EXECUTIVE

SUMMARY

1
 EXECUTIVE SUMMARY

The Project on Portfolio Management was carried out for Badjate

Stocks and shares pvt ltd.

Overview

The invention of new technology and services by banks and financial

institutions has given the consumers a wide range of investment avenues to
invest in. One of the special services brought out by banks and financial
institutions is “PORTFOLIO MANAGEMENT” which aims at providing an
investor to invest a combination of securities all together which enables him
to earn maximum returns at minimum level of risk & without any confusion.

I am inclined to this topic, as it has given me actual knowledge of this service

along with its working and how the portfolio manager manages the portfolio.

Moreover, it has guided me to understand this so called complex world of

investment and also increase my knowledge to such extent. I hope it will
prove beneficial to me in developing my further career.

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COMPANY
FROFILE

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 Badjate Stock & Shares Pvt. Ltd.
Badjate Stocks and Shares Pvt.Ltd is the oldest name in the region in stock broking. The
Badjate Group has its presence in the education field also through its three premier
institutes providing education to 3000 plus students from Nursery to Post Graduation.

Founded by Mr. Shantilal S Badjate the financial services business came into being
in the late sixties, when there were only 10 to 12 investors in Nagpur. Mr. S. S. Badjate
has been associated with the Department of Management Studies and G. S. College of
Commerce and a number of other institutes as a professor. As the phrase goes
“Knowledge without wisdom is just a bunch of information, “Mr. Badjate ventured into
Share Broking to make practical his in-depth knowledge of equity markets. He utilized
his expertise of analysing balance sheets, corporate results, industrial & macroeconomic
scenarios to educate investors on wealth creation by investing in stocks. He introduced
Equity Investments as a preferred place for wealth creation to investors in Central
India.

Continuing the legacy of wealth creation, his younger son Mr. Anuj Badjate took up
charge of businesses in 1992 and is the Managing Director of the company and has
exponentially grown the business in last 20 years from 3 employee’s organization to
450 employees group. With his passion for investing in stock market, hard work and
long experience he has developed exceptional skills of stock picking.
Badjate Stocks & Shares Pvt. Ltd is a corporate member of the National Stock
Exchange, Bombay Stock Exchange and Depositary Participant of CDSL, facilitating
broking and DP services to central India. The company has its presence in different
parts of Maharashtra with its various branches spread across the state with it’s head
office at Nagpur, serving about 7000 registered clients. The group’s customer centric
attitude, research based value investing, ethical and transparent business practices have
enabled their investors to create wealth and grow their investments.
Badjate Stocks & Shares Pvt. Ltd., with a team of honest and hardworking professionals
is equipped with the latest technology to support online trading, provide quality
guidance and offer all financial products under one roof at various locations through its
branches and franchisees. The company plans to expand its offices in Marathwada and
some parts of Chattisgarh in the 1st phase of expansion and extend it’s reach to
Gujarat,M.P. and West Bengal in the 2nd phase and the rest of India subsequently.

Equity investments inherently involve risk but have enormous potential to create
unimaginable wealth as well as offer stable tax free returns over longer term periods
provided the right guidance to make the right choice is available. The Company’s
research team and it’s 50 years of experience in the Stock Market help investors
maximize returns on their investments. The Company provides a diversified range of
financial services from Equity Investments, Mutual Funds, Company Deposits, Bonds
and Insurance, to suit investors from all economic strata as per their risk taking
appetite.

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 Our Services:

Equity Broking:
To derive optimum returns from equity as an asset class it requires
professional guidance and advice. Equity investment is a high risk and high return
option which requires lot of in-depth analysis for making the right choice for wealth
creation.

We with the help of our research team and around 50 years of experience in
stock market provide research based advices. Our investment idea is to catch the stocks
when they are very young and are available at reasonable valuations compared to their
peer group.

Our investment recommendations are based on the growth prospects of the

stocks. Our research team keeps a close watch on the stocks that we recommend and
suggest changes as and when there is a significant trend reversal or deterioration in
company’s performance.
We also provide intraday calls which are based on technicals, news, events where the
risk reward ratio is favorable. We have well equipped team of technical analyst for daily
trading which help investors to make profits.

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 Research :

 Our research team is involved in various macroeconomic studies, sect oral research
and various company specific equity research.
 In-depth research reports on specific companies are sent via mail to all clients as
and when an investments opportunity is spotted.
 SMS Alerts are sent to all clients for short term ideas, intraday calls and positional
trades on What to BUY, SELL or HOLD.
 Our detailed Research report recommended companies are available on our
website.
 Direct interaction with our analyst on chat/voice call/email.

Privileged Services :

At Badjate Stock & Shares we offer our customers various services, aimed at
making investing a hassle - free and simple experience.

 Lowest Brokerage Rates.

 Free unlimited 'Call and Trade' Facility.
 Free SMS Alerts on Research advise.
 Free SMS on transaction and ledger balances.
 Clients can also avail our margin Trading Facility .
 Trusted for Reliable advice.
 Renowned for transparent and ethical business practices.

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 Why Badjate Stock & Shares Pvt. Ltd.

Market Veteran :

Stock markets are prone to sever up and down cycles posing threat of survival for
the intermediaries during turbulent times, such turbulent times have seen entry and
exit of most of the big and small broking houses leaving a very few old names.50 years
of spotless track record of BSS PVT.LTD ensures long term stable relationship.

Research :

 The research team is continuously keeping track of various sectors to ensure no

chance is lost.
 In-depth research reports are sent via mail to all clients as and when an investment
opportunity is spotted.
 Short term ideas via SMS for intraday or short term positional trades.
 Direct interaction with our analyst on chat/voice call/email.

Technical support :

 Technical support and training for installation of Trading terminals and Back Office
software for effective and efficient functioning.

Other Support :

 Pre commencement Training to the business partners for optimum usage of front
and back end software’s and other technology to ease operational efficiency from
day one. Guidance and support for business development.
 Deployment of state of the art technology from beginning to end and availability of
trained staff ensures smooth execution of business.

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 OPTIONS FOR ASSOCIATION :

Remiser :

Remiser module is a Zero infrastructure cost module, ideal for individuals already
selling financial products either as part time or full time profession like Insurance
Agents, Mutual Fund distributors or for beginners wanting to foray in to distribution of
financial products as well as take up share broking as a career .the primary role of a
Remiser is to connect clients with us, entire service aspect is taken care by the H.O. This
offers an individual to earn and learn for a bigger future in the profession.

Sub- Broker/ Authorised Person :

 A person having minimum two to three years of experience in stock market with
good track record, reputation can go for the Sub – Broker Module.
 He should have a zeal for entrepreneurship.
 Office set up to support 3-4 staff members, equipped with computer, printer
internet connexion to suit the scale of business.
 Security deposit for exposure and margin is required.
 Complete support for smooth functioning of business will be provided by the head
office.

 Head Office
274,Sanjay Apartment
Dharampeth Extn., NAGPUR-440010.
Tel.No. : +91 0712 6604200 to 6604227,230
Fax : +91 0712 6604231

 Branch office
4th floor, paul complex
Anji square, NAGPUR-440010
Tel No : 0712 6607643

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  Open an account or know more on Products & Services
Anita Gwalani
Call : +91 0712 6604207
E-mail : newaccount@badjategroup.com

 Compliance Officer
Mr. Kishor Joshi
Call: 0712-6604219
Email : compliance@badjategroup.com

 Investor Grievances
Email : investor_greivances@badjategroup.com

The software used by Badjate stock and shares is now terminal

 Application based ideal for traders

 User friendly & sample navigation
 Robust & speedier execution of trade
 BSE,NSE, F & O, MCX & NCDEX

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 SWOT
ANALYSIS

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 SWOT ANALYSIS

During this training at Badjate Stock and Shares pvt ltd, I had come to know the Strengths-
Weaknesses-Opportunities-Threats for the company and it is very useful for a company to analyze
them. Therefore, the SWOT analysis is presented here and the suggestions for maintaining strengths
and removing weaknesses are explained.

 Strengths:

 Well-maintained infrastructure.
 Dedicated, Intelligent and Loyal staff.
 On-line trading products.
 Lowest brokerage and other charges with respect to Competitors.
 The best investment advice correct up to 70-90 % through dedicated
 Research and reports.
 Wide product range to enable the clients to choose the best alternative.
 One of the best DPs in India.
 A positive image in the existing clients.

 Weaknesses:

 Less awareness in the market.

 Time consuming process for account opening, resolving the problems of the customers, etc.
 Service quality is not maintained accordingly how they are promoted.

 Opportunities:
 Slope of stock market towards delivery based transaction.
 Large potential market for delivery and intra-day transactions.
 Open interest of the people to enter in stock market for investing.
 Attract the customers who are dissatisfied with other broker & DPs.
 An indirect opportunity generated by the market from its bullishness.
 Large untapped market in the Saurashtra region of Gujarat.

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 Threats:

 Decreasing rates of brokerage in the market.

 Increasing competition against other brokers & DPs
 Poor marketing activities for making the company known among the customers.
 A threat of loosing clients for any kind of weakness of the company.
 Loosing the untapped market with the entry of the competitors.

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EQUITY
MARKET

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 ABOUT THE EQUITY MARKET

PRIMARY EQUITY MARKET

There are four ways in which a company may raise equity capital in the primary market.
 PUBLIC ISSUE
 RIGHTS ISSUE
 PRIVATE PLACEMENT
 PREFERENTIAL ALLOTMENT

PUBLIC ISSUE
By far the most important mode of issuing securities, a public issue involves sale of securities to the
public at large. The company making a public issue has to go through a fairly elaborate process
which involves the following:
 Approval by the board
 Appointment of lead managers
 Appointment of other intermediaries like co-managers, advisors, underwriters, bankers,
brokers, and registrars
 Preparation of the prospectus
 Filing of the prospectus with the Registrar of Companies
 Printing and dispatch of prospectus and application form
 Filing of the initial listing application
 Promotion of the issue
 Statutory announcement
 Collection of applications
 Processing of applications
 determination of the liability of underwriters
 Allotments of securities
 Listing of the issue

STOCK INVEST SCHEME

When public issues get heavily over-subscribed, a large number of investors lose interest on the
subscription money locked with the company, while the issuing company enjoys the benefits of float
money. To prevent this, the Securities Exchange Board of India has come out with the stock invest
scheme. This is an additional facility available to investors, besides the existing instruments like cash,
cheques, and drafts, to apply for public issues. The stock invest scheme works as follows:
 An investors who has a savings account or current account with a bank applies, in a
prescribed form, for issue of a certain number of stock invests of requisite denominations.
 The bank issues the stock invests, which are properly dated, and marks a lien in the account
of the investor for the amount of stock invests issued.

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  The investors submits the application form for a public issue along with the requisite stock
invests to the collecting banker.
 The collecting banker transmits the application form with stock invests to the registrar of the
issue.
 After the allotment is finalized, the registrar fills up the right side of the stock invest form
indicating the entitlement of the investor.
 The registrar presents the stock invests to the controlling branch of the colleting bank for
the public issue, claiming whatever amounts are relevant according to the allotments.
 The collecting bank gives credit to the company’s accounts as stock invests are guaranteed
instruments.
 After the company’s account is credited, the registrar proceeds with formal allotment. In
case of full and partial allotment, the registrar intimates the successful applicants through
allotment advice. In case of unsuccessful applicants, the registrar returns the applications
form along with cancelled stock invests to the controlling bank, which in turn advise the
issuing bank.
 The issuing bank intimates the applicant about the release of lien on the account as sequel
to non-allotment.

RIGHT ISSUE
A right s issue involves selling securities in the primary market by issuing rights to the existing
shareholders. When a company issues additional equity capital it has to be offered in the first
instance to the existing shareholders on pro rata basis. This is required under section 81 of the
Companies act 1956. The shareholders, however, may be a special resolution forfeit this right,
partially or fully, to enable a company to issue additional capital to the public.

PRIVATE PLACEMENT
Private placement and preferential allotment involve sale of securities to a limited number of
sophisticated investors such as financial institutions, mutual funds, venture capital funds, banks, and
so on. What there does not seem to be a very clear-cut distinction between the two in the Indian
context we find that broadly (i) Private Placement refers to sale of equity or equity related
instruments of an unlisted company or sale of debentures of a listed or unlisted company, and (ii)
preferential allotment refers to sale of equity or equity related instruments of a listed company.
Private placement in India is mostly of equity or equity-related instruments of unlisted companies
and debt instruments of listed companies.

PREFERENTIAL ALLOTMENT
An issue of equity by a listed company to selected investors at a price which may or may not be
related to the prevailing market price is referred to as preferential allotment in the Indian capital

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market. A preferential allotment is not related to a public issue and certain categories of investors in
a public issue. Preferential allotment in India is given mainly to promoters or friendly investors to
ward off the threat of takeover. This is now a very popular means of raising fresh equity capital
because: (1) The cost and uncertainty associated with the public issue is high (2) Sophisticated
investors like mutual funds and private equity investors are likely to pay a higher price.

The price at which a preferential allotment of share is made should not be lower than the higher of
the average of the weekly high and low of the closing prices of the shares quoted on the stock
exchange during the six months period before the relevant date or during the two week period
before the relevant date.

SECONDARY EQUITY MARKET

For buying and selling any security in the market there must be a some medium to make transaction.
This medium is called secondary market. In secondary market one can buy and sell the security
which would listed in stock exchange.

The secondary market which represented an institutional mechanism that was inadequate, non-
transparent, hardly regulated and rarely geared to investor protection till the early nineties, has also
witness notable developments. Among them are the prescriptions of norms by SEBI for
intermediaries like brokers/sub-brokers/dealers in trading/settlement, broad based governing
boards of stock exchanges, capital adequacy norms for the intermediaries, corporate membership,
transparency in trading and settlement practices, development of cash market, regulation of badla
trading, introduction of future/options trading. The setting up of the Over-The Counter Exchange of
India (OTCEI) and the National Stock Exchange (NSE) represents a landmark in the direction of
developing vibrant, strong, matured, and equitable secondary market as an integral constituent of
the emerging securities market in India. An equally significant development has been the coming
into being of the National Securities Depositories Ltd (NSDL) and the system of dematerialized
trading. The commencement of derivative trading has certainly added to the sophistication of the
market greatly and integrates it with international markets. The corporatisation and demutualization
of the stock exchanges, separating trading, ownership and management is yet another crucial factor
in the same direction.

The example of secondary equity market is DERIVATIVES .

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DERIVATIVES

17
 ABOUT THE DERIVATIVES
INTRODUCTION
Keeping in view the experience of even strong and developed economies the world over, it is
no denying the fact that financial market is extremely volatile by nature. Indian financial
market is not an exception to this phenomenon. The attendant risk arising out of the volatility
and complexity of the financial market is an important concern for financial analysts. As a
result, the logical need is for those financial instruments which allow fund managers to better
manage or reduce these risks.

MEANING

A derivative is a financial instrument, which derives its value from some other financial price. This
“other financial price” is called the underlying. The underlying asset can be equity, FOREX,
commodity or any other asset.

A wheat farmer may wish to contract to sell his harvest at a future date to eliminate the risk of a
change in prices by that date. The price for such a contract would obviously depend upon the
current spot price of wheat. Such a transaction could take place on a wheat forward market. Here,
the wheat forward is the “derivative” and wheat on the spot market is “the underlying”. The terms
“derivative contract”, “derivative product”, or “derivative” are used interchangeably. The most
important derivatives are futures and options.

Example: -

A very simple example of derivatives is curd, which is derivative of milk. The price of curd
depends upon the price of milk, which in turn depends upon the demand, and supply of milk.

See it this way. American depository receipts/ global depository receipts of ICICI, Satyam
and Infosys traded on stock exchanges in the USA and England have their own values? No.
They draw their price from the underlying shares traded in India.

Consider how the value of mutual fund units changes on a day-to-day basis. Don’t mutual
fund units draw their value from the value of the portfolio of securities under the schemes?
Aren’t these examples of derivatives? Yes, these are. And you know what, these examples

18
prove that derivatives are not so new to us. Nifty options and futures, Reliance futures and
options, Satyam futures and options etc are all examples of derivatives. Futures and options
are the most common and popular form of derivatives.

TYPES OF DERIVATIVES

Derivative as a term conjures up visions of complex numeric calculations, speculative

dealings and comes across as an instrument which is the prerogative of a few ‘smart finance
professionals’. In reality it is not so. In fact, a derivative transaction helps cover risk, which
would arise on the trading of securities on which the derivative is based and a small investor
can benefit immensely. “A derivative security can be defined as a security whose value
depends on the values of other underlying variables.” Very often, the variables
underlying the derivative securities are the prices of traded securities.

Derivatives and futures are basically of 3 types:

 Forwards and Futures

 Options
 Swaps

DERIVATIVES

Options Futures Swaps Forwards

Put Call Interest Rate Currency

Commodity Security

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FORWARDS:

A forward contract is the simplest mode of a derivative transaction. It is an agreement to buy or sell
an asset (of a specified quantity) at a certain future time for a certain price. No cash is exchanged
when the contract is entered into.

Illustration: - Shyam wants to buy a TV, which costs Rs 10,000 but he has no cash to buy it
outright. He can only buy it 3 months hence. He, however, fears that prices of televisions will
rise 3 months from now. So in order to protect himself from the rise in prices Shyam enters
into a contract with the TV dealer that 3 months from now he will buy the TV for Rs 10,000.
What Shyam is doing is that he is locking the current price of a TV for a forward contract.
The forward contract is settled at maturity. The dealer will deliver the asset to Shyam at the
end of three months and Shyam in turn will pay cash equivalent to the TV price on delivery.

FUTURES:

It is an agreement between two parties to buy or sell an asset at a certain time in the future at
a certain price through exchange traded contracts.

A Future represents the right to buy or sell a standard quantity and quality of an asset or security at
a specified date and price. Futures are similar to Forward Contracts, but are standardized and traded
on an exchange, and are valued, or "Marked to Market” daily. The Marking to Market provides both
parties with a daily accounting of their financial obligations under the terms of the Future. Unlike
Forward Contracts, the counterparty to a Futures contract is the clearing corporation on the
appropriate exchange. Futures often are settled in cash or cash equivalents, rather than requiring
physical delivery of the underlying asset. Parties to a Futures contract may buy or write Options on
Futures.

OPTIONS:
An option is a contract, which gives the buyer the right, but not the obligation to buy or sell shares of
the underlying security at a specific price on or before a specific date.

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‘Option’, as the word suggests, is a choice given to the investor to either honor the contract; or if he
chooses not to walk away from the contract. There are two kinds of options: Call Options and Put
Options.

A Call Option is an option to buy a stock at a specific price on or before a certain date. When you
buy a Call option, the price you pay for it, called the option premium, secures your right to buy that
certain stock at a specified price called the strike price. If you decide not to use the option to buy the
stock, and you are not obligated to, your only cost is the option premium.

Put Options are options to sell a stock at a specific price on or before a certain date. In this
way, Put options are like insurance policies. With a Put Option, you can "insure" a stock by
fixing a selling price. If something happens which causes the stock price to fall, and thus,
"damages" your asset, you can exercise your option and sell it at its "insured" price level. If
the price of your stock goes up, and there is no "damage," then you do not need to use the
insurance, and, once again, your only cost is the premium.

Technically, an option is a contract between two parties. The buyer receives a privilege for which he
pays a premium. The seller accepts an obligation for which he receives a fee.

CALL OPTIONS

Call options give the taker the right, but not the obligation, to buy the underlying shares at a
predetermined price, on or before a predetermined date.

Illustration: - Raj purchases 1 Satyam Computer (SATCOM) AUG 150 Call --Premium 8

This contract allows Raj to buy 100 shares of SATCOM at Rs 150 per share at any time
between the current date and the end of next August. For this privilege, Raj pays a fee of Rs
800 (Rs eight a share for 100 shares).

The buyer of a call has purchased the right to buy and for that he pays a premium.

Now let us see how one can profit from buying an option; Sam purchases a December call
option at Rs 40 for a premium of Rs 15. That is he has purchased the right to buy that share
for Rs 40 in December. If the stock rises above Rs 55 (40+15) he will break even and he will

21
start making a profit. Suppose the stock does not rise and instead falls he will choose not to
exercise the option and forego the premium of Rs 15 and thus limiting his loss to Rs 15.

Call Options-Long & Short Positions

When you expect prices to rise, then you take a long position by buying calls. You are
bullish.When you expect prices to fall, then you take a short position by selling calls. You are
bearish.

PUT OPTIONS
A Put Option gives the holder of the right to sell a specific number of shares of an agreed security at
a fixed price for a period of time.

Illustration:- Raj is of the view that the a stock is overpriced and will fall in future, but he
does not want to take the risk in the event of price rising so purchases a put option at Rs 70
on ‘X’. By purchasing the put option Raj has the right to sell the stock at Rs 70 but he has to
pay a fee of Rs 15 (premium).

So he will breakeven only after the stock falls below Rs 55 (70-15) and will start making
profit if the stock falls below Rs 55.

Put Options-Long & Short Positions

When you expect prices to fall, then you take a long position by buying Puts. You are
bearish.
When you expect prices to rise, then you take a short position by selling Puts. You are
bullish.

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 CALL OPTIONS PUT OPTIONS

If you expect a fall in price(Bearish) Short Long

If you expect a rise in price (Bullish) Long Short

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MAJOR PLAYERS

24
 MAJOR PLAYERS IN BROKING INDUSTRY

1. BADJATE STOKES AND SHARES PVT LTD (www.badjategroup.com)

2. ANGEL BROKING LTD.
3. NIRMAL BANGPVT LTD.
4. ICICI WEB TRADE LTD. (www.icicidirect.com)
5. 5 PAISA.COM (www.5paisa.com)
6. KOTAK SECURITIES LTD. (www.kotakstreet.com)
7. INDIABULLS (www.indiabulls.com)
8. MOTILAL OSWAL SECURITIES LTD.
9. HDFC SECURITIES LTD. (www.hdfcsec.com)
10. UTI SECURITIES LTD.
11. IDBI CAPITAL MARKET SERIVICES LTD.
12. REFCO SIFY SECURITIES PVT LTD.

 CHARGES APPLICABLE FOR VARIOS INDUSTRIES

A/c Opening Fee Brokerage Interface

Parameters
Trading Square Banks Associated
Demat Delivery
A/c Off with

Badjate stock and

350 150 0.50 0.05 HDFC
shares pvt ltd

Angel Broking Ltd. 460 0.40 0.08 HDFC, ICICI,UTI

ICICI Direct 750 NIL 0.75 0.18 ICICI Bank

India bulls 750 250 0.40 0.10 N.A.

Citibank, HDFC, OBC,

5 paisa 800 NIL 0.20 0.05
UTI & ICICI Bank

Kotak Street 500 N.A. 0.59 0.06 Kotak Bank

25
INTRODUCTION
OF PORTFOLIO
MANAGEMENT

26
 INTRODUCTION OF PORTFOLIO MANAGEMENT

“Portfolio” means the total holdings of securities belonging to any

person.

Portfolio management is the management various financial assets which

comprise the portfolio. In a narrow spectrum, the term portfolio management can be
applied to only shares and debentures whereas the management of the total financial
assets can be attributed to the investment management.

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

to meet the multi-aced needs of investors.

As per definition of SEBI Portfolio means,” a collection of securities owned by

an investor”. It represents the total holdings of securities belonging to any person". It
comprises of different types of assets and securities. Portfolio management refers to
the management or administration of a portfolio of securities to protect and enhance
the value of the underlying investment. Portfolio Management, called, as Portfolio
Management Services are the advisory services provided by corporate financial
intermediaries.

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 ROLE OF PORTFOLIO MANAGEMENT

In the beginning of the nineties India embarked on a programme of economic

liberalization and globalization. The Indian stock markets are steadily moving towards
capital efficiency, with rapid computerization, increasing market transparency, better
infrastructure, better customer service, closer integration and higher volumes. Large
institutional investors with their diversified portfolios dominate the markets. A large
number of mutual funds have been set up in the country since 1987.

The Securities and Exchange Board of India, the stock market regulatory body
in India, is supervising the whole process with a view to making portfolio
management a responsible professional service to be rendered by experts in the field.
Portfolios now include not only domestic securities but also foreign securities.
Diversification has become international.
Another significant development in the field of portfolio management is the
introduction of derivatives securities such as options and futures. The trading in
derivative securities, their valuation, etc. has broadened the scope of portfolio
management.

Portfolio Management Role :-

Portfolio management plays very important role in respect of issuer and investor
means companies and investors. After research portfolio manager decide which
security or which other product is good or investible, accordingly he prepare strategies
to invest. On the basis of the strategies he structures a portfolio.

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 SCOPE OF PORTFOLIO MANAGEMENT :-

Portfolio management is a continuous process. It is a dynamic activity. The

following are the basic operations of a portfolio management:

 Monitoring the performance of portfolio by incorporating the latest market

conditions.
 Identification of the investor’s objective, constraints and preferences.
 Making an evaluation of portfolio income (comparison with targets and
achievements).
 Making revision in the portfolio.
 Implementation of strategies in tune with the investment objective.

ELEMENTS OF PORTFOLIO MANAGEMENT :-

Portfolio management is an on-going process involving the following basic tasks:

 Identification of the investor’s objectives, constraints and preferences, which

will help formulate the investment policy.
 Strategies are to be developed and implemented in tune with the investment
policy formulated. This will help the selection of asset classes and securities in
each class depending upon their risk-return attributes.
 Review and monitoring of the performance of the portfolio by continuous
overview of the market conditions, companies performance and investor’s
circumstances.

The collection of data on the investor’s preferences, objectives, etc., is the foundation
of portfolio management. This gives an idea of channels of investment in terms of
asset classes to be selected and securities to be chosen based upon the liquidity
requirements, time horizon, taxes, asset preferences of investors, etc. these are the
building blocks for the construction of a portfolio.

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 OBJECTIVE OF THE PORTFOLIO MANAGEMENT

The objective of portfolio management is to maximize the return and minimize the
risk.
These objectives are categorized into:

1. Basic Objectives.
2. Subsidiary Objectives

Basic Objectives :-

The basic objectives of a portfolio management are further divided into two
kinds viz., (a) maximize yield (b) minimize risk. The aim of the portfolio management
is to enhance the return for the level of risk to the portfolio owner.

Subsidiary Objectives :-

The subsidiary objectives of a portfolio management are expecting a reasonable

income, appreciation of capital at the time of disposal, safety of the investment and
liquidity etc. The objective of investor is to get a reasonable return on his investment
without any risk.

Every investor has to dispose his holding after a stipulated period of time for a
capital appreciation. Capital appreciation of a financial asset is highly influenced by a
strong brand image, market leadership, guaranteed sales, financial strength, and large
pool of reverses, retained earnings and accumulated profits of the company. The idea
of growth stocks is the right issue in the right industry, bought at the right time. A
portfolio management desires the safety of the investment. The safety of the
investment calls for careful review of economic and industry trends. Liquidity of the
investment is most important, which may not be neglected by any investor/portfolio
manager. An investment is to be liquid, it must have “termination and marketable”
facility at any time.

30
PORTFOLIO – AGE RELATIONSHIP :-

Age Portfolio
80% in stocks or mutual funds

Below 30 10% in cash

10% in fixed income
70% in stocks or mutual funds

30 to 40 10% in cash
20% in fixed income
60% in stocks or mutual funds

40 to 50 10% in cash
30% in fixed income
50% in stocks or mutual funds

50 to 60 10% in cash
40% in fixed income
40% in stocks or mutual funds

above 60 10% in cash

50% in fixed income

31
 TYPES OF
PORTFOLIO
MANAGEMENT

32
 TYPE OF PORTFOLIO

1. Aggressive portfolio

2. Moderate Portfolio

3. Defensive Portfolio

4. Conservative Portfolio

1. Aggressive Portfolio:

Objective: Growth. This strategy might be appropriate for investors who seek High
growth and who can tolerate wide fluctuations in market values, over the short term.

2. Growth Portfolio:

Objective: Growth. This strategy might be appropriate for investors who have a
preference for growth and who can withstand significant fluctuations in market value.

33
3. Balanced Portfolio:

Objective: Capital appreciation and income. This strategy might be appropriate for
investors who want the potential for capital appreciation and some growth, and who
can withstand moderate fluctuations in market values.

4. Conservative Portfolio:

Objective: Income and capital appreciation. This strategy may be appropriate for
investors who want to preserve their capital and minimize fluctuations in market
value.

34
 RESEARCH
METHODOLOGY

35
 Research Methodology
Research Methodology has many dimensions, it include not only research methods but
also considers the logic behind the methods used in the context of the study and explains why
only a particular method of technique has been used so that research leads to proper evaluations.
Thus in a way it is a written game plan for concluding research therefore in order to solve
research problem it is necessary to design a research methodology for the problem as the same
differ from problem to problem.

Research Design:

The research design is a pattern or an outline of a research project. It is a statement only the
essential of a study that provides the basic guidelines for the details of the project. The present
study being conducted follows a Descriptive Research and the Exploratory Research. It is a cross
section of the situation design of the descriptive studies including the nature and the analytical
method.

Data Collection:

After the research problem has been defined and the research design has been chalked out,
the task of date collection begins. The data collection technique would be Secondary Data
Collection. Secondary data would be collected from the internet and different websites and
newspaper articles. And other research paper would be taken into consideration to find out the
better result from the research paper.

Research Tools and Techniques

Tools and techniques are used for the stock selection and to manage the risk and return on
the portfolio. Major things to be considered are the sector preference for the selection of the stock
because diversification should be into different sectors so as to maximize the return and taking
advantage of whole economy related environment and news. Stock selection will be based on the
Fundamental analysis and Beta for the stock selection. Capital Asset Pricing Model and Sharpe
Ratio will be used vis-à-vis to manage the risk and selection of stock as well.

36
Details of tools and techniques

 Sectors will be divided into two parts DEFENSIVE and OFFENSIVE. In defensive bets
IT, FMCG, PHARMA& HEATHCARE will be considered. For the offensive bets
BANKING and FINANCE, AUTOMOBILE, CAPITALGOODS, INFRASTURCTURE
AND, METAL, OIL & GAS will be considered.

 For the selection of the stock nifty 50 stocks, stocks of large capitalization and those
stocks who had major contribution in their sector and cheap via valuation will be selected.
(All Nifty 50 stocks are shortlisted due to the index preference.)

 The first stock selection criteria would be to analyze the industry from a macro point of
view.

 After analyzing the industry, sectoral allocation would be analyzed considering the
individual stocks.

 Then industry analysis and the company analysis will be done for the final stocks which
are good as per the selection criteria.

 In another part I will apply the fundamentals for selecting the specific stocks for my
portfolio.

 For the further analysis and to manage the returns and risk involved in the investment
CAPM and SHARPE will be implemented on the stocks.

 We know the stock market is a risky investment tool and so as to avoid the wrong
decision of elimination or for the restructuring purpose and for the eliminating of the
stocks which are not giving good returns or are giving negative returns, SORTINO will
be used.

Note:-
However we all know that the stock market is always a risky investment tool but the above
analysis part will be used for the stocks and investment decision will be made on the behalf of
above analysis. The investment amount limit will be same as it has been set by SEBI (Min 25lacs
for the portfolio).
The above analysis is made to the best of my knowledge. There will be fee charged
by the fund manager or portfolio manager or by the company who will manage this
investment on the behalf of the client.

37
 RESEARCH PROBLEM

In the Nagpur city, many people invest in stock market but most of the investor trading on equity
while the other segments are remains inaccessible.

Very few people in the Nagpur who are trading in derivatives and commodity while there is immense
opportunities for developing of these segments.

Badjate Broking as a stock broking company needs to focus on increasing interest in stock market
investment because if trading on these instruments increase badjate Broking will be benefited by
earning revenue in terms of brokerage.

So that this study is undertaken.

OBJECTIVES

The main objective of the study is to know the investment pattern in stock market and the
potential market among the people of Nagpur City.

Some other secondary objectives are as under:

1. To know the awareness of Investment Pattern of Equity Market.

2. To know the scope for the Investment Pattern of Equity Market.
3. To know the purpose of investing in Equity Market.
4. To know the influencing force behind the decision making while trading in Equity Market.
5. To find out the best pattern to educate about Equity Market.
6. To find out the medium which is the best suitable for trading on Equity Market.

38
HYPOTHESIS AND
SCOPE OF STUDY

39
HYPOTHESIS

H0: “There is no significant difference of investment pattern in stock

market among the people of Nagpur City.”

H1: “There is significant difference of investment pattern in stock

market among the people of Nagpur City.”

TESTING OF HYPOTHESIS USING Z TEST (TWO TAILED):

1) The Null Hypothesis (H0) “There is no significant difference of

investment pattern in stock market among the people of Rajkot City.”
Therefore, H0 : u = 50%
H1: u ≠ 50%

2) Level of Significance : σ
The Level of significance should be set at α = 0.05

3) The Statistical Test :

Z = X – u / σx
Where, Z = No. of standard deviations for the desired level of
confidence.
X = Mean of the sample
U = Mean of the population or hypothetical mean
σx = Estimate for the standard error or the mean

4) The Decision Rule

1.000 (1-0.025) = 0.975
1.9+ 0.6 = 1.96 & - 1.96 (the result will be between two)
σx = 5 / root of 300 - 1
= 15/17.29
= 0.8676
Z = 55 – 50 / 0.8676
= 5.763
5.) Draw a statistical conclusion
The absolute value of the computerized Z statistic (5.763) is larger than
1.96, therefore null hypothesis is rejected.

So, Alternate Hypothesis is accepted.

H1: “There is significant difference of investment pattern in stock
market among the people of Rajkot City.”

40
 SCOPE OF THE STUDY

The research that is being conducted by us will be useful in the following respect.

 This will help the company, how to make people aware about Equity Market by imparting
best education.

 This will help the company to know the taste of masses and turn it towards Equity Market.

 This will help the company to frame effective Marketing Strategy.

 This will also help to select the right media for advertising to create brand awareness as well
as to give knowledge of the products.

 Mind share of Badjate Broking can be known.

 This will also help to select right medium for trading in Equity Market segment.

 This will help the company to reduce the obstacles which come in the way for the
development of Equity Market segment.

41
 DATA COLLECTION

SECONDARY DATA

When data are collected and compelled from the published nature or any other’s primary data is
called secondary data.

So far as our research is concerned, we have not collected any information from any sources. So, we
have not used secondary data for our research

PRIMARY DATA
The data which is collected directly from the respondent to the base of knowledge and belief of such
research are called primary data.

SAMPLING DESIGN

Sample design is definite plan for obtaining a sample from a given population. It refers to the
technique or procedure the researcher would adopt selecting items for the sample. Sample design
may as well as lay down the no. of item to be included in the sample i.e. the size of sample.Sample
design is determined before the data are collected.

It is very true that it’s very difficult to do the research with the whole universe. As we know that it is
not feasible to go for population survey because of the numerous customers and their scattered
location. So for this purpose sample size has to be determined well in advance and selection of
sample also must be scientific so that it represents the whole universe.So far as our research is
concerned, we have taken sample size of 100 respondents. We have selected Income Earners with
savings to invest in Rajkot city.

42
 RESEARCH INSTRUMENT

We have collected the data through QUESTIONNAIRE by personal meeting and tale – calling with
people.

LIMITATION OF THE STUDY

1. Personal Bias:

People may have personal bias towards particular investment option so they may not
give correct information and due to which conclusion may be derived.

2. Time Limit:
The time duration of the research is short that’s why the information is not covered
fully.

3. Area:
The area was limited to Nagpur city only, so we can not know the degree of the
literacy outside the city.

4. Sample Size:
The last limitation is Sample size, taken by us is of 100 only; due to which we may not get the

proper results.

43
ANALYSIS OF
DATA

44
 ANALYSIS OF DATA
1. GENDER RATIO :
MALE FEMALE
70 30

30

MALE
FEMALE

70

2. AGE GROUP
PARTICULARS NO.OF PERSONS
BELOW 35 25
36-50 50
51-65 15
ABOVE 65 10

AGE GROUP

60
50
50

40

30 25 NO.OF PERSONS

20 15
10
10

0
BELOW 36-50 51-65 ABOVE
35 65

45
3.EDUCATION

PARTICULARS NO.OF PERSONS

UNDER GRADUATE 25
GRADUATE 60
POST GRADUATE 15

EDUCATION

70
60
60
50
40
NO.OF PERSONS
30 25
20 15

10
0
UNDER GRADUATE POST
GRADUATE GRADUATE

4. OCCUPATION
PARTICULARS NO.OF PERSONS
PROFESSIONAL 10
EMPLOYEE WORKING IN PVT. FIRMS 30
BUSINESSMEN 40
GOVT. EMPLOYEE 20

OCCUPATION

PROFESSIONAL
10
20

EMPLOYEE
WORKING IN PVT.
FIRMS
30
BUSINESSMEN

GOVT. EMPLOYEE
40

46
5. OF THIS INVESTMENT OPTION WHERE DO YOU INVEST YOUR SAVINGS?
AVENUES NO. OF PERSONS
BANK FD 90
MUTUAL FUND 10
SHARES/EQUITY 30
POSTAL SCHEME 40
INSURANCE 20
REAL ESTATE 35

INVESTMENT PATTERN

100 90
90
80
70
60
50 40 35 NO. OF PERSONS
40 30
30 20
20 10
10
0
D

CE
TY

TE
FD

E
N

M
UI

TA
FU

N
K

HE

RA
Q
N

ES
AL

SC
BA

/E

SU
ES
U

AL
AL

IN
UT

AR

RE
ST
M

SH

PO

6. IF YOU INVEST IN STOCK MARKET, WHICH WOULD BE YOUR PREFERENCE

FROM BELOW?
PARTICULARS NO. OF PERSONS
EQUITY 60
DERIVATIVES 25
COMMODITY 15

15

EQUITY
DERIVATIVES
25 COMMODITY
60

47
7.WHEN YOU MAKE A DECISION TO INVEST IN STOCK MARKET, WHICH
FACTOR WILL YOU GIVE IMPORTANCE?

PARTICULARS NO.OF PERSONS RANK

RISK REDUCTION 25 2
INVESTMENT 30 1
SPECULATION 10 5
ARBITRAGE 20 3
TO INCREASE THE LEVERAGE 15 4

35 1
30 2
3
25
4
20 RANK
5
15 30 NO.OF PERSONS
25
10 20
15
5 10
0
REDUCTION

SPECULATION

TO INCREASE
RISK

THE

8.WHICH STOCK EXCHANGE WOULD YOU PREFER TO CARRY OUT YOUR

TRANSACTION?
EXCHANGES NO. OF PERSONS
BSE 45
NSE 30
MCX 10
NCDEX 15

50
45
45
40
35
30
30
25 NO. OF PERSONS
20
15
15
10
10
5
0
BSE NSE MCX NCDEX

48
9.DO YOU CONSIDER INVESTMENT IN STOCK MARKET ARE SAFER THAN
OTHER INVESTMENT AVENUES?

PARTICULARS NO.OF PERSONS

YES 60
NO 40

40
YES
NO
60

10. IF NO, THAN WHICH CONSTRAINTS THAT HOLDING YOU BACK?

PARTICULARS NO. OF PERSONS
RISK TAKING ABILITY 40
FUND FACILITY 15
LACK OF KNOWLEDGE 25
LACK OF GUIDANCE 20

45 40
40
35
30 25
25 20 NO. OF
20 15 PERSONS
15
10
5
0
Y
Y

E
E
IT
T

C
G
LI

N
IL

D
BI

A
C

LE

ID
FA
A

U
G

G
O
N

N
KI

F
FU

O
TA

K
O
K

C
IS

LA
K
C
R

LA

49
11. HOW MUCH TIME WILL YOU BE ABLE TO DEVOTE FOR LEARNING STOCK
MARKET?

PARTICULARS NO.OF PERSONS

1 DAY 5
2 DAYS 10
3 DAYS 20
2 HRS PER DAY OVER 1 MONTH 25
CAN'T SAY 40

5
10 1 DAY

2 DAYS
40
3 DAYS
20

2 HRS PER DAY

OVER 1 MONTH
CAN'T SAY
25

12. ACCORDING TO YOU WHICH MEDIUM IS THE MOST RELIABLE FOR

TRADING IN STOCK MARKET?
PARTICULARS NO.OF PERSONS
STOCK BROKING COS. 40
FRANCHISEES 20
BROKERS 30
ONLINE 10

45 40
40
35 30
30
25 20 NO.OF PERSONS
20
15 10
10
5
0
BROKING

BROKERS
STOCK

COS.

50
CONCLUSION

51
 CONCLUSION

 Most of the people in Nagpur City are investing in fixed return Instruments.

 But there are investors who use Equity as an investment tool.

 Those people who want to invest in Derivatives & Commodities are investing mainly
for reducing risk and they consider them as investment tool.

 People generally want to take trading decisions independently or under the guidance
of Friends or Well Known Stock Broking Houses.

 Literature and Self Experience can be taken as the best method to impart education
about stock market.

 More than 40% of the respondents are interested to invest into the stock market.

52
FINDINGS AND
SUGGETIONS

53
 FINDINGS AND SUGGESTIONS

 Badjate Broking firm needs to make its marketing team strong and also it should
increase marketing activities such as promotional campaigns.

 Badjate Broking firm should educate the investors about Derivatives & Commodities
by organizing classes, corporate presentations, taking part in consumer fairs,
organizing events.

 Company should show the benefits of trading on Derivatives & Commodities

 badjate Broking firm can also use Newspapers and Local New Channels as a medium
of advertising.

 Badjate Broking firm may also use its helpline number for giving education on stock
market.

 Company may appoint special team for giving education & attracting people towards
trading in stock market.

54
QUESTIONNAIRE

55
 QUESTIONNAIRE
THE INVESTMENT PATTERN IN THE STOCK MARKET AMONG THE PEOPLE
OF NAGPUR CITY

1. Gender: Male Female

2. Age: Below 30 31-45 46-60 Above 60

3. Education: Undergraduate Graduate Post graduate

4. Occupation: Professional Businessmen

Employees working Govt. Employee
in Pvt. Firms

5. Of this investment options, where do you invest your savings?

Bank FD Postal Scheme Jewellary

Mutual Funds Insurance
Shares/Equity Real Estate

6. If you Invest in stock market which would be your preference from below?
Equity Derivatives (F&O) Commodity

7. Which factor plays crucial role when you make a decision to invest in stock market?

Risk Reduction Speculative Motive

Leverage Benefit Investment
Arbitrage Benefit

56
8. Which Stock exchange would you prefer to carry out your transactions
BSE NCDEX

NSE MCX

9. Do you consider investment in stock market are safer than other investment
avenues ?
YES NO

10. If no than which constraints that are holding you back.

Lack of knowledge Lack of guidance from broker

Lack of fund availability Lack of Risk Taking ability

11. How much time will you be able to devote for learning Stock Market.

1 day 2 days 3 days

2 hrs per day over 1 week Can’t say

12. According to you, which medium is the most reliable for trading in Stock Market? (Give
Rank)

Stock broking cos. (Branded) Brokers

Franchisees Online

57
BIBILOGRAPHY

58
 BIBLIOGRAPHY

Bibliography/ References

WEBSITES:

 www.Google.com
 www.bseindia.com
 www.nseindia.com
 www.badjategroup.com
 www.ncdex.com.
 www.mcx.com
 www.rbi.ors.in
 www.moneycontrol.com

59