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Y   



Submitted to:
Dr.Kiran
Submitted by:
Gautam Sharma
Geetika Sharma
Himashu
Maninder
r   
Maximize the expected rate of return, subject to
risk exposure being held within a certain limit.
Selection  
‡ Cash
‡ Stocks

Formulation of Portfolio Strategy


‡ Active Portfolio Strategy
Market Timings: Highly Active
Sector Rotation: Active
2    2  
‡ Equity Shares:-

ÔReliance Industries
ÔLIC Housing Finance
ÔVijaya Bank
ÔJaypee Associates
  
Date of purchase: 17th August
Number of Shares: 200
Purchase Price: Rs.79
Date of Sale: 13th October
Sale Price: Rs.94.5
Reason of Purchase: PSU
Rate of Return: (94.5-79)/79*100
=19.62%
°  
 : Stock Price Line
above MA line falls but begin
to rise again before reaching
MA line
Risk:-
Period Return% (R- Ŕ) (R- Ŕ) ²
Aug 9.58% -4.43 19.624
Sept 1.36% -12.65 160.02
Oct 31.10% 10.94 119.683
42.04 6.14 299.33

Ŕ= ™R/n= 42.04/3= 14.01%


ȉ = {™ (R- Ŕ) ²/n}† 
 ™ (R- Ŕ) ™(Rm- Ŕm)/ ™(Rm- Ŕm ) ²
=6.14*0.001/89.76=0
0   
Date of Purchase: 27th August
Number of shares: 200
Purchase Price: Rs.113.4
Date of Sale: 5th October
Sale Price: Rs.128
Reason of Purchase: Capital good company
Dividend : 27% on 15 Sept
Rate of Return: (128+2.7- 113.4/113.4)*100
= 15.25%
°  
Buy Signal: August
Stock Price Line rises
through the MA Line
when the Graph of
MA Line is flattening
Sell Signal: October
Stock Price Line rises above
MA Line which is falling
Risk:-
Period Return% (R- Ŕ) (R- Ŕ) ²
Aug -8.02% -7.597 57.71
Sept 9.77% 10.193 103.89
Oct -3.02% -2.597 6.744
-1.27 -0.001 168.34

Ŕ= ™R/n=-1.27/3= -0.423
ȉ = {™ (R- Ŕ) ²/n}† 
 ™(R- Ŕ) ™(Rm- Ŕm)/ ™(Rm- Ŕm ) ² =0
ï   r  
Date of Purchase: 31st August
Number of shares: 25
Purchase Price: Rs. 934(52 weeks low)
Date of Sale: 11th October
Sale Price: Rs.1058
Reason of Purchase: Petroleum Deregulations
Rate of Return: (1058-934)/934*100
=13.27%
°  
Stock price line falls
below the MA Line
which is rising
Risk:-
Period Return% (R- Ŕ) (R- Ŕ) ²
Aug -9.92% -11.34% 128.7%
Sept 5.32% 3.895% 15.17%
Oct 8.87% 7.445% 55.43%
4.28% 0 199.3%

Ŕ= ™R/n= 4.28/3= 1.425


ȉ = {™ (R- Ŕ) ²/n}† 

 ™(R- Ŕ) ™(Rm- Ŕm)/ ™(Rm- Ŕm ) ² =0


ër  
  
Date of Purchase: 6th September
Number of shares: 30
Purchase Price: Rs. 1216
Date of Sale: 7th October
Sale Price: Rs.1472
Reason of Purchase: Strong Brand name
High Profitability
NBFC Banking license soon
Rate of Return: (1472-1216)/1216*100
=21.05%
°  
Stock Price Line is
above MA line which
is falling and rises
before touching
MA Line
Risk:-
Period Return% (R- Ŕ) (R- Ŕ) ²
Aug 5.37% -0.11 0.0121
Sept 18.74% 13.26 175.827
Oct -7.67% -13.15 172.92
16.44 0 348.75

Ŕ= ™R/n= 16.44/3= 5.48


ȉ = {™ (R- Ŕ) ²/n}† 
 ™(R- Ŕ) ™(Rm- Ŕm)/ ™(Rm- Ŕm ) ² =0
Y   ï 
½eight% Return% ½R
Reliance 23.75 13.27 3.15
LIC 37.1 21.05 7.81
Vijaya bank 16.07 19.62 3.15
JayPee 23.06 15.25 3.51

Portfolio Return = ™½R= 17.62%


Y   ï
ȉ²=w1² ȉ1²+ w2²ȉ2²+ w3²ȉ3²+ w4²ȉ4² ÷   

   

2w1w2cov12 +2w1w3cov13+ 2w1w4cov14+


2w2w3cov23+ 2w2w4cov24+ 2w3w4cov34

=25720.7+29839.7+37464.86+0+
2(1682.4-14640.57+301812.8+
35237.4+428070.9-10295.11)/10000=157.67

ȉ= 12.57
2   ï 

2nd August: 18081


11th October: 20340
Return: 20340-18081/18081*100= 12.49%
Our Portfolio Return is 17.62% which
outperformed the Sensex.