rese(r*h (nd !ro.in' servi*es to individu(- investors0 Tec#nolo*3 &ith their on-ine tr(din' (**ount one *(n !u$ (nd se-- sh(res in (n inst(nt fro" (n$ P4 +ith (n internet *onne*tion0 4usto"ers 'et (**ess to the po+erfu- on-ine tr(din' too-s th(t +i-- he-p the" to t(.e *o"p-ete *ontro- over their invest"ent in sh(res0 Access%b%l%t3 Sh(re.h(n provides AD3I4E, EDU4ATION, TOOLS AND EQE4UTION servi*es for investors0 These servi*es (re (**essi!-e throu'h "(n$ *enters (*ross the *ountr$ 8Over IC; -o*(tions in :C; *ities9, over the Internet 8throu'h the +e!site +++0sh(re.h(n0*o"9 (s +e-- (s over the 3oi*e Too-0 Kno=le'*e In ( !usiness +here the ri'ht infor"(tion (t the ri'ht ti"e *(n tr(ns-(te into dire*t profits, investors 'et (**ess to ( +ide r(n'e of infor"(tion on the *ontent%ri*h port(-, +++0sh(re.h(n0*o"0 Investors +i-- (-so 'et ( usefu- set of .no+-ed'e%!(sed too-s th(t +i-- e"po+er the" to t(.e infor"ed de*isions0 Con(en%ence One *(n *(-- Sh(re.h(n7s Di(-%N%Tr(de nu"!er to 'et invest"ent (dvi*e (nd e1e*ute hisNher tr(ns(*tions0 The$ h(ve ( dedi*(ted *(--%*enter to provide this servi*e vi( ( To-- Free Nu"!er :F;; DD%KC;; O GJK;KC;; fro" (n$+here in Indi(0

22

er(%ce Its *usto"er servi*e te(" (ssist their *usto"er for (n$ he-p th(t the$ need re-(tin' to tr(ns(*tions, !i--in', de"(t (nd other /ueries0 Their *usto"er servi*e *(n !e *ont(*ted vi( ( to--%free nu"!er, e"(i- or -ive *h(t on +++0sh(re.h(n0*o"0 In(est&ent A'(%ce Sh(re.h(n h(s dedi*(ted rese(r*h te("s of "ore th(n G; peop-e for fund("ent((nd te*hni*(- rese(r*h0 Their (n(-$sts *onst(nt-$ tr(*. the pu-se of the "(r.et (nd provide ti"e-$ invest"ent (dvi*e to *usto"er in the for" of d(i-$ rese(r*h e"(i-s, on-ine *h(t, printed reports et*0 6enef%ts Free Depositor$ AN* Inst(nt 4(sh Tr(nsfer Mu-tip-e #(n. Option0 Se*ure Order !$ 3oi*e Too- Di(-%n%Tr(de0 Auto"(ted Portfo-io to .eep tr(*. of the v(-ue of $our (*tu(- pur*h(ses0 DH1K 3oi*e Too- (**ess to $our tr(din' (**ount0 Person(-i=ed Pri*e (nd A**ount A-erts de-ivered inst(nt-$ to $our Mo!i-e Phone O E%"(i- (ddress0 Live 4h(t f(*i-it$ +ith Re-(tionship M(n('er on >(hoo Messen'er Spe*i(- Person(- In!o1 for order (nd tr(de *onfir"(tions0 On%-ine 4usto"er Servi*e vi( &e! 4h(t0 En)o$ Auto"(ted Portfo-io0 #u$ or se-- even sin'-e sh(re An$ti"e Orderin'0

23

#are$#an offers t#e follo=%n* 0ro')cts:9 CLA IC ACCOUNT

This is ( User Friend-$ Produ*t +hi*h (--o+s the *-ient to tr(de throu'h +e!site +++0sh(re.h(n0*o" (nd is suit(!-e for the ret(i- investors +ho is ris.%(verse (nd hen*e prefers to invest in sto*.s or +ho does not tr(de too fre/uent-$0

?eat)res On-ine tr(din' (**ount for investin' in E/uit$ (nd Deriv(tives vi( +++0sh(re.h(n0*o" Live Ter"in(- (nd Sin'-e ter"in(- for NSE 4(sh, NSE FOO O #SE0 Inte'r(tion of On%-ine tr(din', S(vin' #(n. (nd De"(t A**ount0 Inst(nt *(sh tr(nsfer f(*i-it$ ('(inst pur*h(se O s(-e of sh(res0 4o"petitive tr(ns(*tion *h(r'es0 Inst(nt order (nd tr(de *onfir"(tion !$ E%"(i-0 Stre("in' <uotes 84(sh O Deriv(tives90 Person(-i=ed "(r.et +(t*h0 Sin'-e s*reen interf(*e for 4(sh (nd deriv(tives (nd "ore0 Provision to enter pri*e tri''er (nd vie+ the s("e on-ine in "(r.et +(t*h0 7EEDT!ADE SPEEDTRADE is (n internet%!(sed soft+(re (pp-i*(tion th(t en(!-es $ou to !u$ (nd se-- in (n inst(nt0 It is ide(- for (*tive tr(ders (nd )o!!ers +ho tr(ns(*t fre/uent-$ durin' d($7s session to *(pit(-i=e on intr(%d($ pri*e "ove"ent0 F'at-r'+ Inst(nt order E1e*ution (nd 4onfir"(tion0

2.

 Sin'-e s*reen tr(din' ter"in(- for NSE 4(sh, NSE FOO O #SE0 Te*hni*(- Studies0 Mu-tip-e 4h(rtin'0 Re(-%ti"e stre("in' /uotes, ti*%!$%ti* *h(rts0 M(r.et su""(r$ 84ost tr(ded s*rip, hi'hest *-ue et*09 Hot .e$s si"i-(r to !ro.er7s ter"in(-0 A-erts (nd re"inders0 #(*.%up f(*i-it$ to p-(*e tr(des on Dire*t Phone -ines0 Live "(r.et de!ts0

DIAL9N9T!ADE
A-on' +ith en(!-in' (**ess for tr(de on-ine, the 4LASSI4 (nd SPEEDTRADE A44OUNT (-so 'ives Di(-%n%tr(de servi*es0 &ith this servi*e, one *(n di(- Sh(re.h(n7s dedi*(ted phone -ines :F;;% DD%KC;;, GJK;%KC;;0 #eside this, Re-(tionship M(n('ers (re (-+($s (v(i-(!-e on Offi*e Phone (nd Mo!i-e to reso-ve *usto"er /ueries0

8A!E MO6ILE
Sh(re.h(n h(d introdu*ed Sh(re Mo!i-e, "o!i-e !(sed soft+(re +here one *(n +(t*h Sto*. Pri*es, Intr( D($ 4h(rts, Rese(r*h O Advi*e (nd Tr(din' 4(--s -ive on the Mo!i-e0 (As per SEBI regulations, uying!selling shares through a "o ile phone are not yet per"itted#)

7!E7AID ACCOUNT
4usto"ers p($ Adv(n*e #ro.er('e on tr(din' A**ount (nd en)o$ uninterrupted tr(din' in their A**ount0 #eside this, 're(t dis*ount (re (-so (v(i-(!-e 8up to C;E9 on !ro.er('e0 7re0a%' Class%c Acco)nt: 9 !s. ;... 7re0a%' 0ee' tra'e Acco)nt: 9 !s. A...

I7O ON9LINE
4usto"ers *(n (pp-$ to (-- the forth*o"in' IPOs on-ine0 This is /uite h(ss-e%free, p(per-ess (nd ti"e s(vin'0 Si"p-$ (--o*(te fund to IPO A**ount, App-$ for the IPO (nd Sit #(*. O Re-(15

2/

M)t)al ?)n' Onl%ne

Investors *(n (pp-$ to Mutu(- Funds of Re-i(n*e, Fr(n.-in Te"p-eton Invest"ents, I4I4I Prudenti(-, S#I, #ir-(, Sund(r(", HDF4, DSP Merri-- L$n*h, PRIN4IPAL (nd TATA +ith Sh(re.h(n5

Fero 6alance ICICI a(%n* Acco)nt

Sh(re.h(n h(d tied%up +ith I4I4I !(n. for Rero #(-(n*e A**ount for Sh(re.h(n7s 4-ients0 No+ their *usto"ers *(n h(ve ( Rero #(-(n*e S(vin' A**ount +ith I4I4I #(n. (fter $our de"(t (**ount *re(tion +ith Sh(re.h(n5

26

C8A7TE!9,

R)S)*RC+ M)T+ODO,O-.

27

!E EA!C8 MET8ODOLOG" O6GECTIVE O? T8E 7!OGECT E(*h rese(r*h stud$ h(s its o+n spe*ifi* purpose0 It is -i.e to dis*over to <uestion throu'h the (pp-i*(tion of s*ientifi* pro*edure0 #ut the "(in (i" of our rese(r*h to find out the truth th(t is hidden (nd +hi*h h(s not !een dis*overed (s $et0 Our rese(r*h stud$ h(s t+o o!)e*tives?% O6GECTIVE To .no+ the *on*ept of Portfo-io M(n('e"ent0 To .no+ (!out the s*he"es offered !$ the different insur(n*e *o"p(nies, ne+ IPO7s, Mutu(- Funds0 To .no+ in depth (!out Insur(n*e, Mutu(- Funds, Sto*., #onds et*0 To .no+ (!out the (+(reness to+(rds sto*. !ro.ers (nd sh(re "(r.et0 To stud$ (!out the *o"petitive position of Sh(re.h(n Ltd in 4o"petitive M(r.et0 To stud$ (!out the effe*tiveness O effi*ien*$ of Sh(re.h(n Ltd in re-(tion to its *o"petitors To stud$ (!out +hether peop-e (re s(tisfied +ith Sh(re.h(n Servi*es O M(n('e"ent S$ste" or not0

To stud$ (!out the diffi*u-ties f(*ed !$ persons +hi-e Tr(din' in Sh(re.h(n0 To stud$ (!out the need of i"prove"ent in e1istin' Tr(din' s$ste"0

28

co0e of t#e t)'3 T#e st)'3 of t#e 7ortfol%o Mana*e&ent er(%ces %s #el0f)l %n t#e follo=%n* areas. In tod($@s *o"p-e1 fin(n*i(- environ"ent, investors h(ve uni/ue needs +hi*h (re derived fro" their ris. (ppetite (nd fin(n*i(- 'o(-s0 #ut re'(rd-ess of this, ever$ investor see.s to "(1i"i=e his returns on invest"ents +ithout *(pit(erosion0 Portfo-io M(n('e"ent Servi*es 8PMS9 re*o'ni=e this, (nd "(n('e the invest"ents profession(--$ to (*hieve spe*ifi* invest"ent o!)e*tives, (nd not to for'et, re-ievin' the investors fro" the d($ to d($ h(ss-es +hi*h invest"ent re/uire0

It is offers profession(- "(n('e"ent of e/uit$ invest"ent of the investor +ith (n (i" to de-iver *onsistent return +ith (n e$e on ris.0 Identif$ the .e$ Sto*. in e(*h portfo-io0 To -oo. out for ne+ prospe*tive *usto"ers +ho (re +i--in' to invest in PMS0 To find out the Sh(re.h(n, PMS servi*es effe*tiveness in the *urrent situ(tion0 It (-so *overs the s*en(rio of the Invest"ent Phi-osoph$ of ( Fund M(n('er0

29

MET8ODOLOG" ?O! DATA COLLECTION This report is !(sed on pri"(r$ (s +e-- se*ond(r$ d(t(, ho+ever pri"(r$ d(t( *o--e*tion +(s 'iven "ore i"port(n*e sin*e it is overhe(rin' f(*tor in (ttitude studies0 One of the "ost i"port(nt users of rese(r*h "ethodo-o'$ is th(t it he-ps in identif$in' the pro!-e", *o--e*tin', (n(-$=in' the re/uired infor"(tion d(t( (nd providin' (n (-tern(tive so-ution to the pro!-e" 0It (-so he-ps in *o--e*tin' the vit(- infor"(tion th(t is re/uired !$ the top "(n('e"ent to (ssist the" for the !etter de*ision "(.in' !oth d($ to d($ de*ision (nd *riti*(- ones0 The stud$ *onsists of (n(-$sis (!out Investors Per*eption (!out the Portfo-io M(n('e"ent Servi*es offered !$ Sh(re.h(n Li"ited0 For the purpose of the stud$ :;; *usto"ers +ere pi*.ed up (t r(ndo" (nd their vie+s so-i*ited on different p(r("eters0 The "ethodo-o'$ (dopted in*-udes D)est%onna%re !an'o& sa&0le s)r(e3 of c)sto&ers D%sc)ss%ons =%t# t#e concerne' OU!CE O? DATA 7r%&ar3 'ata? <uestionn(ire econ'ar3 'ata? Pu!-ished "(teri(-s of Sh(re.h(n Li"ited0 Su*h (s periodi*(-s, )ourn(-s, ne+s p(pers, (nd +e!site0

30

D)rat%on of t)'3 The Stud$ +(s *(rried out for the period of one (nd h(-f "onths fro" :;th M($ to G;th of Lune D;:G0

AM7LING 7LAN a&0l%n*:

Sin*e Sh(re.h(n Li"ited h(s "(n$ se'"ents I se-e*ted Portfo-io M(n('e"ent Servi*es 8PMS9 se'"ent (s per "$ profi-e to do "(r.et rese(r*h0 :;;E *over('e +(s diffi*u-t +ithin the -i"ited period of ti"e0 Hen*e s("p-in' surve$ "ethod +(s (dopted for the purpose of the stud$0

7o0)lat%on: 8Universe9 *usto"ers O non *onsu"ers of Sh(re.h(n -i"ited a&0l%n* s%<e:

A s("p-e of hundred +(s *hosen for the purpose of the stud$0 S("p-e *onsisted of Investor (s !(sed on their In*o"e (nd Profession (s +e-- (s Edu*(tion(- #(*.'round0

a&0l%n* Met#o's:

Pro!(!i-it$ s("p-in' re/uires *o"p-ete .no+-ed'e (!out (-- s("p-in' units in the universe0 Due to ti"e *onstr(int non%pro!(!i-it$ s("p-in' +(s *hosen for the stud$0

31

 a&0l%n* 0roce')re: Fro" -(r'e nu"!er of *usto"ers O non *onsu"ers s("p-e -ot +ere r(ndo"-$ pi*.ed up !$ "e0 ?%el' t)'3:
Dire*t-$ (ppro(*hed respondents !$ the fo--o+in' str(te'ies

Te-e%*(--in' Person(- 3isits 4-ients Referen*es Pro"otion(- A*tivities D(t(!(se provided !$ the Sh(re.h(n Li"ited0

C8A7TE!9+

PORTFO,IO M*N*-M)NT S)R/IC)S

32

7O!T?OLIO MANGEMNT E!VICE (7M B Portfo-io 8fin(n*e9 "e(ns ( *o--e*tion of invest"ents he-d !$ (n institution or ( priv(te individu(-0 Ho-din' ( portfo-io is often p(rt of (n invest"ent (nd ris.%-i"itin' str(te'$ *(--ed diversifi*(tion0 #$ o+nin' sever(- (ssets, *ert(in t$pes of ris. 8in p(rti*u-(r spe*ifi* ris.9 *(n !e redu*ed0 There (re (-so portfo-ios +hi*h (re (i"ed (t t(.in' hi'h ris.s S these (re *(--ed *on*entr(ted portfo-ios0 Invest"ent "(n('e"ent is the profession(- "(n('e"ent of v(rious se*urities 8sh(res, !onds et*9 (nd other (ssets 8e0'0 re(- est(te9, to "eet spe*ified invest"ent 'o(-s for the !enefit of the investors0 Investors "($ !e institutions 8insur(n*e *o"p(nies, pension funds, *orpor(tions et*09 or priv(te investors 8!oth dire*t-$ vi( invest"ent *ontr(*ts (nd "ore *o""on-$ vi( *o--e*tive invest"ent s*he"es e0'0 "utu(- funds90 The ter" (sset "(n('e"ent is often used to refer to the invest"ent "(n('e"ent of *o--e*tive invest"ents, +hi-st the "ore 'eneri* fund "(n('e"ent "($ refer to (-for"s of institution(- invest"ent (s +e-- (s invest"ent "(n('e"ent for priv(te investors0 Invest"ent "(n('ers +ho spe*i(-i=e in (dvisor$ or dis*retion(r$ "(n('e"ent on !eh(-f of 8nor"(--$ +e(-th$9 priv(te investors "($ often refer to their servi*es (s +e(-th "(n('e"ent or portfo-io "(n('e"ent often +ithin the *onte1t of so%*(--ed Tpriv(te !(n.in'T0

The provision of @invest"ent "(n('e"ent servi*es@ in*-udes e-e"ents of fin(n*i((n(-$sis, (sset se-e*tion, sto*. se-e*tion, p-(n i"p-e"ent(tion (nd on'oin' "onitorin' of invest"ents0 Outside of the fin(n*i(- industr$, the ter" Tinvest"ent "(n('e"entT is often (pp-ied to invest"ents other th(n fin(n*i(- instru"ents0 Invest"ents (re often "e(nt to in*-ude pro)e*ts, !r(nds, p(tents (nd "(n$ thin's other th(n sto*.s (nd !onds0 Even in this *(se, the ter" i"p-ies th(t ri'orous fin(n*i(- (nd e*ono"i* (n(-$sis "ethods (re used0

33

Nee' of 7M As in the *urrent s*en(rio the effe*tiveness of PMS is re/uired0 As the PMS 'ives investors periodi*(--$ revie+ their (sset (--o*(tion (*ross different (ssets (s the portfo-io *(n 'et s.e+ed over ( period of ti"e0 This *(n !e -(r'e-$ due to (ppre*i(tion N depre*i(tion in the v(-ue of the invest"ents0 As the fin(n*i(- 'o(-s (re diverse, the invest"ent *hoi*es (-so need to !e different to "eet those needs0 No sin'-e invest"ent is -i.e-$ to "eet (-- the needs, so one shou-d .eep so"e "one$ in !(n. deposits (nd N -i/uid funds to "eet (n$ ur'ent need for *(sh (nd .eep the !(-(n*e in other invest"ent produ*tsN s*he"es th(t +ou-d "(1i"i=e the return (nd "ini"i=e the ris.0 Invest"ent (--o*(tion *(n (-so *h(n'e dependin' on one7s ris.%return profi-e0

3.

3/

ObHect%(e of 7M There (re the fo--o+in' o!)e*tives +hi*h (re fu-- fi--ed !$ Portfo-io M(n('e"ent Servi*es0 ./ Sa&'ty O& F-n$0 The invest"ent shou-d !e preserved, not !e -ost, (nd shou-d re"(in in the return(!-e position in *(sh or .ind0 1/ Mar2'ta3%4%ty0 The invest"ent "(de in se*urities shou-d !e "(r.et(!-e th(t "e(ns, the se*urities "ust !e -isted (nd tr(ded in sto*. e1*h(n'e so (s to (void diffi*u-t$ in their en*(sh"ent0 5/ L%6-%$%ty0 The portfo-io "ust *onsist of su*h se*urities, +hi*h *ou-d !e en%*(shed +ithout (n$ diffi*u-t$ or invo-ve"ent of ti"e to "eet ur'ent need for funds0 M(r.et(!i-it$ ensures -i/uidit$ to the portfo-io0 7/ R'a+#na34' r't-rn0 The invest"ent shou-d e(rn ( re(son(!-e return to up.eep the de*-inin' v(-ue of "one$ (nd !e *o"p(ti!-e +ith opportunit$ *ost of the "one$ in ter"s of *urrent in*o"e in the for" of interest or dividend0 8/ A((r'9%at%#n %n Ca(%ta40 The "one$ invested in portfo-io shou-d 'ro+ (nd resu-t into *(pit(- '(ins0 :/ Ta; (4ann%ng0 Effi*ient portfo-io "(n('e"ent is *on*erned +ith *o"posite t(1 p-(nnin' *overin' in*o"e t(1, *(pit(- '(in t(1, +e(-th t(1 (nd 'ift t(10 </ M%n%*%=' r%+20 Ris. (void(n*e (nd "ini"i=(tion of ris. (re i"port(nt o!)e*tive of portfo-io "(n('e"ent0 Portfo-io "(n('ers (*hieve these o!)e*tives !$ effe*tive invest"ent p-(nnin' (nd periodi*(- revie+ of "(r.et, situ(tion (nd e*ono"i* environ"ent (ffe*tin' the fin(n*i(- "(r.et0

36

7O!T?OLIO CON T!UCTION The Portfo-io 4onstru*tion of R(tion(- investors +ish to "(1i"i=e the returns on their funds for ( 'iven -eve- of ris.0 A-- invest"ents possess v(r$in' de'rees of ris.0 Returns *o"e in the for" of in*o"e, su*h (s interest or dividends, or throu'h 'ro+th in *(pit(- v(-ues 8i0e0 *(pit(- '(ins90 The portfo-io *onstru*tion pro*ess *(n !e !ro(d-$ *h(r(*teri=ed (s *o"prisin' the fo--o+in' steps? :0 ett%n* obHect%(es0 The first step in !ui-din' ( portfo-io is to deter"ine the "(in o!)e*tives of the fund 'iven the *onstr(ints 8i0e0 t(1 (nd -i/uidit$ re/uire"ents9 th(t "($ (pp-$0 E(*h investor h(s different o!)e*tives, ti"e hori=ons (nd (ttitude to+(rds ris.0 Pension funds h(ve -on'%ter" o!-i'(tions (nd, (s ( resu-t, invest for the -on' ter"0 Their o!)e*tive "($ !e to "(1i"i=e tot(- returns in e1*ess of the inf-(tion r(te0 A *h(rit$ "i'ht +ish to 'ener(te the hi'hest -eve- of in*o"e +hi-st "(int(inin' the v(-ue of its *(pit(- re*eived fro" !e/uests0 An individu(- "($ h(ve *ert(in -i(!i-ities (nd +ish to "(t*h the" (t ( future d(te0 Assessin' ( *-ient7s ris. to-er(n*e *(n !e diffi*u-t0 The *on*epts of effi*ient portfo-ios (nd diversifi*(tion "ust (-so !e *onsidered +hen settin' up the invest"ent o!)e*tives0 D0 Def%n%n* 7ol%c30 On*e the o!)e*tives h(ve !een set, ( suit(!-e invest"ent po-i*$ "ust !e est(!-ished0 The st(nd(rd pro*edure is for the "one$ "(n('er to (s. *-ients to se-e*t their preferred "i1 of (ssets, for e1("p-e e/uities (nd !onds, to provide (n ide( of the nor"(- "i1 desired0 4-ients (re then (s.ed to spe*if$ -i"its or "(1i"u" (nd "ini"u" ("ounts the$ +i-- (--o+ to !e invested in the different (ssets (v(i-(!-e0 The "(in (sset *-(sses (re *(sh, e/uities, 'i-tsN!onds (nd other de!t instru"ents, deriv(tives, propert$ (nd overse(s (ssets0 A-tern(tive invest"ents, su*h (s priv(te e/uit$, (re (-so 'ro+in' in popu-(rit$, (nd +i-- !e dis*ussed in ( -(ter *h(pter0 Att(inin' the opti"(- (sset "i1 over ti"e is one of the .e$ f(*tors of su**essfuinvestin'0

37

G0 A00l3%n* 0ortfol%o strate*30 At either end of the portfo-io "(n('e"ent spe*tru" of str(te'ies (re (*tive (nd p(ssive str(te'ies0 An (*tive str(te'$ invo-ves predi*tin' trends (nd *h(n'in' e1pe*t(tions (!out the -i.e-$ future perfor"(n*e of the v(rious (sset *-(sses (nd (*tive-$ de(-in' in (nd out of invest"ents to see. ( !etter perfor"(n*e0 For e1("p-e, if the "(n('er e1pe*ts interest r(tes to rise, !ond pri*es (re -i.e-$ to f(-- (nd so !onds shou-d !e so-d, un-ess this e1pe*t(tion is (-re(d$ f(*tored into !ond pri*es0 At this st('e, the (*tive fund "(n('er shou-d (-so deter"ine the st$-e of the portfo-io0 For e1("p-e, +i-- the fund invest pri"(ri-$ in *o"p(nies +ith -(r'e "(r.et *(pit(-i=(tions, in sh(res of *o"p(nies e1pe*ted to 'ener(te hi'h 'ro+th r(tes, or in *o"p(nies +hose v(-u(tions (re -o+ A p(ssive str(te'$ usu(--$ invo-ves !u$in' se*urities to "(t*h ( prese-e*ted "(r.et inde10 A-tern(tive-$, ( portfo-io *(n !e set up to "(t*h the investor7s *hoi*e of t(i-or%"(de inde10 P(ssive str(te'ies re-$ on diversifi*(tion to redu*e ris.0 Outperfor"(n*e versus the *hosen inde1 is not e1pe*ted0 This str(te'$ re/uires "ini"u" input fro" the portfo-io "(n('er0 In pr(*ti*e, "(n$ (*tive funds (re "(n('ed so"e+here !et+een the (*tive (nd p(ssive e1tre"es, the *ore ho-din's of the fund !ein' p(ssive-$ "(n('ed (nd the !(-(n*e !ein' (*tive-$ "(n('ed0 H0 Asset select%ons. On*e the str(te'$ is de*ided, the fund "(n('er "ust se-e*t individu(- (ssets in +hi*h to invest0 Usu(--$ ( s$ste"(ti* pro*edure .no+n (s (n invest"ent pro*ess is est(!-ished, +hi*h sets 'uide-ines or *riteri( for (sset se-e*tion0 A*tive str(te'ies re/uire th(t the fund "(n('ers (pp-$ (n(-$ti*(- s.i--s (nd )ud'"ent for (sset se-e*tion in order to identif$ underv(-ued (ssets (nd to tr$ to 'ener(te superior perfor"(n*e0 C0 7erfor&ance assess&ents0 In order to (ssess the su**ess of the fund "(n('er, the perfor"(n*e of the fund is periodi*(--$ "e(sured ('(inst ( pre%('reed !en*h"(r. S perh(ps ( suit(!-e sto*. e1*h(n'e inde1 or ('(inst ( 'roup of si"i-(r portfo-ios 8peer 'roup *o"p(rison90 The portfo-io *onstru*tion pro*ess is *ontinuous-$ iter(tive, ref-e*tin' *h(n'es intern(--$ (nd e1tern(--$0 For e1("p-e, e1pe*ted "ove"ents in e1*h(n'e r(tes "($ "(.e overse(s invest"ent "ore (ttr(*tive, -e(din' to *h(n'es in (sset (--o*(tion0 Or, if "(n$ -(r'e%s*(-e investors si"u-t(neous-$ de*ide to s+it*h fro" p(ssive to "ore (*tive str(te'ies, pressure +i-- !e put on the fund "(n('ers to offer "ore (*tive funds0

38

Poor perfor"(n*e of ( fund "($ -e(d to "odifi*(tions in individu(- (sset ho-din's or, (s (n e1tre"e "e(sureA the "(n('er of the fund "($ !e *h(n'ed (-to'ether0

te0s to toc$ elect%on 7rocess

39

T30es of assets The stru*ture of ( portfo-io +i-- depend u-ti"(te-$ on the investor7s o!)e*tives (nd on the (sset se-e*tion de*ision re(*hed0 The portfo-io stru*ture t(.es into (**ount ( r(n'e of f(*tors, in*-udin' the investor7s ti"e hori=on, (ttitude to ris., -i/uidit$ re/uire"ents, t(1 position (nd (v(i-(!i-it$ of invest"ents0 The "(in (sset *-(sses (re *(sh, !onds (nd other fi1ed in*o"e se*urities, e/uities, deriv(tives, propert$ (nd overse(s (ssets0 Cas# an' cas# %nstr)&ents 4(sh *(n !e invested over (n$ desired period, to 'ener(te interest in*o"e, in ( r(n'e of hi'h-$ -i/uid or e(si-$ redee"(!-e instru"ents, fro" si"p-e !(n. deposits, ne'oti(!-e *ertifi*(tes of deposits, *o""er*i(- p(per 8short ter" *orpor(te de!t9 (nd Tre(sur$ !i--s 8short ter" 'overn"ent de!t9 to "one$ "(r.et funds, +hi*h (*tive-$ "(n('e *(sh resour*es (*ross ( r(n'e of do"esti* (nd forei'n "(r.ets0 4(sh is nor"(--$ he-d over the short ter" pendin' use e-se+here 8perh(ps for p($in' *-(i"s !$ ( non%-ife insur(n*e *o"p(n$ or for p($in' pensions9, !ut "($ !e he-d over the -on'er ter" (s +e--0 Returns on *(sh (re driven !$ the 'ener(- de"(nd for funds in (n e*ono"$, interest r(tes, (nd the e1pe*ted r(te of inf-(tion0 A portfo-io +i-- nor"(--$ "(int(in (t -e(st ( s"(-- proportion of its funds in *(sh in order to t(.e (dv(nt('e of !u$in' opportunities0 6on's #onds (re de!t instru"ents on +hi*h the issuer 8the !orro+er9 ('rees to "(.e interest p($"ents (t periodi* interv(-s over the -ife of the !ond S this *(n !e for t+o to thirt$ $e(rs or, so"eti"es, in perpetuit$0 Interest p($"ents *(n !e fi1ed or v(ri(!-e, the -(tter !ein' -in.ed to prev(i-in' -eve-s of interest r(tes0 #ond "(r.ets (re intern(tion(- (nd h(ve 'ro+n r(pid-$ over re*ent $e(rs0 The !ond "(r.ets (re hi'h-$ -i/uid, +ith "(n$ issuers of si"i-(r st(ndin', in*-udin' 'overn"ents 8soverei'ns9 (nd st(te%'u(r(nteed or'(ni=(tions0 4orpor(te !onds (re !onds th(t (re issued !$ *o"p(nies0 To (ssist investors (nd to he-p in the effi*ient pri*in' of !ond issues, "(n$ !ond issues (re 'iven r(tin's !$ spe*i(-ist ('en*ies su*h (s St(nd(rd O Poor7s (nd Mood$7s0 The hi'hest invest"ent 'r(de is AAA, 'oin' (-- the +($ do+n to D, +hi*h is 'r(ded (s in def(u-t0 Dependin' on e1pe*ted "ove"ents in future interest r(tes, the *(pit(- v(-ues of !onds f-u*tu(te d(i-$, providin' investors +ith the potenti(- for *(pit(- '(ins or -osses0 Future interest r(tes (re driven !$ the -i.e-$ de"(ndN supp-$ of

.0

"one$ in (n e*ono"$, future inf-(tion r(tes, po-iti*(- events (nd interest r(tes e-se+here in +or-d "(r.ets0 Investors +ith short%ter" hori=ons (nd -i/uidit$ re/uire"ents "($ *hoose to invest in !onds !e*(use of their re-(tive-$ hi'her return th(n *(sh (nd their prospe*ts for possi!-e *(pit(- (ppre*i(tion0 Lon'%ter" investors, su*h (s pension funds, "($ (*/uire !onds for the hi'her in*o"e (nd "($ ho-d the" unti- rede"ption S for perh(ps seven or fifteen $e(rs0 #e*(use of the 're(ter ris., -on' !onds 8over ten $e(rs to "(turit$9 tend to !e "ore vo-(ti-e in pri*e th(n "ediu"% (nd short%ter" !onds, (nd h(ve ( hi'her $ie-d0

E>)%t%es E/uit$ *onsists of sh(res in ( *o"p(n$ representin' the *(pit(- ori'in(--$ provided !$ sh(reho-ders0 An ordin(r$ sh(reho-der o+ns ( proportion(- sh(re of the *o"p(n$ (nd (n ordin(r$ sh(re *(rries the residu(- ris. (nd re+(rds (fter (-- -i(!i-ities (nd *osts h(ve !een p(id0 Ordin(r$ sh(res *(rr$ the ri'ht to re*eive in*o"e in the for" of dividends 8on*e de*-(red out of distri!ut(!-e profits9 (nd (n$ residu(- *-(i" on the *o"p(n$7s (ssets on*e its -i(!i-ities h(ve !een p(id in fu--0 Preferen*e sh(res (re (nother t$pe of sh(re *(pit(-0 The$ differ fro" ordin(r$ sh(res in th(t the dividend on ( preferen*e sh(re is usu(--$ fi1ed (t so"e ("ount (nd does not *h(n'e0 A-so, preferen*e sh(res usu(--$ do not *(rr$ votin' ri'hts (nd, in the event of fir" f(i-ure, preferen*e sh(reho-ders (re p(id !efore ordin(r$ sh(reho-ders0 Returns fro" investin' in e/uities (re 'ener(ted in the for" of dividend in*o"e (nd *(pit(- '(in (risin' fro" the u-ti"(te s(-e of the sh(res0 The -eve- of dividends "($ v(r$ fro" $e(r to $e(r, ref-e*tin' the *h(n'in' profit(!i-it$ of ( *o"p(n$0 Si"i-(r-$, the "(r.et pri*e of ( sh(re +i-- *h(n'e fro" d($ to d($ to ref-e*t (-- re-ev(nt (v(i-(!-e infor"(tion0 A-thou'h not 'u(r(nteed, e/uit$ pri*es 'ener(--$ rise over ti"e, ref-e*tin' 'ener(e*ono"i* 'ro+th, (nd h(ve !een found over the -on' ter" to 'ener(te 'ro+in' -eve-s of in*o"e in e1*ess of the r(te of inf-(tion0 Gr(nted, there "($ !e periods of ti"e, even $e(rs, +hen e/uit$ pri*es trend do+n+(rds S usu(--$ durin' re*ession(r$ ti"es0 The over(-- -on'%ter" prospe*t, ho+ever, for *(pit(- (ppre*i(tion "(.es e/uities (n (ttr(*tive invest"ent proposition for "()or institution(- investors0

.1

Der%(at%(es Deriv(tive instru"ents (re fin(n*i(- (ssets th(t (re derived fro" e1istin' pri"(r$ (ssets (s opposed to !ein' issued !$ ( *o"p(n$ or 'overn"ent entit$0 The t+o "ost popu-(r deriv(tives (re futures (nd options0 The e1tent to +hi*h ( fund "($ in*orpor(te deriv(tives produ*ts in the fund +i-- !e spe*ified in the fund ru-es (nd, dependin' on the t$pe of fund est(!-ished for the *-ient (nd dependin' on the *-ient, "($ not !e (--o+(!-e (t (--0 A f)t)res contract is (n ('ree"ent in the for" of ( st(nd(rdi=ed *ontr(*t !et+een t+o *ounterp(rties to e1*h(n'e (n (sset (t ( fi1ed pri*e (nd d(te in the future0 The under-$in' (sset of the futures *ontr(*t *(n !e ( *o""odit$ or ( fin(n*i(- se*urit$0 E(*h *ontr(*t spe*ifies the t$pe (nd ("ount of the (sset to !e e1*h(n'ed, (nd +here it is to !e de-ivered 8usu(--$ one of ( fe+ (pproved -o*(tions for th(t p(rti*u-(r (sset90 Futures *ontr(*ts *(n !e set up for the de-iver$ of *o*o(, stee-, oi- or *offee0 Li.e+ise, fin(n*i(- futures *ontr(*ts *(n spe*if$ the de-iver$ of forei'n *urren*$ or ( r(n'e of 'overn"ent !onds0 The !u$er of ( futures *ontr(*t t(.es ( P-on' position7, (nd +i-"(.e ( profit if the v(-ue of the *ontr(*t rises (fter the pur*h(se0 The se--er of the futures *ontr(*t t(.es ( Pshort position7 (nd +i--, in turn, "(.e ( profit if the pri*e of the futures *ontr(*t f(--s0 &hen the futures *ontr(*t e1pires, the se--er of the *ontr(*t is re/uired to de-iver the under-$in' (sset to the !u$er of the *ontr(*t0 Re'(rdin' fin(n*i(- futures *ontr(*ts, ho+ever, in the v(st "()orit$ of *(ses no ph$si*(- de-iver$ of the under-$in' (sset t(.es p-(*e (s "(n$ *ontr(*ts (re *(sh sett-ed or *-osed out +ith the offsettin' position !efore the e1pir$ d(te0 An o0t%on contract is (n ('ree"ent th(t 'ives the o+ner the ri'ht, !ut not o!-i'(tion, to !u$ or se-- 8dependin' on the t$pe of option9 ( *ert(in (sset for ( spe*ified period of ti"e0 A *(-- option 'ives the ho-der the ri'ht to !u$ the (sset0 A put option 'ives the ho-der the ri'ht to se-- the (sset0 Europe(n options *(n !e e1er*ised on-$ on the options7 e1pir$ d(te0 US options *(n !e e1er*ised (t (n$ ti"e !efore the *ontr(*t7s "(turit$ d(te0 Option *ontr(*ts on sto*.s or sto*. indi*es (re p(rti*u-(r-$ popu-(r0 #u$in' (n option invo-ves p($in' ( pre"iu"A se--in' (n option invo-ves re*eivin' the pre"iu"0 Options h(ve the potenti(- for -(r'e '(ins or -osses, (nd (re *onsidered to !e hi'h%ris. instru"ents0 So"eti"es, ho+ever, option *ontr(*ts (re used to redu*e ris.0 For e1("p-e, fund "(n('ers *(n use ( *(-- option to redu*e ris. +hen the$ o+n (n (sset0 On-$ ver$ spe*ifi* funds (re (--o+ed to ho-d options0

.2

7ro0ert3 Propert$ invest"ent *(n !e "(de either dire*t-$ !$ !u$in' properties, or indire*t-$ !$ !u$in' sh(res in -isted propert$ *o"p(nies0 On-$ "()or institution(- investors +ith -on'%ter" ti"e hori=ons (nd no -i/uidit$ pressures tend to "(.e dire*t propert$ invest"ents0 These institutions pur*h(se freeho-d (nd -e(seho-d properties (s p(rt of ( propert$ portfo-io he-d for the -on' ter", perh(ps t+ent$ or "ore $e(rs0 Propert$ se*tors of interest +ou-d in*-ude pri"e, /u(-it$, +e--%-o*(ted *o""er*i(- offi*e (nd shop properties, "odern industri(- +(rehouses (nd est(tes, hote-s, f(r"-(nd (nd +ood-(nd0 Returns (re 'ener(ted fro" (nnu(- rents (nd (n$ *(pit(- '(ins on re(-i=(tion0 These invest"ents (re often hi'h-$ i--i/uid0

.3

!%s$ an' !%s$ A(ers%on Portfo-io theor$ (-so (ssu"es th(t investors (re !(si*(--$ ris. (dverse, "e(nin' th(t, 'iven ( *hoi*e !et+een t+o (ssets +ith e/u(- r(tes of return the$ +i-- se-e*t the (sset +ith -o+er -eve- of ris.0 For e1("p-e, the$ pur*h(sed v(rious t$pe of insur(n*e in*-udin' -ife insur(n*e, He(-th insur(n*e (nd *(r insur(n*e0 The 4o"!in(tion of ris. preferen*e (nd ris. (version *(n !e e1p-(ined !$ (n (ttitude to+(rd ris. th(t depends on the ("ount of "one$ invo-ved0 A dis*ussion of portfo-io or fund "(n('e"ent "ust in*-ude so"e thou'ht 'iven to the *on*ept of ris.0 An$ portfo-io th(t is !ein' deve-oped +i-- h(ve *ert(in ris. *onstr(ints spe*ified in the fund ru-es, ver$ often to *(ter to ( p(rti*u-(r se'"ent of investor +ho possesses ( p(rti*u-(r -eve- of ris. (ppetite0 It is, therefore, i"port(nt to spend so"e ti"e dis*ussin' the !(si* theories of /u(ntif$in' the -eve- of ris. in (n invest"ent, (nd to (tte"pt to e1p-(in the +($ in +hi*h "(r.et v(-ues of invest"ents (re deter"ined

Def%n%t%on of !%s$ A-thou'h there is ( differen*e in the spe*ifi* definitions of ris. (nd un*ert(int$, for our purpose (nd in "ost fin(n*i(- -iter(ture the t+o ter"s (re used inter*h(n'e(!-$0 In f(*t, one +($ to define ris. is t#e )ncerta%nt3 of f)t)re o)tco&es. An (-tern(tive definition "i'ht !e t#e 0robab%l%t3 of an a'(erse o)tco&e. Co&0os%te r%s$s %n(ol(e t#e '%fferent r%s$ as e@0la%ne' belo=:9 >.)/ Int'r'+t rat' r%+20 It o**urs due to v(ri(!i-it$ *(use in return !$ *h(n'es in -eve- of interest r(te0 In -on' runs (-- interest r(te "ove up or do+n+(rds0 These *h(n'es (ffe*t the v(-ue of se*urit$0 R#I, in Indi(, is the "onitorin' (uthorit$ +hi*h effe*t(-ises the *h(n'e in interest r(te0 An$ up+(rd revision in interest r(te (ffe*ts fi1ed in*o"e se*urit$, +hi*h

..

*(rr$ o-d -o+er r(te of interest (nd thus de*-inin' "(r.et v(-ue0 Thus it est(!-ishes (n inverse re-(tionship in the pri=e of se*urit$0

TYPES 4(sh e/uiv(-ent Lon' ter" #ond

R S! E"TE#T Less vu-ner(!-e to interest r(te ris. More vu-ner(!-e to interest r(te ris.0

>1) P-r9ha+%ng (#"'r r%+20 It is .no+n (s inf-(tion ris. (-so0 This ris. e"(n(tes fro" the ver$ f(*t th(t inf-(tion (ffe*ts the pur*h(sin' po+er (dverse-$0 Pur*h(sin' po+er ris. is "ore in inf-(tion(r$ ti"es in !onds (nd fi1ed in*o"e se*urities0 It is desir(!-e to invest in su*h se*urities durin' def-(tion(r$ period or ( period of de*e-er(tin' inf-(tion0 Pur*h(sin' po+er ris. is -ess in f-e1i!-e in*o"e se*urities -i.e e/uit$ sh(res or *o""on stuffs +here rise in dividend in*o"e offset in*re(se in the r(te of inf-(tion (nd provide (dv(nt('e of *(pit(- '(ins0 >5) B-+%n'++ r%+20 #usiness ris. e"(n(tes fro" s(-e (nd pur*h(se of se*urities (ffe*ted !$ !usiness *$*-es, te*hno-o'i*(- *h(n'e et*0 #usiness *$*-e (ffe*ts (-- the t$pe of se*urities vi=0 there is *heerfu- "ove"ent in !oo" due to !u--ish trend in sto*. pri=es +here (s !e(rish trend in depression !rin's do+nf(-- in the pri=es of (-- t$pes of se*urities0 F-e1i!-e in*o"e se*urities (re ne(r-$ (ffe*ted th(n fi1 r(te se*urities durin' depression due to de*-ine n the "(r.et pri=e0 >7) F%nan9%a4 r%+20 Fin(n*i(- ris. e"(n(tes fro" the *h(n'es in the *(pit(- stru*ture of the *o"p(n$0 It is (-so .no+n (s -ever('ed ris. (nd e1pressed in ter" of de!t e/uit$ r(tio0 E1*ess of de!ts ('(inst e/uit$ in the *(pit(- stru*ture indi*(tes the *o"p(n$ to !e hi'h-$ 'e(red

./

or hi'h-$ -evered0 A-thou'h -ever('ed *o"p(n$7s e(rnin's per sh(re (E7 B (re "ore !ut dependen*e on !orro+in' e1poses it to the ris. of +indin' up0 For, its in(!i-it$ to the honor its *o""it"ents to+(rds the *reditors (re "ost i"port(nt0 Here it is i"per(tive to e1press the re-(tionship !et+een ris. (nd return, +hi*h is depi*ted 'r(phi*(--$ !e-o+

Ma;%*%=' r't-rn+? *%n%*%=' r%+2+

!I K VE! U !ETU!N

.6

Ris. versus return is the re(son +h$ investors invest in portfo-ios0 The ide(- 'o(- in portfo-io "(n('e"ent is to *re(te (n opti"(- portfo-io derived fro" the !est ris.S return opportunities (v(i-(!-e 'iven ( p(rti*u-(r set of ris. *onstr(ints0 To !e (!-e to "(.e de*isions, it "ust !e possi!-e to /u(ntif$ the de'ree of ris. in ( p(rti*u-(r opportunit$0 The "ost *o""on "ethod is to use the st(nd(rd devi(tion of the e1pe*ted returns0 This "ethod "e(sures spre(ds, (nd it is the possi!-e returns of these spre(ds th(t provide the "e(sure of ris.0 The presen*e of ris. "e(ns th(t "ore th(n one out*o"e is possi!-e0 An invest"ent is e1pe*ted to produ*e different returns dependin' on the set of *ir*u"st(n*es th(t prev(i-0 ?or e@a&0le1 *%(en t#e follo=%n* for In(est&ent A: C%rc)&stance I II III IV It is possi!-e to *(-*u-(te? :0 The e1pe*ted 8or (ver('e9 return Mean (a(era*eB I @ I e@0ecte' (al)e (EVB I J0@ C%rc)&stan ce I II III IV 5./ 5;/ 5-/ 52/ ..; .., ..+ ..5 ;.. ,.A A.. 5.2 !et)rn(@B 7robab%l%t3(0B 0@ !et)rn(@B 5./ 5;/ 5-/ 52/ 7robab%l%t3(0B ..; .., ..+ ..5

E@0ecte' !et)rn (J0@B I 5,.-/

D0 The St(nd(rd devi(tion

.7

tan'ar' 'e(%at%on IKIL J0(@9 @B ; A4+#/ Var%an9' >VAR) %+ '6-a4 t# th' +tan$ar$ $')%at%#n +6-ar'$ #r @1
De(%at%on fro& C%rc)&stance !et)rn 7robab%l%t3 e@0ecte' !et)rn (@ 9@B I II III IV 5./ 5;/ 5-/ 52/ ..; .., ..+ ..5 9,.-/ 95.-/ M5.-/ M-.-/ 0 (@ 9@B; ;.+.A4 5.2. ,..,

VA!AIANCEI N..A

tan'ar' 'e(%at%on (KB I LVar%ance

I L N..A

I ;.AA/

The st(nd(rd devi(tion is ( "e(sure of ris., +here!$ the 're(ter the st(nd(rd devi(tion, the 're(ter the spre(d, (nd the 're(ter the spre(d, the 're(ter the ris.0 If the (!ove e1er*ise +ere to !e perfor"ed usin' (nother invest"ent th(t offered the s("e e1pe*ted return, !ut ( different st(nd(rd devi(tion, then the fo--o+in' resu-t "i'ht o**ur? If the (!ove e1er*ise +ere to !e perfor"ed usin' (nother invest"ent th(t offered the s("e e1pe*ted return, !ut ( different st(nd(rd devi(tion, then the fo--o+in' resu-t "i'ht o**ur? 7lan In(est&ent A E@0ecte' !et)rn 2/ !%s$(stan'ar' 'e(%at%onB ;.-/

.8

In(est&ent 6

2/

+../

Sin*e !oth invest"ents h(ve the s("e e1pe*ted return, the !est se-e*tion of invest"ent +ou-d !e Invest"ent A1 +hi*h provides the -o+er ris.0 Si"i-(r-$, if there (re t+o invest"ents presentin' the s("e ris., !ut one h(s ( hi'her return th(n the other, th(t invest"ent +ou-d !e *hosen over the invest"ent +ith the -o+er return for the s("e ris.0 In the re(- +or-d, there (re (-- t$pes of investors0 So"e investors (re *o"p-ete-$ ris. (verse (nd others (re +i--in' to t(.e so"e ris., !ut e1pe*t ( hi'her return for th(t ris.0 Different investors +i-- (-so h(ve different to-er(n*es or thresho-d -eve-s for ris.S return tr(de%offs S i0e0 for ( 'iven -eve- of ris., one investor "($ de"(nd ( hi'her r(te of return th(n (nother investor0 INDI??E!NCE CU!VE )00ose t#e follo=%n* s%t)at%on e@%sts 7lan In(est&ent A In(est&ent 6 E@0ecte' !et)rn 5./ ;./ !%s$( tan'ar' De(%at%onB -/ 5./

The /uestion to (s. here is, does the e1tr( :;E return *o"pens(te for the e1tr( ris. There is no ri'ht (ns+er, (s the de*ision +ou-d depend on the p(rti*u-(r investor7s (ttitude to ris.0 A p(rti*u-(r investor7s indifferen*e *urve *(n !e (s*ert(ined !$ p-ottin' +h(t r(te of return the investor +ou-d re/uire for e(*h -eve- of ris. to !e indifferent ("on'st (-- of the invest"ents0 For e1("p-e, there "($ !e (n investor +ho *(n o!t(in ( return of C;E +ith =ero ris. (nd ( return of CC E+ith ( ris. or st(nd(rd devi(tion of CE +ho +i-- !e indifferent !et+een the t+o invest"ents0 If further invest"ents +ere *onsidered, e(*h +ith ( hi'her de'ree of ris., the investor +ou-d re/uire sti-- hi'her returns to "(.e (-- of the invest"ents e/u(--$ (ttr(*tive0 The investor !ein' dis*ussed *ou-d present the fo--o+in' (s the indifferen*e *urve sho+n in Fi'ure0

.9

In'%fference C)r(e E@0ecte' !et)rn -./ --/ N./ 5../ 5;./ ;,./ !%s$ ./ -/ 5./ 5-/ 54/ ;-/

In'%fference c)r(e It *ou-d !e the *(se th(t this investor +ou-d h(ve different indifferen*e *urves 'iven ( different st(rtin' -eve- of return for =ero ris.0 The e1er*ise +ou-d need to !e repe(ted for v(rious -eve-s of ris.Sreturn st(rtin' points0 An entire set of indifferen*e *urves *ou-d !e *onstru*ted th(t +ou-d portr($ ( p(rti*u-(r investor7s (ttitude to+(rds ris.

/0

In'%fference C)r(e Ut%l%t3 scores At this st('e the *on*ept of uti-it$ s*ores *(n !e introdu*ed0 These *(n !e seen (s ( +($ of r(n.in' *o"petin' portfo-ios !(sed on the e1pe*ted return (nd ris. of those portfo-ios0 Thus if ( fund "(n('er h(d to deter"ine +hi*h invest"ent ( p(rti*u-(r investor +ou-d prefer, i0e0 Invest"ent A e/u(-in' ( return of :;E for ( ris. of CE or Invest"ent # e/u(-in' ( return of D;E for ( ris. of :;E, the "(n('er +ou-d *re(te indifferen*e *urves for th(t p(rti*u-(r investor (nd -oo. (t the uti-it$ s*ores0 Hi'her uti-it$ s*ores (re (ssi'ned to portfo-ios or invest"ents +ith "ore (ttr(*tive ris.Sreturn profi-es0 A-thou'h sever(- s*orin' s$ste"s (re -e'iti"(te, one fun*tion th(t is *o""on-$ e"p-o$ed (ssi'ns ( portfo-io or invest"ent +ith e1pe*ted return or v(-ue E3 (nd v(ri(n*e of returns K ;the fo--o+in' uti-it$ v(-ue? U I EV O...-AK; +here? U V uti-it$ v(-ue A V (n inde1 of the investor7s (version, 8the f(*tor of 0;;C is ( s*(-in' *onvention th(t (--o+s e1pression of the e1pe*ted return (nd st(nd(rd devi(tion in the e/u(tion (s ( per*ent('e r(ther th(n ( de*i"(-90

/1

Uti-it$ is enh(n*ed !$ hi'h e1pe*ted returns (nd di"inished !$ hi'h ris.0 Investors *hoosin' ("on'st *o"petin' invest"ent portfo-ios +i-- se-e*t the one providin' the hi'hest uti-it$ v(-ue0 Thus, in the e1("p-e (!ove, the investor +i-- se-e*t the invest"ent 8portfo-io9 +ith the hi'her uti-it$ v(-ue of :F0

E@0ecte' !et)rn(EVB 5./ ;./

tan'ar' 'e(%at%on(KB -/ 5./

Ut%l%t3IEV9...-AK; 5. O...- P+ PQ;- I 2.;. O...- PQ+ P5.. I 54 (Ass)&e AI + %n t#%s caseB

/2

7ortfol%o D%(ers%f%cat%on There (re sever(- different f(*tors th(t *(use ris. or -e(d to v(ri(!i-it$ in returns on (n individu(- invest"ent0 F(*tors th(t "($ inf-uen*e ris. in (n$ 'iven invest"ent vehi*-e in*-ude un*ert(int$ of in*o"e, interest r(tes, inf-(tion, e1*h(n'e r(tes, t(1 r(tes, the st(te of the e*ono"$, def(u-t ris. (nd -i/uidit$ ris. 8the ris. of not !ein' (!-e to se-- on the invest"ent90 In (ddition, (n investor +i-- (ssess the ris. of ( 'iven invest"ent 8portfo-io9 +ithin the *onte1t of other t$pes of invest"ents th(t "($ (-re(d$ !e o+ned, i0e0 st(.es in pension funds, -ife insur(n*e po-i*ies +ith s(vin's *o"ponents, (nd propert$0

One +($ to *ontro- portfo-io ris. is vi( '%(ers%f%cat%on, +here!$ invest"ents (re "(de in ( +ide v(riet$ of (ssets so th(t the e1posure to the ris. of (n$ p(rti*u-(r se*urit$ is -i"ited0 This *on*ept is !(sed on the o-d (d('e Pdo not put (-- $our e''s in one !(s.et70 If (n investor o+ns sh(res in on-$ one *o"p(n$, th(t invest"ent +i-f-u*tu(te dependin' on the f(*tors inf-uen*in' th(t *o"p(n$0 If th(t *o"p(n$ 'oes !(n.rupt, the investor "i'ht -ose :;; per *ent of the invest"ent0 If, ho+ever, the investor o+ns sh(res in sever(- *o"p(nies in different se*tors, then the -i.e-ihood of (-- of those *o"p(nies 'oin' !(n.rupt si"u-t(neous-$ is 're(t-$ di"inished0 Thus, diversifi*(tion redu*es ris.0 A-thou'h !(n.rupt*$ ris. h(s !een *onsidered here, the s("e prin*ip-e (pp-ies to other for"s of ris.0 !I K O!ETU!N MAT!IX

/3

Co(ar%ance an' Correlat%on The 'o(- is to ho-d ( 'roup of invest"ents or se*urities +ithin ( portfo-io potenti(--$ to redu*e the ris. -eve- suffered +ithout redu*in' the -eve- of return0 To "e(sure the su**ess of ( potenti(--$ diversified portfo-io, 9#)ar%an9' (nd 9#rr'4at%#n (re *onsidered0 4ov(ri(n*e "e(sures to +h(t de'ree the returns of t+o ris.$ (ssets "ove in t(nde"0 A positive *ov(ri(n*e "e(ns th(t the returns of the t+o (ssets "ove to'ether, +hi-st ( ne'(tive *ov(ri(n*e "e(ns th(t the$ "ove in inverse dire*tions0

Co(ar%ance COV(@1 3B I J0(@9@B (393B for t+o invest"ents 1 (nd $, +here p is the pro!(!i-it$0 4ov(ri(n*e is (n (!so-ute "e(sure, (nd *ov(ri(n*es *(nnot !e *o"p(red +ith one (nother0 To o!t(in ( re-(tive "e(sure, the for"u-( for *orre-(tion *oeffi*ient WrX is used0 Correlat%on coeff%c%ent r I COV@3

/.

K@K3
To %ll)strate t#e abo(e1 #ere %s t#e e@a&0le:

C%rc)&stance

7robab%l%t3

@9@

393

J0(@9@B (393B
I II III IV ..; .., ..+ ..5 M5.. . M5.9+ 9,.95.M5.M-.COV@3 I9;.. 9..N . ..2 9;.;

For d(t( re'(rdin' (3 O 39, see e(r-ier e1("p-e0 Assu"e th(t ( si"i-(r e1er*ise h(s !een run for d(t( re'(rdin' (@ O @B. Assu"e the v(ri(n*e or K; of @I ;.+-, (nd the v(ri(n*e or K; of 3 I N..A. Thus, the *orre-(tion *oeffi*ient +ou-d !e r V 9;.. V %..+45 Y D0HC RLN..-A

If, the s("e e1("p-e is run ('(in, !ut usin' ( different set of nu"!ers for 3, ( different *orre-(tion *oeffi*ient "i'ht resu-t of s($, O..2440 It *(n !e *on*-uded th(t ( -(r'e ne'(tive *orre-(tion *onfir"s the stron' tenden*$ of the t+o invest"ents to "ove inverse-$0 7erfect 0os%t%(e correlat%on 8*orre-(tion *oeffi*ient V B:9 o**urs +hen the returns fro" t+o se*urities "ove up (nd do+n to'ether in proportion0 If these se*urities +ere *o"!ined in ( portfo-io, the Poffsettin'7 effe*t +ou-d not o**ur0 7erfect ne*at%(e correlat%on 8*orre-(tion *oeffi*ient V S:9 t(.es p-(*e +hen one se*urit$ "oves up (nd the other one do+n in e1(*t proportion0 4o"!inin' these t+o se*urities in ( portfo-io +ou-d in*re(se the diversifi*(tion effe*t0 Uncorrelate' 8*orre-(tion *oeffi*ient V ;9 o**urs +hen returns fro" t+o se*urities "ove independent-$ of e(*h other S th(t is, if one 'oes up, the other "($ 'o up or do+n or "($ not "ove (t (--0 As ( resu-t, the *o"!in(tion of these t+o se*urities in ( portfo-io "($ or "($ not *re(te ( diversifi*(tion effe*t0 Ho+ever, it is sti-- !etter to !e in this position th(n in ( perfe*t positive *orre-(tion situ(tion0 Uns3ste&at%c an' s3ste&at%c r%s$

//

As "entioned previous-$, diversifi*(tion di"inishes ris.? the "ore sh(res or (ssets he-d in ( portfo-io or in invest"ents, the 're(ter the ris. redu*tion0 Ho+ever, it is i"possi!-e to e-i"in(te (-- ris. *o"p-ete-$ even +ith e1tensive diversifi*(tion0 The ris. th(t re"(ins is *(--ed "(r.et ris.A the ris. th(t is *(used !$ 'ener(- "(r.et inf-uen*es0 This ris. is (-so .no+n (s s$ste"(ti* ris. or non%diversifi(!-e ris.0 The ris. th(t is (sso*i(ted +ith ( spe*ifi* (sset (nd th(t *(n !e (!o-ished +ith diversifi*(tion is .no+n (s uns$ste"(ti* ris., uni/ue ris. or diversifi(!-e ris.0 Total r%s$ I 3ste&at%c r%s$ M Uns3ste&at%c r%s$ Sy+t'*at%9 r%+2 I the potenti(- v(ri(!i-it$ in the returns offered !$ ( se*urit$ or (sset *(used !$ 'ener(- "(r.et f(*tors, su*h (s interest r(te *h(n'es, inf-(tion r(te "ove"ents, t(1 r(tes, st(te of the e*ono"$0 Un+y+t'*at%9 r%+2 V the potenti(- v(ri(!i-it$ in the returns offered !$ ( se*urit$ or (sset *(used !$ f(*tors spe*ifi* to th(t *o"p(n$, su*h (s profit(!i-it$ "(r'ins, de!t -eve-s, /u(-it$ of "(n('e"ent, sus*epti!i-it$ to de"(nds of *usto"ers (nd supp-iers0 As the nu"!er of (ssets in ( portfo-io in*re(ses, the tot(- ris. "($ de*-ine (s ( resu-t of the de*-ine in the uns$ste"(ti* ris. in th(t portfo-io0 The re-(tionship ("on'st these ris.s *(n !e /u(ntified (s fo--o+s T!; I !; M U!; or K;% I Ks; M K);
W#ere:

Z[ V the invest"ent7s tot(- ris. 8st(nd(rd devi(tion9 Zs V the invest"entPs s$ste"(ti* ris. Zu Vthe invest"ent7s uns$ste"(ti* ris.0 The *orre-(tion *oeffi*ient !et+een t+o invest"ent opportunities *(n !e e1pressed (s? Ks I K% CO!%& W#ere1 Zs V the invest"ent s$ste"(ti* ris. Zi V the invest"ent7s tot(- ris. 8s$ste"(ti* (nd uns$ste"(ti*9

/6

4ORi" V the *orre-(tion *oeffi*ient !et+een the return of the invest"ent (nd those of the "(r.et0 If (n invest"ent +ere perfe*t-$ *orre-(ted to the "(r.et so th(t (-- its "ove"ents *ou-d !e fu--$ e1p-(ined !$ "ove"ents in "(r.et, then (-- of the ris. +ou-d !e s$ste"(ti* O K% I K s If (n invest"ent +ere not *orre-(ted (t (-- to the "(r.et, then (-of its ris. +ou-d !e uns$ste"(ti*

TEC8NODUE O? 7O!T?OLIO MANAGEMENT 3(rious t$pes of portfo-io re/uire different te*hni/ues to !e (dopted to (*hieve the desired o!)e*tives0 So"e of the te*hni/ues fo--o+ed in Indi( !$ portfo-io "(n('ers (re su""(ri=ed !e-o+0 >.)/ E6-%ty (#rt&#4%#E/uit$ portfo-io is (ffe*ted !$ intern(- (nd e1tern(- f(*tors? >a) Int'rna4 &a9t#r+ A Pert(in to the inner +or.in' of the p(rti*u-(r *o"p(n$ of +hi*h e/uit$ sh(res (re he-d0 These f(*tors 'ener(--$ in*-ude? 85B Mar$et (al)e of s#ares (;B 6oo$ (al)e of s#ares (,B 7r%ce earn%n*s rat%o (7SE rat%oB (+B D%(%'en' 0a3o)t rat%o >3) E;t'rna4 &a9t#r+ A (5B Go(ern&ent 0ol%c%es (;B Nor&s 0rescr%be' b3 %nst%t)t%ons (,B 6)s%ness en(%ron&ent (+B Tra'e c3cles >1)/ E6-%ty +t#92 ana4y+%+ A

/7

The !(si* o!)e*tive !ehind the (n(-$sis is to deter"ine the pro!(!-e future S v(-ue of the sh(res of the *on*erned *o"p(n$0 It is *(rried out pri"(ri-$ fe+er th(n t+o +($s0 ? (aB Earn%n*s 0er s#are (bB 7r%ce earn%n*s rat%o >A) Tr'n$ #& 'arn%ng0 A hi'her pri*e%e(rnin's r(tio dis*ount e1pe*ted profit 'ro+th0 4onverse-$, ( do+n+(rd trend in e(rnin' resu-ts in ( -o+ pri*e%e(rnin's r(tio to dis*ount (nti*ip(ted de*re(se in profits, pri*e (nd dividend0 Risin' EPS *(uses (ppre*i(tion in pri*e of sh(res, +hi*h !enefits investors in -o+er t(1 !r(*.ets Su*h investors h(ve not p($ t(1 or to 'ive -o+er r(te t(1 on *(pit(- '(ins0 M(n$ institution(- investor -i.e st(!i-it$ (nd 'ro+th (nd support hi'h EPS0 Gro+th of EPS is di-uted +hen ( *o"p(n$ fin(n*es intern(--$ its e1p(nsion pro'r(" (nd offers ne+ sto*.0 EPS in*re(se r(pid-$ (nd resu-t in hi'her PNE r(tio +hen ( *o"p(n$ fin(n*es its e1p(nsion pro'r(" fro" intern(- sour*es (nd !orro+in's +ithout offerin' ne+ sto*.0 >B) B-a4%ty #& r'(#rt'$ 'arn%ng0 <u(-it$ of reported e(rnin's (ffe*ts PNE r(tio0 The f(*tors th(t (ffe*t the /u(-it$ of reported e(rnin's (re (s under? D'(r'9%at%#n a44#"an9'+0 L(r'er 8Non 4(sh9 dedu*tion for depre*i(tion provides "ore funds to *o"p(n$ to fin(n*e profit(!-e e1p(nsion s*he"es intern(--$0 This !ui-ds up future e(rnin' po+er of *o"p(n$0

/8

 R'+'ar9h an$ $')'4#(*'nt #-t4't+0 There is hi'her PNE r(tio for ( *o"p(n$, +hi*h *(rries ROD pro'r("s0 ROD enh(n*es profit e(rnin' stren'th of the *o"p(n$ throu'h in*re(sed future s(-es0

In)'nt#ry an$ #th'r n#n-r'9-rr%ng ty(' #& (r#&%t0 Lo+ *ost inventor$ "($ !e so-d (t hi'her pri*e due to inf-(tion(r$ *onditions ("on' profit !ut su*h profit "($ not (-+($s o**ur (nd hen*e -o+ PNE r(tio0 >C) D%)%$'n$ (#4%9y0 Dividend po-i*$ is si'nifi*(nt in (ffe*tin' PNE r(tio0 &ith hi'her dividend r(tio, e/uit$ pri*e 'oes up (nd thus r(ises PNE r(tio0 Dividend r(tes (re r(ised to push in sh(re pri*es up0 Dividend *over is *(-*u-(ted to find out the ti"e the dividend is prote*ted, In ter"s of e(rnin's0 It is *(-*u-(ted (s under? D%(%'en' Co(er I E7 S D%(%'en' 0er #are >D) In)'+t#r+ $'*an$0 De"(nd fro" institution(- investors for e/uit$ (-so enh(n*es the PNE r(tio0 >5) B-a4%ty #& *anag'*'nt0 -

/9

Investors de*ide (!out the (!i-it$ (nd *(-i!er of "(n('e"ent (nd ho-d (nd dispose of e/uit$ (*(de"$0 PNE r(tio is "ore +here ( *o"p(n$ is "(n('ed !$ reputed entrepreneurs +ith 'ood p(st re*ords of "(n('e"ent perfor"(n*e0

T30es of 7ortfol%os The different t$pes of Portfo-io +hi*h is *(rried !$ (n$ Fund M(n('er to "(1i"i=e profit (nd "ini"i=e -osses (re different (s per their o!)e*tives 0The$ (re (s fo--o+s0 Aggr'++%)' P#rt&#4%#0 ObHect%(e: Gro+th0 This str(te'$ "i'ht !e (ppropri(te for investors +ho see. Hi'h 'ro+th (nd +ho *(n to-er(te +ide f-u*tu(tions in "(r.et v(-ues, over the short ter"0

Gr#"th P#rt&#4%#0 ObHect%(e: Gro+th0 This str(te'$ "i'ht !e (ppropri(te for investors +ho h(ve ( preferen*e for 'ro+th (nd +ho *(n +ithst(nd si'nifi*(nt f-u*tu(tions in "(r.et v(-ue0

60

Ba4an9'$ P#rt&#4%#0 ObHect%(e: 4(pit(- (ppre*i(tion (nd in*o"e0 This str(te'$ "i'ht !e (ppropri(te for investors +ho +(nt the potenti(- for *(pit(- (ppre*i(tion (nd so"e 'ro+th, (nd +ho *(n +ithst(nd "oder(te f-u*tu(tions in "(r.et v(-ues \

C#n+'r)at%)' P#rt&#4%#0 ObHect%(e: In*o"e (nd *(pit(- (ppre*i(tion0 This str(te'$ "($ !e (ppropri(te for investors +ho +(nt to preserve their *(pit(- (nd "ini"i=e f-u*tu(tions in "(r.et v(-ue0

61

#are$#an 7ortfol%o Mana*e&ent er(%ces

PMS

PRO PRIME

PRO ARBITRAGE

PRO TECH

7ro 7r%&e

62

7ro')ct A00roac# Invest"ent +i-- !e .eepin' in "ind G invest"ent tenets0 :0 4onsistent, ste(d$ (nd sust(in(!-e returns0 D0 M(r'in of S(fet$ G0 Lo+ 3o-(ti-it$

7ro')ct offer%n* Pro Pri"e is the ide(- for investors -oo.in' (t ste(d$ (nd superior +ith -o+ (nd "ediu" ris. (ppetite0 The portfo-io *onsists of ( !-end of /u(-it$ !-ue *hip (nd 'ro+th sto*.s ensurin' ( !(-(n*ed portfo-io +ith re-(tive-$ "ediu" ris. profi-e0 The portfo-io *onstitutes of re-(tive-$ -(r'e *(pit(-i=(tion sto*.s, !(sed on se*tor (nd the"es +hi*h h(ve "ediu" to -on' ter" 'ro+th potenti(-0 7ro')ct C#aracter%st%cs #otto" up sto*. se-e*tion In depth ,independent fund("ent(- rese(r*h Hi'h /u(-it$ *o"p(nies +ith re-(tive-$ -(r'e *(pit(-i=(tion

63

 Dis*ip-ined v(-u(tion (ppro(*h (pp-$in' "u-tip-e v(-u(tion "e(sure0 Mediu" to -on' ter" vision, resu-tin' in -o+ portfo-io turnover0 8o= to %n(est? Mini"u" Invest"ent ? :; L(*s Lo*. in ? I "onths Reportin'? A**ess to +e!site sho+in' *-ients ho-din' 0Month-$ reportin' of portfo-io ho-din' Ntr(ns(*tion0 4h(r'es? D0CE p( AM4 8Annu(- M(inten(n*es 4h(r'es9 fees *h(r'ed ever$ /u(rter ,;0CE !ro.er('e ,D;E profit sh(rin' (fter :CE hurd-e is *rossed *h(r'e(!-e (t the end of fis*(- $e(r0

7ro Arb%tra*e 7ro')ct A00roac# An opportunit$ -ies in !(sis +hi*h is the differen*e !et+een *(sh (nd future0 &henever !(sis is hi'h +e !u$ the sto*.s (nd se-- the future to -o*. in differen*e 0The differen*e is !ound to !e =ero (t e1pir$0 7ro')ct Offere' Cas# Of)t)re arb%tra*e: The produ*t intends to spot -o+ ris. opportunities +hi*h +i-- $ie-d "ore th(n the nor"(- -o+ ris. produ*t 0&henever su*h opportunit$ is spotted sto*.s +i-- !e !ou'ht

6.

(nd to -o*. in the !(sis, future +i-- !e so-d 0This position +i-- !e -i/u(ted in the e1pir$ or !efore th(t if the !(sis v(nishes e(r-$ 0Si"i-(r-$ the s*he"e +i-- "ove on fro" opportunit$ to opportunit$0 7ro')ct C#aracter%st%cs Lo= O!%s$: This is re-(tive-$ -o+ ris. produ*t +hi*h *(n !e *o"p(red +ith -i/uid funds issued !$ "utu(- funds0 8%*# ret)rn: 4o"p(red +ith other -o+ ris. produ*ts, this produ*ts offers (n indi*(tive post t(1 return of F to :;E p-us0 7ro')ct Deta%ls Mini"u" Invest"ent?Rs0: 4rore Lo*. in ?I "onths Reportin'? Fortni'ht-$ for portfo-io Net +orth, Month-$ reportin' pf portfo-io Ho-din' Ntr(ns(*tion0 4h(r'es? ;0;GCE !ro.er('e for future ,;0;KE for de-iver$

7ro Tec# Prote*h usin' the .no+-ed'e of te*hni/ue (n(-$sis (nd the po+er of depr(vities "(r.ets to identif$ tr(din' opportunities in the "(r.et 0The prote*h -ine of the produ*t is desi'ned (round v(rious ris. Sre+(rd Svo-(ti-it$ profi-es for the different .ind of invest"ent needs0 7ro')ct A00roac# #etter perfor"(n*e is possi!-e fro" superior "(r.et ti"in' (nd fro" pi*.in' sto*.s !efore inf-(tion points in their tr(din' *$*-es 0Line(r return (re possi!-e fro"

6/

h(vin' hed'edS se-- "(r.et positions in do+ntrends 0A!so-ute return (re t(r'eted !$ fo*usin' on findin' tr(din' opportunities O not out perfor"(n*e of (n inde10 7ro')ct offere' 5. N%ft3 T#%rt3 ? Nift$ futures +i-- !e !ou'ht (nd so-d on the !(sis of (n (uto"(ted tr(din' s$ste" 'ener(ted *(--s to 'o -on'Nshort0 The e1posure +i-- never e1*eed the v(-ue of portfo-io i0e0 no -ever('in'A !ut (--o+s us to !e short Nhed'ed in Nift$ in f(--in' "(r.et therefore (--o+in' the *-ient to e(rn irrespe*tive of the "(r.et dire*tion0

;. 6eta 7ortfol%o ? Position(- tr(din' opportunities (re identified in the future se'"ent !(sed on te*hni*(- (n(-$sis 0Inf-e*tion points in the "o"entu" *$*-es (re identified to 'o -on' Nshort on sto*.Ninde1 futures +ith :%D "onths ti"e hori=on 0The ide( is to 'ener(te the !est possi!-e return in the "ediu" ter" irrespe*tive of the dire*tion of the "(r.et +ithout re(--$ -ever('in' !e$ond the portfo-io v(-ue0 Ris. prote*tion is done !(sed on stop -osses on d(i-$ *-osin' pri*es0

,.

tar N%ft3: S+in' tr(din' te*hni/ue (nd Do+ theor$ is used to identif$ short Ster" revers(- -eve-s for Nift$ futures (nd ride +ith trend !oth on the -on' (nd short side 0This return *(n !e e(rned in !u-- (nd !e(r "(r.et 0Stop (nd reverse "e(ns to reverse ones position fro" -on' to short or vi*e ( vers( (t the revers(- -eve-s si"u-t(neous-$ 0The e1posure never e1*eeds v(-ue of portfo-io i0e0 there is no -ever('in'0

+. Tra%l%n* to0s.

66

Mo"entu" tr(din' te*hni/ues (re used to spot short Ster" "o"entu" of C% :; d($s in sto*.s (nd sto*.s Ninde1 futures 0Tr(i-in' stop -oss "ethod of ris. "(n('e"ent or profit prote*tion is used to -o+er the portfo-io vo-(ti-it$ (nd "(1i"i=e return 0Tr(din' opportunities (re e1posed !oth on the -on' side (nd the short side (s the "(r.et de"(nds to 'et the !est of !oth up+(rd (nd do+n+(rd trends0 7ro')ct C#aracter%st%cs Usin' s+in' !(sed inde1 Str(din' s$ste"s stop (nd reverse 0trend fo--o+in' (nd "o"entu" tr(din' te*hni/ue0 Nift$ !(sed produ*ts for -o+ i"p(*t *ost (nd -o+ produ*t vo-(ti-it$ #oth -on' (nd short str(te'ies to e(rn returns even in f(--in' "(r.et0 Tr(din' in future "(r.et to (--o+ for (*tive ris. prote*tion usin' tr(i-in' stop -osses0 8o= to %n(est? Mini"u" ? Rs0:; L(*s Lo*. in ? I "onths Reportin'? Fortni'ht-$ reportin' of portfo-io Net &orth, "onth-$ reportin' of portfo-io Ho-din' STr(ns(*tion0 4h(r'es? ;E AM4 8Annu(- M(inten(n*e 4h(r'es9, ;0;CE !ro.er('e for deriv(tives, D;E profit sh(rin' on !oo.ed profit /u(rter-$ !(sis

7rotec# 7erfor&ance !e0ort

67

N%ft3 T#r%ft3: NI?T" T8!I?T" Date NAV ense@ ;:N;DND;; :;0;; JFCJ0DI I DJN;HND;; ::H;G0D :J0HG J C !et)rns 2+.,. 5-.AA (/B

8o= %t =or$s:

68

Our first produ*t is !(sed *o"p-ete-$ on ( "(the"(ti*(- "ode- +ith =ero hu"(n intervention0 This produ*t h(s *o"e out of its fifth dr(+%do+n period 8in DF $e(rs of !(*. testin'9 (nd the net (sset v(-ue 8NA39 is t(.in' off to ne+ hei'hts0 6eta 0ortfol%o: 6ETA 7O!T?OLIO Date NAV ense@ ;GN;FND;; :C:GF0H :;0;; K ; DJN;HND;; ::H;G0D :G0F: J C !et)rns ,4.5. 9;+.AN (/B 8o= %t =or$s: Our produ*t is !(sed on position(- tr(din' +ith ( -on' (nd short "ode- investin' in p-(in v(ni--( sto*. futures0 In this, +e identif$ sto*.s +ith 're(ter ris.%re+(rd r(tios +ith ( ti"e hori=on of : to D "onths, !(sed on the prev(-ent "(r.et situ(tion0 Tra%l%n* to0s: T!AILING TO7 NAV ense@ D;N:;ND;;K :;0;; :KCCJ0JF DHN;HND;;J :C0GD JK;F0C; !et)rns +,.-. 9,-..A (/B

8o= %t =or$s: The tr(din' str(te'$ is to !u$ short%ter" "o"entu" over ( ti"e fr("e of : to C d($s (nd then !oo. s"(-- profits *onsistent-$0

69

C8A7TE! 9-

D*T* *N*,.SIS *ND INT)RPR)T*TION

70

5. Do 3o) $no= abo)t t#e In(est&ent O0t%on a(a%lable?

Inter0retat%on As the (!ove t(!-e sho+s the .no+-ed'e of Investor out of :;; respondent *(rried throu'hout the H$der(!(d Are( is on-$ FCE0 The re"(inin' :CE t(.e hisNher residenti(- propert$ (s (n invest"ent0 A**ordin' to -(+ purpose this is not (n invest"ent !e*(use of it is not *re(te (n$ profit for the o+ner0 The "(in pro!-e" is th(t in this ti"e fro" $e(r D;;F%D;;J , the re*ession (nd the Inf-(tion "(.e the investor thin. !efore investin' ( even ( Rs0 :;;0So , it (-so *re(te the pro!-e" for the Investor to not t(.e interest in Invest"ent option0

71

;. W#at %s t#e bas%c 0)r0ose of 3o)r In(est&ents?

Inter0retat%on As +ith the (!ove (n(-$sis, it is found KCE peop-e (re interested in -i/uidit$, returns (nd t(1 !enefits0 And re"(inin' DCE (re interested in *(pit(- (ppre*i(tions, ris. *overin', (nd others0 In the entire respondent it is *o""on th(t this ti"e ever$one is -oo.in' for "ini"i=in' the ris. (nd "(1i"i=in' their profit +ith the short ti"e of period0 As e1p-(inin' the" A!out the Portfo-io M(n('e"ent Servi*es of Sh(re.h(n, the$ +ere /uite interested in Prote*h Servi*es0

72

,. W#at %s t#e &ost %&0ortant factor 3o) cons%'er at t#e t%&e of In(est&ent?

Inter0retat%on As the (!ove (n(-$sis 'ives the *-e(r ide( th(t "ost of the Investors *onsidered the "(r.et f(*tor (s (round :DE for Ris. (nd DGE Return, !ut "ost i"port(nt *o""on thin's in (-- (re th(t the$ (re even re(d$ for t(.in' !oth Ris. (nd Return in (round ICE investor0 Moreover, the M(r.et is f-u*tu(tin' no+ d($s, so (s it (-so 'ettin' i"prove"ent0 So, Investor (re -oo.in' for Invest"ent in -on' ter" (nd Short%ter"0

73

+. ?ro& =#%c# o0t%on 3o) =%ll *et t#e best ret)rns?

Inter0retat%on Most of the respondents s($ the$ +i-- 'et "ore returns in Sh(re M(r.et0 Sin*e Sh(re M(r.et is s(id to !e the !est p-(*e to invest to 'et "ore returns0 The ris. in the invest"ent is (-so hi'h0 Si"i-(r-$, the Investor (re "ore Interested in Investin' their "one$ in Mutu(Fund S*he"es (s th(t is (-so ver$ i"port(nt fin(n*i(- produ*t due to its n(ture of

7.

"ini"i=in' ris. (nd "(1i"i=in' the profit0 As the *o""odities "(r.et is doin' +e-fro" -(st fe+ "onths so Investor (-so prefer to invest their "one$ in 4o""odities M(r.et !(si*(--$ in GOLD no+(d($s0 Moreover, even +ho don7t +(nt to t(.e Ris. the$ (re -oo.in' for investin' in Fi1ed Deposit for -on' period of ti"e0

-. CIn(est%n* %n 7M %s far safer t#an In(est%n* %n M)t)al ?)n'E. Do 3o) a*ree?

Inter0retat%on In the (!ove 'r(phs it7s *-e(r th(t DHE of respondent out of hundred fee- th(t investin' their "one$ in Mutu(- Fund S*he"e (re f(r s(fer th(n Investin' in PMS0 this is !e*(use of -(*. of proper infor"(tion (!out the Portfo-io "(n('e"ent servi*es0 As the !(sis is s("e for the "utu(- fund (nd PMS !ut the invest"ent p(ttern is tot(--$ different fro" e(*h other (nd +hi*h depends upon different ris. f(*tor (v(i-(!-e in !oth the Fin(n*i(- Produ*ts0

7/

A. 8o= &)c# 3o) carr3 t#e e@0ectat%on %n !%se of 3o)r Inco&e fro& In(est&ents?

Inter0retat%on The opti"is" is sho+n in the (ttitude of the respondents0 The *onfiden*e +(s (ppre*i(!-e +ith +hi*h the$ (re -oo.in' for+(rd to ( rise in their invest"ents0 M()or p(rt of the s("p-e fee-s th(t the rise +ou-d !e of (round :CE0 On-$ FE of the respondents +ere *onfident enou'h to e1pe*t ( rise of upto GCE0 As (-- the respondents +ere *onsiderin' the Ris. f(*tor (-so !efore fi--in' the /uestionn(ire (nd the$ +ere (s.in' (!out the perfor"(n*e report of (-- the PMS servi*es offered !$ Sh(re.h(n -i"ited0

76

N. If 3o) %n(este' %n #are Mar$et1 =#at #as been 3o)r e@0er%ence?

Inter0retat%on D;E of the respondents h(ve invested in Sh(re "(r.et (nd re*eived s(tisf(*tor$ returns, H;E of the respondents h(ve not (t (-- invested in Sh(re M(r.et0 So"e of the investors f(*e pro!-e"s due to -ess .no+-ed'e (!out the "(r.et0 So"e of the respondents don7t h(ve *o"p-ete overvie+ of the h(ppenin's (nd invest their "one$ in +ron' sh(res +hi*h resu-t in Loss0 This is the re(son "ost of the respondents prefer Portfo-io M(n('e"ent Servi*es to tr(de no+ ( d($s, +hi*h 'ives the Investor the *-e(r ide( +hen is the ri'ht ti"e to !u$ (nd ri'ht ti"e to se-- the sh(res +hi*h is re*o""ended !$ their Fund M(n'er0

77

40 8o= 'o 3o) tra'e %n #are Mar$et?

Inter0retat%on As +e .no+ th(t Sh(re "(r.et is tot(--$ !(sed on ps$*ho-o'i*(- p(r("eters of Investors, +hi*h *h(n'ed (s per the "(r.et *ondition, !ut (t the s("e ti"e the (round HCE investor tr(de on the !(sis of spe*u-(tion (nd G:E depend upon Invest"ent option #onds, Mutu(- Funds et*0

78

Moreover, the no+ ( d($7s Hed'in' is "ost *o""on deriv(tives too-s +hi*h is used !$ the Investor to 'et "ore return fro" the M(r.et ,this is "ost-$ used in the 4o""odities M(r.et0

2. 8o= 'o 3o) &ana*e 3o)r 7ortfol%o?

Inter0retat%on A!out CKE of the respondents s($ the$ the"se-ves "(n('e their portfo-io (nd HGE of the respondents s($ the$ depends on the se*urit$ *o"p(n$ for portfo-io M(n('e"ent0 HGE of the respondents prefer PMS of the *o"p(n$ !e*(use the$ don7t h(ve to .eep ( *-ose e$e on their invest"entA the$ 'et (-- the infor"(tion ti"e to ti"e fro" their Fund M(n('er0

79

Moreover, t(-.in' (!out the Sh(re.h(n PMS servi*es the$ (re f(r s(tisfied +ith the Prote*h (nd Prop ri"e Perfor"(n*e durin' -(st $e(r0 The$ (re s(tisfied +ith the /ui*. (nd (*tive servi*es of Sh(re.h(n *usto"er servi*es +here, the$ 'et the upd(ted .no+-ed'e (!out the s*rip det(i- ever$d($ fro" their Fund M(n('er0

5.. If 3o) tra'e =%t# #are$#an l%&%te' t#en =#3?

Inter0retat%on As the (!ove rese(r*h sho+s the re(sons (nd the p(r("eters on +hi*h investor -ie on Sh(re.h(n (nd the$ do the tr(de0 A"on' hundred respondents GCE respondents do the tr(de +ith the *o"p(n$ due to its rese(r*h Report, DFE !(sed on #ro.er('e R(te +here(s DD E (re h(pp$ +ith its Servi*es0

80

L(st !ut not the -e(st, :CE respondents (re depends upon the tips of Sh(re.h(n +hi*h 'ives the" ide( +here to invest (nd +hen to invest0 At the ti"e of rese(r*h +h(t I found is th(t sti-- Sh(re.h(n need to "(.e the *-ients "ore .no+-ed'e (!out their PMS produ*t0

55. Are 3o) )s%n* 7ortfol%o Mana*e&ent ser(%ces (7M B of #are$#an?

Inter0retat%on As t(-.in' (!out the Invest"ent option, in "ost of *-ients it +(s *o""on th(t the$ .no+ (!out the Option !ut (s the PMS of Sh(re.h(n h(ve different Produ*t offerin',

81

Produ*t 4h(r(*teristi*s (nd the Invest"ent ("ount is (-so different this "(.es the *-ients to thin. different-$0 It is found th(t CIE of Sh(re.h(n *-ient +here usin' PMS servi*es (s for their Invest"ent Option0

5;. W#%c# 7ortfol%o T30e 3o) 0referre'?

Inter0retat%on The (!ove (n(-$sis sho+s, in +hi*h portfo-io the investor -i.e to de(- "ore in PMS0

82

As HCE investor -i.es to 'o for E/uit$ Portfo-io (nd DFE +ith #(-(n*ed Portfo-io, +here(s (round DKE investor -i.e to, 'o for De!t Portfo-io0

5,. 8o= =as 3o)r e@0er%ence abo)t 7ortfol%o Mana*e&ent ser(%ces (7M B of #are$#an L%&%te'?

Inter0retat%on In the (!ove (n(-$sis it is *-e(r th(t the Investor h(ve the 'ood (nd the !(d e1perien*e !oth +ith the Sh(re.h(n PMS servi*es0

83

In this *urrent s*en(rio CDE of the Investor e(rned, +here(s (round :FE h(ve to suffer -osses in the "(r.et0 Si"i-(r-$ G;E of the Respondents (re there in #re(.even Point 8#EP9, +here no -oss (nd no profit0

5+. Does #are$#an L%&%te' $ee0 %t 7M 0rocess Trans0arent?

Inter0retat%on The (!ove (n(-$sis is t(-.in' (!out the Sh(re.h(n Tr(nsp(ren*$ of their PMS servi*es0 In hundred respondents IGE s(id th(t the$ 'et (-- the infor"(tion (!out their s*rip !u$in' (nd se--in' infor"(tion d($ !$ d($, +here (s GKE of respondents (re not

8.

s(tisfied +ith the PMS infor"(tion (nd Tr(nsp(ren*$ !e*(use the$ don7t 'et (n$ t$pe of e1tr( servi*es in PMS (s the$ +ere s($in'0

5-. Do 3o) reco&&en' #are$#an 7M to ot#ers?

Inter0retat%on

8/

The (!ove (n(-$sis sho+s the Investor per*eption to+(rd the Sh(re.h(n PMS (s on the !(sis of their 'ood (nd !(d e1perien*e +ith Sh(re.h(n -i"ited0 A"on' hundred respondents FIE respondents +ere ('ree to re*o""end the PMS of Sh(re.h(n to their peers, re-(tives et*0

C8A7TE!9A

CONCU,SION *ND
86

SU--)STIONS

87

O6 E!VATION AND ?INDING A!out FCE Respondents .no+s (!out the Invest"ent Option, !e*(use re"(inin' :CE t(.e his Nher residenti(- propert$ (s Invest"ent, !ut in (*tu(- it not (n invest"ent phi-osoph$ *(rries th(t (-- the Invest"ent does not *re(te (n$ profit for the o+ner0 More th(n KCE Investors (re investin' their "one$ for Li/uidit$, Return (nd T(1 !enefits0 At the ti"e of Invest"ent the Investors !(si*(--$ *onsidered the !oth Ris. (nd Return in "ore E('e (round ICE0 As ("on' (-- Invest"ent Option for Investor the "ost i"port(nt (re( to 'et "ore return is sh(re (round DDE(fter th(t Mutu(- Fund (nd other *o"es into e1isten*e0 More th(n KIE of Investors fee-s th(t PMS is -ess ris.$ th(n investin' "one$ in Mutu(- Funds0 As e1pe*ted return fro" the M(r.et "ore th(n HFE respondents e1pe*t the rise in In*o"e "ore th(n :CE, GDE respondents (re e1pe*tin' !et+een :C%DCE return0 As the e1perien*e fro" the M(r.et "ore th(n GHE Investor h(d -ose their "one$ durin' the *on*erned $e(r, +here(s D;E respondents h(ve 'ot s(tisfied return0 A!out HCE respondents do the Tr(de in the M(r.et +ith Deriv(tives Too-s Spe*u-(tion *o"p(re to DHE throu'h Hed'in' 0And the rest G:E tr(de their "one$ in Invest"ents0

88

 Around CKE residents "(n('e their Portfo-io throu'h the different *o"p(n$ +here(s HGEInvestor "(n('e their portfo-io the"se-ves0 The "ost i"port(nt re(sons for doin' tr(de +ith Sh(re.h(n -i"ited is Sh(re.h(n Rese(r*h Dep(rt"ent th(n its #ro.er('e r(te Stru*ture0

Out of hundred respondents CIE respondents (re usin' Sh(re.h(n PMs servi*es0 Investors preferred "ore th(n HCE e/uit$ Portfo-io, DFE#(-(n*eed Portfo-io (nd (!out DKE De!t Portfo-io +ith Sh(re.h(n PMS0 A!out CDE Respondents e(rned throu'h Sh(re.h(n PMS produ*t, +here(s :FE investor f(*ed -oses (-so0 More th(n IGE Investor (re h(pp$ +ith the Tr(nsp(ren*$ s$ste" of Sh(re.h(n -i"ited0 As !(sed on the 'ood (nd !(d e1perien*e +ith Sh(re.h(n -i"ited (round FIE (re re(d$ to re*o""ended the PMS of Sh(re.h(n to their peers, re-(tives et*0

89

LIMITATION O? T8E 7!OGECT As on-$ Ne= Del#% =as 'ealt in the surve$ so it does not represent the vie+ of the tot(- Indi(n "(r.et0 The s("p-e si=e +(s restri*ted +ith hundred respondents0

There +(s -(*. of ti"e on the p(rt of respondents0

The surve$ +(s *(rried throu'h /uestionn(ire (nd the /uestions +ere !(sed on per*eption0

There "($ !e !i(sness in infor"(tion !$ "(r.et p(rti*ip(nt0

4o"p-ete d(t( +(s not (v(i-(!-e due to *o"p(n$ priv(*$ (nd se*re*$0

So"e peop-e +ere not +i--in' to dis*-ose the invest"ent profi-e0

90

CONCLU ION AND UGGE TION On the !(sis of the stud$ it is found th(t Sh(re.h(n Ltd is !etter servi*es provider th(n the other sto*.!ro.ers !e*(use of their ti"e-$ rese(r*h (nd person(-i=ed (dvi*e on +h(t sto*.s to !u$ (nd se--0 Sh(re.h(n Ltd0 provides the f(*i-it$ of Tr(de ti'er (s +e-- (s re-(tionship "(n('er f(*i-it$ for en*our('e"ent (nd prote*ts the interest of the investors0 It (-so provides the infor"(tion throu'h the internet (nd "o!i-e (-erts th(t +h(t IPO7s (re *o"in' in the "(r.et (nd it (-so provides its rese(r*h on the future prospe*t of the IPO0 &e *(n *on*-ude the fo--o+in' +ith (!ove (n(-$sis0

Sh(re.h(n Ltd h(s !etter Portfo-io M(n('e"ent servi*es th(n Other 4o"p(nies It .eeps its pro*ess "ore tr(nsp(rent0 It 'ives "ore returns to its investors0 It *h(r'es (re -ess th(n other portfo-io M(n('e"ent Servi*es It provides d(i-$ upd(tes (!out the sto*.s infor"(tion0

91

 Investors (re -oo.in' for those invest"ent options +here the$ 'et "(1i"u" returns +ith -ess returns0 M(r.et is !e*o"in' *o"p-e1 O it "e(ns th(t the individu(- investor +i-- not h(ve the ti"e to p-($ sto*. '("e on his o+n0 Peop-e (re not so "u*h +(re (+(re (!out the Invest"ent option (v(i-(!-e in the M(r.et0

S !!"#$%&'# The *o"p(n$ shou-d (-so or'(ni=e se"in(rs (nd si"i-(r (*tivities to enh(n*e the .no+-ed'e of prospe*tive (nd e1istin' *usto"ers, so th(t the$ fee- "ore *o"fort(!-e +hi-e investin' in the sto*. "(r.et0 Investors "ust fee- s(fe (!out their "one$ invested0 Investor7s (**ounts "ust !e "ore tr(nsp(rent (s *o"p(red to other *o"p(nies0 Sh(re.h(n -i"ited "ust tr$ to pro"ote "ore its Portfo-io M(n('e"ent Servi*es throu'h Advertise"ents0 Sh(re.h(n needs to i"prove "ore it7s 4usto"er Servi*es There is need to *h(n'e in -o*. in period in (-- three PMS i0e0Prote*h, Propri"e, Pro Ar!itr('e0

92

93

ANNEXU!E 0U)STIONN*IR) NAME(((((((((((((. AGE(((((((((((((((( OCCUPATION(((((((((((... NO.................................. 1. Do $ou .no+ (!out the Invest"ents Option (v(i-(!-e A9 >ES #9 NO PHONE

D0 &h(t is the !(si* purpose of $our Invest"ents A9 Li/uidit$ #9 Return 49 T(1 #enefits F9 Others D9 Ris. 4overin'

E9 4(pit(- Appre*i(tion

G0 &h(t is the "ost i"port(nt f(*tor $ou *onsider (t the ti"e of Invest"ent A9 Ris. #9 Return 49 #oth

H0 Fro" +hi*h option $ou +i-- 'et the !est returns A9 Mutu(- Funds #9 Sh(res 49 4o""odities M(r.et D9 #onds G9 Others

E9 Fi1ed Deposits F9 Propert$

C0 2Investin' in PMS is f(r s(fer th(n Investin' in Mutu(- Fund50 Do $ou ('ree A9 >es #9 No

I0 Ho+ "u*h $ou *(rr$ the e1pe*t(tion in Rise of $our In*o"e fro" Invest"ents A9 Upto :CE #9 :C%DCE 49 DC%GCE D9 More th(n GCE

K0 If $ou invested in Sh(re M(r.et, +h(t h(s !een $our e1perien*e

9.

A9 S(tisf(*tor$ Return D9 No

#9 #urned Fin'er

49 Uns(tisf(*tor$ Resu-ts

F0 Ho+ do $ou tr(de in Sh(re M(r.et A9 Hed'in' #9 Spe*u-(tion 49 Invest"ent

J0 Ho+ do $ou "(n('e $our Portfo-io A9 Se-f #9 Depends on the *o"p(n$ for portfo-io

:;0 If, $ou tr(de +ith Sh(re.h(n -i"ited then +h$ A9 Rese(r*h #9 #ro.er('e 49 Servi*es D9 Invest"ents Tips

::0 Are $ou usin' Portfo-io M(n('e"ent servi*es 8PMS9 of Sh(re.h(n A9 >es #9 No

:D0 &hi*h Portfo-io T$pe $ou preferred A9 E/uit$ #9 De!t 49 #(-(n*ed

:G0 Ho+ +(s $our e1perien*e (!out Portfo-io M(n('e"ent servi*es 8PMS9 of Sh(re.h(n Li"ited A9 E(rned #9 F(*ed Loss 49 No profit No -oss

:H0 Does Sh(re.h(n Li"ited .eep it PMS pro*ess Tr(nsp(rent A9 >es #9 No

:C0 Do $ou re*o""end Sh(re.h(n PMS to others A9 >es #9 No

9/

96

6I6LIOG!A78" !E?E!ENCE

===.s#are$#a.co&

===.seb%.*o(.%n

===.&one3control.co& ===.$ar(3.co& ===.(al)eresarc#onl%ne.co& ===.3a#oof%nance.co& ===.t#eecono&%st.co& ===.nse%n'%a.co& ===.bse%n'%a.co&

6oo$ !eferre'

3(-ue 'uide !$ Sh(re.h(n Investors E$es !$ Sh(re.h(n #usiness +or-d0 The e*ono"ist

97