A

PROJECT STUDY REPORT ON

“Portfolio management service”

Submitted towards the partial fulfillment of the requirement of

MBA (Full-Time) Programme
Subject:

SUBMITTED BY:
PATEL HERIN JANAKBHAI

UNDER THE GUIDANCE OF

(DR. JANKI MISTRY)

G. H. Bhakta Management Academy

DEPARTMENT OF BUSINESS AND INDUSTRIAL MANAGEMENT

VEER NARMAD SOUTH GUJARAT UNIVERSITY

SURAT

May 2022

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 DECLARATION

I, the undersigned Patel Herin Janakbhai student of MBA (2 year Full-time)

programme at the Department of Business & Industrial Management, Veer

Narmad South Gujarat University, Surat , hereby declare that the work

reported by me in this report titled Portfolio management service is

original and fully an outcome of the winter research project work carried

out by me.

I also declare that the secondary sources of information have been duly

acknowledged wherever used.

Further, I would like to declare that this report has not been submitted to

any other University or institute for the award of any degree or diploma.

Place: Surat
Date:
PATEL HERIN JANAKTBHAI
MBA (Full-Time) Programme

Department of Business and Industrial Management

Veer Narmad South Gujarat University, Surat.

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 Department of Business & Industrial Management
Veer Narmad South Gujarat University,
Surat

Certificate

This is to certify that the Project Study Report titled “Portfolio management
service” submitted by PATEL HERIN JANAKBHAI is a record of the work
carried out under my guidance and supervision for the subject “Project Study in
MBA (Full-time) Sem-2

To the best of my knowledge, this report has not been submitted to any other
university of institute for any degree or diploma award.

DR. JANKI MISTRY

(Name of the Department Mentor)

(Designation)
Department of Business and Industrial Management
Veer Narmad South Gujarat University
Surat – 395007, Gujarat, India

Professor & Head

Department of Business and Industrial Management
Veer Narmad South Gujarat University,
Surat – 395007, Gujarat, India.

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 INDEX

CHEPTER TABLE OF CONTENT PG NO

CH – 1 INTRODUCTION 9

Introduction of Indian stock market 9

Advantages of stock trading 11

Disadvantages of stock trading 11

CH - 2 COMPANY PROFILE 13

Work structure of Sharekhan 15

Product and services offered by Sharekhan 16

Reason to choose Sharekhan 22

CH – 3 RESEARCH METHODOLOGY 25

Reseach design of the study 25

Scope of the Study 27

CH – 4 PORTFOLIO MANAGEMENT SERVICES 28

Need of PMS 29

Objective of PMS 30

Portfolio construction 32

Risk and Risk aversion 41

Risk versus Return 45

Techniques of portfolio management 52

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CH – 5 DATA ANALYSIS AND INTERPRETATION 68

CH - 6 CONCLUSION FINDING AND 79

SUGGESTIONS
BIBLIOGRAPHY 82

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OBJECTIVE OF THE PROJECT

Each research study has its own specific purpose. It is like to discover to Question
through the application of scientific procedure. But the main aim of our research
to find out the truth that is hidden and which has not been discovered as yet. Our
research study has two objectives:

OBJECTIVES

 To know the concept of Portfolio Management. Service.

 To study attitude the investor toward portfolio management service.

 To know about the awareness towards stock brokers and share market.

 To study about the competitive position of Sharekhan Ltd in Competitive

Market.

 To study about the effectiveness & efficiency of Sharekhan Ltd in relation

to its competitors

 To study about whether people are satisfied with Sharekhan Services &
Management System or not.

 To study about the difficulties faced by persons while Trading in

Sharekhan.

 To study about the need of improvement in existing Trading system

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EXECUTIVE SUMMARY

Investing is both Arts and Science. Every Individual has their own specific
financial need and expectation based on their risk takin capabilities, whereas
some needs and expectation are universal. Therefore, we find that the scenario of
the Stock Market is changing day by day hours by hours and minute by minute.
The evaluation of financial planning has been increased through decades, which
can be best seen in customers. Now a day’s investments have become very
important part of income saving.

In order to keep the Investor safe from market fluctuation and make them
profitable, Portfolio Management Services (PMS) is fast gaining Investment
Option for the High Net worth Individual (HNI). There is growing competition
between brokerage firms in post reform India. For investor it is always difficult
to decide which brokerage firm to choose.

The research design is analytical in nature. A questionnaire was prepared and

distributed to Investors. The investor’s profile is based on the results of a
questionnaire that the Investors completed. The Sample consists of 100 investors
from various broker’s premises. The target customers were Investors who are
trading in the stock market.

In order to identify the effectiveness of Share khan PMS services this Research
is carried throughout the area of Hyderabad. At the time of investing money
everyone look for the Risk factor involve in the Investment option. The Report is
prepared on the basis of Research work done through the different Research
Mythology the data is collected from both the source Primary sources which
consist of Questionnaire and secondary data is collected from different sources
such as Company website, Magazine and other sources.

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In this project I have shown the details of financial planning as well as wealth
management so as to understand about the customer’s needs and wants with
respect to market and how a client’s portfolio can be designed and what factors a
portfolio manager must consider for designing a portfolio.

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 CHAPTER 1: INTRODUCTION

 What Is the Stock Market?

The stock market broadly refers to the collection of exchanges and other
venues where the buying, selling, and issuance of shares of publicly held
companies take place. Such financial activities are conducted through
institutionalized formal exchanges (whether physical or electronic) or via over-
the-counter (OTC) marketplaces that operate under a defined set of
regulations.

While both the terms “stock market” and “stock exchange” are often used
interchangeably, the latter term generally comprises a subset of the former. If
one trades in the stock market, it means that they buy or sell shares on one (or
more) of the stock exchange(s) that are part of the overall stock market. A
given country or region may have one or more exchanges comprising their
stock market.

 Understanding the Stock Market

The stock market allows numerous buyers and sellers of securities to meet,
interact, and transact. Stock markets allow for price discovery for shares of
corporations and serve as a barometer for the overall economy. Since the
number of stock market participants is huge, one can often be assured of a fair
price and a high degree of liquidity as various market participants compete with
one another for the best price.

Introduction to the Indian Stock Market

is an Indian stock exchange located on Dalal Street in Mumbai Established in

1875 by cotton merchant Premchand roychand, a Rajasthani Jain
businessman, it is the oldest stock exchange in Asia, and also the tenth oldest in
the world. The BSE is the 10th largest stock exchange with an overall market
capitalisation of more than ₹276.713 LAKHA CRORE, as of January 2022.[3]

Bombay Stock Exchange was started by Premchand Roychand in 1875. While

BSE Limited is now synonymous with Dalal Street, it was not always so. In the
1850s, five stock brokers gathered together under a Banyan tree in front of
Mumbai Town Hall, where Horniman Circle is now situated. [9] A decade later,
the brokers moved their location to another leafy setting, this time under banyan
trees at the junction of Meadows Street and what was then called Esplanade
Road, now Mahatma Gandhi Road. With a rapid increase in the number of

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brokers, they had to shift places repeatedly. At last, in 1874, the brokers found a
permanent location, the one that they could call their own. The brokers group
became an official organization known as "The Native Share & Stock Brokers
Association" in 1875.
The Bombay Stock Exchange continued to operate out of a building near
the Town Hall until 1928. The present site near Horniman Circle was acquired
by the exchange in 1928, and a building was constructed and occupied in 1930.
The street on which the site is located came to be called Dalal Street in Hindi
due to the location of the exchange.
On 31 August 1957, the BSE became the first stock exchange to be recognized
by the Indian Government under the Securities Contracts Regulation Act.
Construction of the present building, the PhirozeJeejeebhoy Towers at dala
Street, Fort area, began in the late 1970s and was completed and occupied by
the BSE in 1980. Initially named the BSE Towers, the name of the building was
changed soon after occupation, in memory of Sir Phiroze Jamshedji Jeejeebhoy,
chairman of the BSE since 1966, following his death.
In 1986, the BSE developed the S&P BSE SENSEX index, giving the BSE a
means to measure the overall performance of the exchange. In 2000, the BSE
used this index to open its derivatives market, trading S&P BSE SENSEX
futures contracts. The development of S&P BSE SENSEX options along with
equity derivatives followed in 2001 and 2002, expanding the BSE's trading
platform.
On 12 March 1993, a car bomb exploded in the basement of the building during
the 1993 Bombay bombings
Historically an open outcry floor trading exchange, the Bombay Stock
Exchange switched to an electronic trading system developed by Cmc ltd. in
1995. It took the exchange only 50 days to make this transition. This
automated, screen-based trading platform called BSE On-Line Trading (BOLT)
had a capacity of 8 million orders per day.

BSE established India INX on 30 December 2016. India INX is the first
international exchange of India.

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Advantages of Stocks Trading
1. Better returns
Actively trading stocks can produce better overall returns than simply buying and
holding.

2. Huge Choice
There are thousands of stocks listed on markets around the world. There is always
a stock whose price is moving - it’s just a matter of finding them.

3. Familiarity
The most traded stocks are in the largest companies that most of us have heard of
and understand - Microsoft, IBM, and Cisco etc.

Disadvantages of Stocks Trading

1. Leverage
With a margined account the maximum amount of leverage available for stock
trading is usually 4:1. Meaning a $25,000 could trade up to $100,000 of stock.
This is pretty low compared to Forex trading or futures trading.

2. Pattern Day Trader Rules

It requires at least $25,000 to be held in a trading account if the trader completes
more than 4 trades in a 5 day period. No such rule applies to Forex trading or
futures trading.

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3. Uptick Rule on Short Selling
A trader must wait until a stock price ticks up before they can short sell it. Again
there are no such rules in Forex trading or futures trading where going short are
as easy as going long.

4. Need to Borrow Stock to Short

Stocks are physical commodities and if a trader wishes to go short then the broker
must have arrangements in place to borrow that stock from a shareholder until the
trader closes their position. This limits the opportunities available for short
selling. Contrast this to futures trading where selling is as easy as buying.

5. Costs
Although online trading costs for stock trading are low they still add considerably
to the costs of day trading. Online futures trading are about 1/4 of the cost for the
equivalent value. In the UK 0.5% stamp duty is also levied on all share purchases
making trading virtually impossible, hence the popularity of spread betting.

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 CHAPTER- 2

COMPANY PROFILE

Sharekhan is one of the leading retail brokerage of City Venture which is running
successfully since 1922 in the country. Earlier it was the retail broking arm of the
Mumbai-based SSKI Group, which has over eight decades of experience in the
stock broking business. Share khan offers its customers a wide range of equity
related services including trade execution on BSE, NSE, Derivatives, depository
services, online trading, investment advice etc.

Earlier with a legacy of more than 80 years in the stock markets, the SSKI group
ventured into institutional broking and corporate finance 18 years ago. SSKI is
one of the leading players in institutional broking and corporate finance activities.
SSKI holds a sizeable portion of the market in each of these segments. SSKI’s
institutional broking arm accounts for 7% of the market for Foreign Institutional
portfolio investment and 5% of all Domestic Institutional portfolio investment in
the country.

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It has 60 institutional clients spread over India, Far East, UK and US. Foreign
Institutional Investors generate about 65% of the organization’s revenue, with a
daily turnover of over US$ 2 million. The content-rich and research oriented
portal has stood out among its contemporaries because of its steadfast dedication
to offering customers best-of-breed technology and superior market information.
The objective has been to let customers make informed decisions and to simplify
the process of investing in stocks

Mission of the Share khan is

“To educate and empower the individual investor to make better investment
decisions through
 QUALITY ADVICE
 INNOVATIVE PRODUCTS and
 SUPERIOR SERVICE.”

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WORK STRUCUTRE OF SHAREKHAN

Share khan has always believed in investing in technology to build its business.
The company has used some of the best-known names in the IT industry, like Sun
Microsystems, Oracle, Microsoft, Cambridge Technologies, Nexgenix,
VignetteVeriSigngn Financial Technologies India Ltd, Spider Software Pvt. Ltd.
to build its trading engine and content. The City Venture holds a majority stake
in the company. HSBC, Intel & Carlyle are the other investors.
On April 17, 2002 Share khan launched Speed Trade and Trade Tiger, are net-
based executable application that emulates the broker terminals along with host
of other information relevant to the Day Traders. This was for the first time that
a net-based trading station of this caliber was offered to the traders. In the last six
months Speed Trade has become a de facto standard for the Day Trading
community over the net. Share khan’s ground network includes over 700+ Share
shops in 130+ cities in India.
The firm’s online trading and investment site www.sharekhan.com - was
launched on Feb 8, 2000. The site gives access to superior content and transaction
facility to retail customers across the country. Known for its jargon-free, investor
friendly language and high quality research, the site has a registered base of over
3 Laces customers. The number of trading members currently stands at over 7
Laces. While online trading currently accounts for just over 5 per cent of the daily
trading in stocks in India, Share khan alone accounts for 27 per cent of the
volumes traded online.
The Corporate Finance section has a list of very prestigious clients and has many
‘firsts’ to its credit, in terms of the size of deal, sector tapped etc. The group has
placed over US$ 5 billion in private equity deals. Some of the clients include BPL
Cellular Holding, Gujarat Papaya, Essar, Hutchison, Planetasia, and Shopper’s
Stop. Finally, Share khan shifted hands and City venture get holds on it.

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PRODUCT AND SERVICES OFFERD BY SHAREKHAN
1- Equity Trading Platform (Online/Offline).

2- - Mutual Fund Advisory and Distribution.

3- Portfolio Management Service.

4- IPO

5- COMMODITY TRADING PLATFORM

1- Equity Trading Platform (Online/Offline).:-

Investment in Equities has many advantages. One of the best avenues for long
term wealth creation whereas derivate help you leverage on anticipated market
movement & acts as a hedging tool to minimize your risk.
Key benefits :-

 Better long term return

 Dividend income
 Transparency
 Alpha delivery & top picks research
 Offering complete range of investment

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2- Mutual Funds :-
An imminent asset class to diversify your investments. Sharekhan offer wide
spectrum of investment schemes from all top mutual fund houses.
Secure recurring investment by investing in systematic investment plan in mutual
fund of your choice .invest wisely with sharekhan
in lumpsum & SIP in mutual fund from across all
the fund houses.

Key benefits:-
 Diversification
 Minimization of risk
 Online & offline transaction facility
 Disciplined investment approach
 Dedicated back office software to view client investment in MF

3..PMS- Portfolio Management Service:-

Portfolio Management Services (PMS), service offered by the Portfolio Manager
at Sharekhan, is an investment portfolio in stocks, fixed income, debt, cash,
structured products and other individual securities, managed by a professional
money manager that can potentially be tailored to meet specific investment
objectives.

Key benefits :-

 Disciplined and professional approach to investments

 Maximizing returns while minimizing risks
 Active monitoring by an expert team to optimize returns

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  Transparency in fees and commissions 
 Periodic performance reporting to client

4- IPO(Initial Public Offer) :-

An opportunities to invest in the primary market where
IPOs are issued at attractive prices which makes it an
investment that offers reasonable returns and acceptable
risk. -printed ASBA application forms are available or
clients.
Key Benefits :-
 No refund hassles under ASBA process
 NO brokerage while applying for application
 No other hidden cost

5-Commodity trading online / offline

Commodity markets have grown exponentially since they were r e-introduced

by the government in 2002. The turnover in the commodity markets have grown
manifold in the past decade-and-a-half. The growth was evident in its nascent
stage itself. The value of trading increased from Rs 0.66 lakh crore in 2002-03 to
Rs 21.34 lakh crore in 2005-06.
Currently, India has 22 commodity markets. Of them, six are national-level
exchanges, with the Multi Commodity Exchange (MCX) and the National
Commodity & Derivatives Exchange Limited (NCDEX) being the prominent
ones. Incidentally, MCX is one of the busiest exchanges in the world.

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The prime reason for robust growth in commodity markets has been the lure of
high profits and an opportunity for traders to spread their investment to reduce
risk. But, before you invest in the commodity market, let’s understand how the
commodity market works.
The basics

The commodity market can be split into four categories:

Metals (gold, silver, platinum, copper, among others)

Energy (crude and heating oil, natural gas and gasoline)
Livestock and meat
Agricultural produces like corn, soybeans, wheat, rice, cocoa, coffee, cotton,
sugar, among others

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Share khan offers the following products:-

CLASSIC ACCOUNT
This is a User Friendly Product which allows the client to trade through website
www.sharekhan.com and is suitable for the retail investors who is risk-averse and
hence prefers to invest in stocks or who does not trade too frequently.

Features
 Online trading account for investing in Equity and Derivatives via
www.sharekhan.com
 Live Terminal and Single terminal for NSE Cash, NSE F&O & BSE.
 Integration of On-line trading, Saving Bank and Demat Account.
 Instant cash transfer facility against purchase & sale of shares.
 Competitive transaction charges.
 Instant order and trade confirmation by E-mail.
 Streaming Quotes (Cash & Derivatives).
 Personalized market watch.
 Single screen interface for Cash and derivatives and more.
 Provision to enter price trigger and view the same online in market watch.

SPEEDTRADE
SPEEDTRADE is an internet-based software application that enables you to buy
and sell in an instant. It is ideal for active traders and jobbers who transact
frequently during day’s session to capitalize on intra-day price movement.

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Features
 Instant order Execution and Confirmation.
 Single screen trading terminal for NSE Cash, NSE F&O & BSE.
 Technical Studies.
 Multiple Charting.
 Real-time streaming quotes, tic-by-tic charts.
 Market summary (Cost traded scrip, highest clue etc.)
 Hot keys similar to broker’s terminal.
 Alerts and reminders.
 Back-up facility to place trades on Direct Phone lines.
 Live market debts.

DIAL-N-TRADE
Along with enabling access for trade online, the CLASSIC and SPEEDTRADE
ACCOUNT also gives Dial-n-trade services. With this service, one can dial Share
khan’s dedicated phone lines 1800-22-7500, 3970-7500. Beside this,
Relationship Managers are always available on Office Phone and Mobile to
resolve customer queries.

SHARE MOBILE
Share khan had introduced Share Mobile, mobile based software where one can
watch Stock Prices, Intra Day Charts, Research & Advice and Trading Calls live
on the Mobile. (As per SEBI regulations, buying-selling shares through a mobile
phone are not yet permitted.)

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REASON TO CHOOSE SAHREKHAN LIMITED

Experience
SSKI has more than eight decades of trust and credibility in the Indian stock
market. In the Asia Money broker's poll held recently, SSKI won the 'India's best
broking house for 2004' award. Ever since it launched Share khan as its retail
broking division in February 2000, it has been providing institutional-level
research and broking services to individual investors.

Technology
With their online trading account one can buy and sell shares in an instant from
any PC with an internet connection. Customers get access to the powerful online
trading tools that will help them to take complete control over their investment in
shares.

Accessibility
Share khan provides ADVICE, EDUCATION, TOOLS AND EXECUTION
services for investors. These services are accessible through many centers across
the country (Over 650 locations in 150 cities), over the Internet (through the
website www.sharekhan.com) as well as over the Voice Tool.

Knowledge
In a business where the right information at the right time can translate into direct
profits, investors get access to a wide range of information on the content-rich
portal, www.sharekhan.com. Investors will also get a useful set of knowledge-
based tools that will empower them to take informed decisions.

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Convenience

One can call Share khan’s Dial-N-Trade number to get investment advice and
execute his/her transactions. They have a dedicated call-center to provide this
service via a Toll Free Number 1800 22-7500 & 39707500 from anywhere in
India.

Customer Service
Its customer service team assist their customer for any help that they need relating
to transactions, billing, demat and other queries. Their customer service can be
contacted via a toll-free number, email or live chat on www.sharekhan.com.

Investment Advice
Share khan has dedicated research teams of more than 30 people for fundamental
and technical research. Their analysts constantly track the pulse of the market and
provide timely investment advice to customer in the form of daily research
emails, online chat, printed reports etc.

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Benefits
 Free Depository A/c
 Instant Cash Transfer
 Multiple Bank Option.
 Secure Order by Voice Tool Dial-n-Trade.
 Automated Portfolio to keep track of the value of your actual purchases.
 24x7 Voice Tool access to your trading account.
 Personalized Price and Account Alerts delivered instantly to your Mobile
Phone & E-mail address.
 Live Chat facility with Relationship Manager on Yahoo Messenger
 Special Personal Inbox for order and trade confirmations.
 On-line Customer Service via Web Chat.
 Enjoy Automated Portfolio.
 Buy or sell even single share
 Anytime Ordering.

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 CHAPTER 3

RESEARCH METHODOLOGY

RESEARCH DESISGN OF THE STUDY

This report Is Discriptive Research based on primary as well secondary data,

however primary data collection was given more importance since it is
overhearing factor in attitude studies. One of the most important users of research
methodology is that it helps in identifying the problem, collecting, analyzing the
required information data and providing an alternative solution to the problem .It
also helps in collecting the vital information that is required by the top
management to assist them for the better decision making both day to day
decision and critical ones.

The study consists of analysis about Investors Perception about the Portfolio
Management Services offered by Share khan Limited. For the purpose of the
study 30 customers were picked up at random and their views solicited on
different parameters.

The methodology adopted includes

 Questionnaire
 sample survey of customers
 Discussions with the concerned

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SOURCES OF DATA

 Primary data: Questionnaire

Secondary data: Published materials of Share khan Limited. Such as

periodicals, journals, and website

SAMPLING PLAN

 Sampling:

Since Share khan Limited has many segments I selected Portfolio Management
Services (PMS) segment as per my profile to do market research. 100% coverage
was difficult within the limited period of time. Hence sampling survey method
was adopted for the purpose of the study.
 Population:
The Population of Surat City of Share khan limited
 Sampling size:

A sample of 100 was chosen for the purpose of the study. Sample consisted of
Investor as based on their Income and Profession as well as Educational
Background.

 Sampling Methods:

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Probability sampling requires complete knowledge about all sampling units in the
universe. Due to time constraint non-probability sampling was chosen for the
study.
Scope of the Study
The study of the Portfolio Management Services is helpful in the following
areas.

 In today's complex financial environment, investors have unique needs

which are derived from their risk appetite and financial goals. But
regardless of this, every investor seeks to maximize his returns on
investments without capital erosion. Portfolio Management Services
(PMS) recognize this, and manage the investments professionally to
achieve specific investment objectives, and not to forget, relieving the
investors from the day to day hassles which investment require.
 It is offers professional management of equity investment of the investor
with an aim to deliver consistent return with an eye on risk.
 Identify the key Stock in each portfolio.
 To look out for new prospective customers who are willing to invest in
PMS.
 To find out the Share khan, PMS services effectiveness in the current
situation.
 It also covers the scenario of the Investment Philosophy of a Fund
Manager.

Limitations :-

 The Total Number Of Respondents Was 100 Which Was Small

Compared To The Population Size.

 This Study Was Confined Only To Surat City. Therefore, The Result
Was Not Applied To The Whole Surat District Or Other Cities.

27
  Sometimes Respondents Were Not Very Enthusiastic To Fill Up
The Questionnaire And They May Not Give Accurate Information.
That’s Why The Result May Be Dissatisfied.
CHAPTER-4

PORTFOLIO MANAGMENT SERVICES

PORTFOLIO MANGEMNT SERVICES (PMS)

Portfolio (finance) means a collection of investments held by an institution or a
private individual. Holding a portfolio is often part of an investment and risk-
limiting strategy called diversification. By owning several assets, certain types of
risk (in particular specific risk) can be reduced. There are also portfolios which
are aimed at taking high risks – these are called concentrated portfolios.

Investment management is the professional management of various securities

(shares, bonds etc) and other assets (e.g. real estate), to meet specified investment
goals for the benefit of the investors. Investors may be institutions (insurance
companies, pension funds, corporations etc.) or private investors (both directly
via investment contracts and more commonly via collective investment schemes
e.g. mutual funds).

The term asset management is often used to refer to the investment management
of collective investments, whilst the more generic fund management may refer to
all forms of institutional investment as well as investment management for private
investors. Investment managers who specialize in advisory or discretionary
management on behalf of (normally wealthy) private investors may often refer to
their services as wealth management or portfolio management often within the
context of so-called "private banking".

28
The provision of 'investment management services' includes elements of financial
analysis, asset selection, stock selection, plan implementation and ongoing
monitoring of investments. Outside of the financial industry, the term "investment
management" is often applied to investments other than financial instruments.
Investments are often meant to include projects, brands, patents and many things
other than stocks and bonds. Even in this case, the term implies that rigorous
financial and economic analysis methods are used.

Need of PMS

As in the current scenario the effectiveness of PMS is required. As the PMS gives
investors periodically review their asset allocation across different assets as the
portfolio can get skewed over a period of time. This can be largely due to
appreciation / depreciation in the value of the investments.

As the financial goals are diverse, the investment choices also need to be different
to meet those needs. No single investment is likely to meet all the needs, so one
should keep some money in bank deposits and / liquid funds to meet any urgent
need for cash and keep the balance in other investment products/ schemes that
would maximize the return and minimize the risk. Investment allocation can also
change depending on one’s risk-return profile.

29
Objective of PMS

There are the following objective which is full filled by Portfolio Management
Services.

1. Safety Of Fund: -
The investment should be preserved, not be lost, and should remain in the
returnable position in cash or kind.

2. Marketability: -
The investment made in securities should be marketable that means, the
securities must be listed and traded in stock exchange so as to avoid
difficulty in their encashment.

30
3. Liquidity: -
The portfolio must consist of such securities, which could be en-cashed
without any difficulty or involvement of time to meet urgent need for
funds. Marketability ensures liquidity to the portfolio.

4. Reasonable return: -
The investment should earn a reasonable return to upkeep the declining
value of money and be compatible with opportunity cost of the money in
terms of current income in the form of interest or dividend.

5. Appreciation in Capital: -
The money invested in portfolio should grow and result into capital gains.

6. Tax planning: -
Efficient portfolio management is concerned with composite tax
planning covering income tax, capital gain tax, wealth tax and gift tax.
7. Minimize risk: -
Risk avoidance and minimization of risk are important objective of
portfolio management. Portfolio managers achieve these objectives by
effective investment planning and periodical review of market, situation
and economic environment affecting the financial market.

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PORTFOLIO CONSTRUCTION

The Portfolio Construction of Rational investors wish to maximize the returns on

their funds for a given level of risk. All investments possess varying degrees of
risk. Returns come in the form of income, such as interest or dividends, or through
growth in capital values (i.e. capital gains).

The portfolio construction process can be broadly characterized as comprising

the following steps:

1. Setting objectives.

The first step in building a portfolio is to determine the main objectives of the
fund given the constraints (i.e. tax and liquidity requirements) that may apply.
Each investor has different objectives, time horizons and attitude towards risk.
Pension funds have long-term obligations and, as a result, invest for the long term.
Their objective may be to maximize total returns in excess of the inflation rate. A
charity might wish to generate the highest level of income whilst maintaining the
value of its capital received from bequests. An individual may have certain
liabilities and wish to match them at a future date. Assessing a client’s risk
tolerance can be difficult. The concepts of efficient portfolios and diversification
must also be considered when setting up the investment objectives.

2. Defining Policy.

Once the objectives have been set, a suitable investment policy must be
established. The standard procedure is for the money manager to ask clients to
select their preferred mix of assets, for example equities and bonds, to provide an
idea of the normal mix desired. Clients are then asked to specify limits or

32
maximum and minimum amounts they will allow to be invested in the different
assets available. The main asset classes are cash, equities, gilts/bonds and other
debt instruments, derivatives, property and overseas assets. Alternative
investments, such as private equity, are also growing in popularity, and will be
discussed in a later chapter. Attaining the optimal asset mix over time is one of
the key factors of successful investing.

3. Applying portfolio strategy.

At either end of the portfolio management spectrum of strategies are active and
passive strategies. An active strategy involves predicting trends and changing
expectations about the likely future performance of the various asset classes and
actively dealing in and out of investments to seek a better performance. For
example, if the manager expects interest rates to rise, bond prices are likely to fall
and so bonds should be sold, unless this expectation is already
factored into bond prices. At this stage, the active fund manager should also
determine the style of the portfolio. For example, will the fund invest primarily
in companies with large market capitalizations, in shares of companies expected
to generate high growth rates, or in companies whose valuations are low? A
passive strategy usually involves buying securities to match a preselected market
index. Alternatively, a portfolio can be set up to match the investor’s choice of
tailor-made index. Passive strategies rely on diversification to reduce risk.
Outperformance versus the chosen index is not expected. This strategy requires
minimum input from the portfolio manager. In practice, many active funds are
managed somewhere between the active and passive extremes, the core holdings
of the fund being passively managed and the balance being actively managed.

33
4. Asset selections.

Once the strategy is decided, the fund manager must select individual assets in
which to invest. Usually a systematic procedure known as an investment process
is established, which sets guidelines or criteria for asset selection. Active
strategies require that the fund managers apply analytical skills and judgment for
asset selection in order to identify undervalued assets and to try to generate
superior performance.

5. Performance assessments.

In order to assess the success of the fund manager, the performance of the fund is
periodically measured against a pre-agreed benchmark – perhaps a suitable stock
exchange index or against a group of similar portfolios (peer group comparison).
The portfolio construction process is continuously iterative, reflecting changes
internally and externally. For example, expected movements in exchange rates
may make overseas investment more attractive, leading to changes in asset
allocation. Or, if many large-scale investors simultaneously decide to switch from
passive to more active strategies, pressure will be put on the fund managers to
offer more active funds. Poor performance of a fund may lead to modifications
in individual asset holdings or, as an extreme measure; the manager of the fund
may be changed altogether.

34
Steps to Stock Selection Process

35
Types of assets

The structure of a portfolio will depend ultimately on the investor’s objectives

and on the asset selection decision reached. The portfolio structure takes into
account a range of factors, including the investor’s time horizon, attitude to risk,
liquidity requirements, tax position and availability of investments. The main
asset classes are cash, bonds and other fixed income securities, equities,
derivatives, property and overseas assets.

Cash and cash instruments

Cash can be invested over any desired period, to generate interest income, in a
range of highly liquid or easily redeemable instruments, from simple bank
deposits, negotiable certificates of deposits, commercial paper (short term
corporate debt) and Treasury bills (short term government debt) to money market
funds, which actively manage cash resources across a range of domestic and
foreign markets. Cash is normally held over the short term pending use elsewhere
(perhaps for paying claims by a non-life insurance company or for paying
pensions), but may be held over the longer term as well. Returns on cash are
driven by the general demand for funds in an economy, interest rates, and the
expected rate of inflation. A portfolio will normally maintain at least a small
proportion of its funds in cash in order to take advantage of buying opportunities.

36
Bonds

Bonds are debt instruments on which the issuer (the borrower) agrees to make
interest payments at periodic intervals over the life of the bond – this can be for
two to thirty years or, sometimes, in perpetuity. Interest payments can be fixed or
variable, the latter being linked to prevailing levels of interest rates. Bond markets
are international and have grown rapidly over recent years. The bond markets are
highly liquid, with many issuers of similar standing, including governments
(sovereigns) and state-guaranteed organizations. Corporate bonds are bonds that
are issued by companies. To assist investors and to help in the efficient pricing of
bond issues, many bond issues are given ratings by specialist agencies such as
Standard & Poor’s and Moody’s. The highest investment grade is AAA, going all
the way down to D, which is graded as in default. Depending on expected
movements in future interest rates, the capital values of bonds fluctuate daily,
providing investors with the potential for capital gains or losses. Future interest
rates are driven by the likely demand/ supply of money in an economy, future
inflation rates, political events and interest rates elsewhere in world markets.
Investors with short-term horizons and liquidity requirements may choose to
invest in bonds because of their relatively higher return than cash and their
prospects for possible capital appreciation. Long-term investors, such as pension
funds, may acquire bonds for the higher income and may hold them until
redemption – for perhaps seven or fifteen years. Because of the greater risk, long
bonds (over ten years to maturity) tend to be more volatile in price than medium-
and short-term bonds, and have a higher yield.

37
Equities

Equity consists of shares in a company representing the capital originally

provided by shareholders. An ordinary shareholder owns a proportional share of
the company and an ordinary share carries the residual risk and rewards after all
liabilities and costs have been paid. Ordinary shares carry the right to receive
income in the form of dividends (once declared out of distributable profits) and
any residual claim on the company’s assets once its liabilities have been paid in
full. Preference shares are another type of share capital. They differ from ordinary
shares in that the dividend on a preference share is usually fixed at some amount
and does not change. Also, preference shares usually do not carry voting rights
and, in the event of firm failure, preference shareholders are paid before ordinary
shareholders. Returns from investing in equities are generated in the form of
dividend income and capital gain arising from the ultimate sale of the shares. The
level of dividends may vary from year to year, reflecting the changing
profitability of a company. Similarly, the market price of a share will change from
day to day to reflect all relevant available information. Although not guaranteed,
equity prices generally rise over time, reflecting general economic growth, and
have been found over the long term to generate growing levels of income in
excess of the rate of inflation. Granted, there may be periods of time, even years,
when equity prices trend downwards – usually during recessionary times. The
overall long-term prospect, however, for capital appreciation makes equities an
attractive investment proposition for major institutional investors.

38
Derivatives

Derivative instruments are financial assets that are derived from existing primary
assets as opposed to being issued by a company or government entity. The two
most popular derivatives are futures and options. The extent to which a fund may
incorporate derivatives products in the fund will be specified in the fund rules
and, depending on the type of fund established for the client and depending on
the client, may not be allowable at all.

A futures contract is an agreement in the form of a standardized contract

between two counterparties to exchange an asset at a fixed price and date in the
future. The underlying asset of the futures contract can be a commodity or a
financial security. Each contract specifies the type and amount of the asset to be
exchanged, and where it is to be delivered (usually one of a few approved
locations for that particular asset). Futures contracts can be set up for the delivery
of cocoa, steel, oil or coffee. Likewise, financial futures contracts can specify the
delivery of foreign currency or a range of government bonds. The buyer of a
futures contract takes a ‘long position’, and will make a profit if the value of the
contract rises after the purchase. The seller of the futures contract takes a ‘short
position’ and will, in turn, make a profit if the price of the futures contract falls.
When the futures contract expires, the seller of the contract is required to deliver
the underlying asset to the buyer of the contract. Regarding financial futures
contracts, however, in the vast majority of cases no physical delivery of the
underlying asset takes place as many contracts are cash settled or closed out with
the offsetting position before the expiry date.

An option contract is an agreement that gives the owner the right, but not
obligation, to buy or sell (depending on the type of option) a certain asset for a
specified period of time. A call option gives the holder the right to buy the asset.

39
A put option gives the holder the right to sell the asset. European options can be
exercised only on the options’ expiry date. US options can be exercised at any
time before the contract’s maturity date. Option contracts on stocks or stock
indices are particularly popular. Buying an option involves paying a premium;
selling an option involves receiving the premium. Options have the potential for
large gains or losses, and are considered to be high-risk instruments. Sometimes,
however, option contracts are used to reduce risk. For example, fund managers
can use a call option to reduce risk when they own an asset. Only very specific
funds are allowed to hold options.

Property

Property investment can be made either directly by buying properties, or

indirectly by buying shares in listed property companies. Only major institutional
investors with long-term time horizons and no liquidity pressures tend to make
direct property investments. These institutions purchase freehold and leasehold
properties as part of a property portfolio held for the long term, perhaps twenty
or more years. Property sectors of interest would include prime, quality, well-
located commercial office and shop properties, modern industrial warehouses and
estates, hotels, farmland and woodland. Returns are generated from annual rents
and any capital gains on realization. These investments are often highly illiquid.

40
Risk and Risk Aversion

Portfolio theory also assumes that investors are basically risk adverse, meaning
that, given a choice between two assets with equal rates of return they will select
the asset with lower level of risk.
For example, they purchased various type of insurance including life insurance,
Health insurance and car insurance. The Combination of risk preference and risk
aversion can be explained by an attitude toward risk that depends on the amount
of money involved.
A discussion of portfolio or fund management must include some thought given
to the concept of risk. Any portfolio that is being developed will have certain risk
constraints specified in the fund rules, very often to cater to a particular segment
of investor who possesses a particular level of risk appetite. It is, therefore,
important to spend some time discussing the basic theories of quantifying the
level of risk in an investment, and to attempt to explain the way in which market
values of investments are determined

Definition of Risk

Although there is a difference in the specific definitions of risk and uncertainty,

for our purpose and in most financial literature the two terms are used
interchangeably. In fact, one way to define risk is the uncertainty of future
outcomes. An alternative definition might be the probability of an adverse
outcome.

41
Composite risks involve the different risk as explained below:-

(1). Interest rate risk: -

It occurs due to variability cause in return by changes in level of interest rate. In

long runs all interest rate move up or downwards. These changes affect the value
of security. RBI, in India, is the monitoring authority which effectalises the
change in interest rate. Any upward revision in interest rate affects fixed income
security, which carry old lower rate of interest and thus declining market value.
Thus it establishes an inverse relationship in the prize of security.

TYPES RISK EXTENT

Cash equivalent Less vulnerable to interest rate risk

Long term Bond More vulnerable to interest rate

risk.

(2) Purchasing power risk:

It is known as inflation risk also. This risk emanates from the very fact that
inflation affects the purchasing power adversely. Purchasing power risk is more
in inflationary times in bonds and fixed income securities. It is desirable to invest
in such securities during deflationary period or a period of decelerating inflation.
Purchasing power risk is less in flexible income securities like equity shares or
common stuffs where rise in dividend income offset increase in the rate of
inflation and provide advantage of capital gains.

42
(3) Business risk:

Business risk emanates from sale and purchase of securities affected by business
cycles, technological change etc. Business cycle affects all the type of securities
viz. there is cheerful movement in boom due to bullish trend in stock prizes where
as bearish trend in depression brings downfall in the prizes of all types of
securities. Flexible income securities are nearly affected than fix rate securities
during depression due to decline n the market prize.

(4) Financial risk:

Financial risk emanates from the changes in the capital structure of the company.
It is also known as leveraged risk and expressed in term of debt equity ratio.
Excess of debts against equity in the capital structure indicates the company to be
highly geared or highly levered. Although leveraged company’s earnings per
share (EPS) are more but dependence on borrowing exposes it to the risk of
winding up. For, its inability to the honor its commitments towards the creditors
are most important.

Here it is imperative to express the relationship between risk and return, which is
depicted graphically below

43
Maximize returns, minimize risks

44
RISK VERSUS RETURN

Risk versus return is the reason why investors invest in portfolios. The ideal goal
in portfolio management is to create an optimal portfolio derived from the best
risk–return opportunities available given a particular set of risk constraints. To be
able to make decisions, it must be possible to quantify the degree of risk in a
particular opportunity. The most common method is to use the standard deviation
of the expected returns. This method measures spreads, and it is the possible
returns of these spreads that provide the measure of risk. The presence of risk
means that more than one outcome is possible. An investment is expected to
produce different returns depending on the set of circumstances that prevail.

For example, given the following for Investment A:

Circumstance Return(x) Probability(p)

I 10% 0.2
II 12% 0.3
III 15% 0.4
IV 19% 0.1

It is possible to calculate:

1. The expected (or average) return

Mean (average) = x = expected value (EV) = ∑px

45
 Circumstance Return(x) Probability(p) px

I 10% 0.2 2.0

II 12% 0.3 3.6

III 15% 0.4 6.0

IV 19% 0.1 1.9

Expected Return (∑px) = 13.5%

2. The Standard deviation

Standard deviation =σ=√ ∑p(x- x) 2

Also. Variance (VAR) is equal to the standard deviation squared or σ2

Deviation from
Circumstance Return Probability
expected Return (x -x) p (x -x)2

2.45
I 10% 0.2 -3.5%

.68
II 12% 0.3 -1.5%

1.90
III 15% 0.4 +1.5%

3.03
IV 19% 0.1 +5.5%

VARAIANCE= 7.06

Standard deviation (σ) = √Variance

= √ 7.06

= 2.66%

46
The standard deviation is a measure of risk, whereby the greater the standard
deviation, the greater the spread, and the greater the spread, the greater the risk.

If the above exercise were to be performed using another investment that offered
the same expected return, but a different standard deviation, then the following
result might occur:

If the above exercise were to be performed using another investment that offered
the same expected return, but a different standard deviation, then the following
result might occur:

Plan Expected Return Risk(standard

deviation)
Investment A 9% 2.5%
Investment B 9% 4.0%

Since both investments have the same expected return, the best selection of
investment would be Investment A, which provides the lower risk. Similarly, if
there are two investments presenting the same risk, but one has a higher return
than the other, that investment would be chosen over the investment with the
lower return for the same risk.

In the real world, there are all types of investors. Some investors are completely
risk averse and others are willing to take some risk, but expect a higher return for
that risk. Different investors will also have different tolerances or threshold levels
for risk–return trade-offs – i.e. for a given level of risk, one investor may demand
a higher rate of return than another investor.

47
INDIFFERNCE CURVE
Suppose the following situation exists
Plan Expected Return Risk(Standard
Deviation)
Investment A 10% 5%
Investment B 20% 10%

The question to ask here is, does the extra 10% return compensate for the extra
risk? There is no right answer, as the decision would depend on the particular
investor’s attitude to risk. A particular investor’s indifference curve can be
ascertained by plotting what rate of return the investor would require for each
level of risk to be indifferent amongst all of the investments.

For example, there may be an investor who can obtain a return of 50% with zero
risk and a return of 55 %with a risk or standard deviation of 5% who will be
indifferent between the two investments. If further investments were considered,
each with a higher degree of risk, the investor would require still higher returns
to make all of the investments equally attractive. The investor being discussed
could present the following as the indifference curve shown in Figure.

Indifference Curve
Expected Return Risk
50% 0%
55% 5%
70% 10%
100% 15%
120% 18%
230% 25%

48
 Risk

Indifference curve

It could be the case that this investor would have different indifference curves
given a different starting level of return for zero risk. The exercise would need to
be repeated for various levels of risk–return starting points. An entire set of
indifference curves could be constructed that would portray a particular investor’s
attitude towards risk

49
 Indifference Curve

Utility scores

At this stage the concept of utility scores can be introduced. These can be seen as
a way of ranking competing portfolios based on the expected return and risk of
those portfolios. Thus if a fund manager had to determine which investment a
particular investor would prefer, i.e. Investment A equaling a return of 10% for a
risk of 5% or Investment B equaling a return of 20% for a risk of 10%, the
manager would create indifference curves for that particular investor and look at
the utility scores. Higher utility scores are assigned to portfolios or investments
with more attractive risk–return profiles. Although several scoring systems are
legitimate, one function that is commonly employed assigns a portfolio or
investment with expected return or value EV and variance of returns σ 2the
following utility value:

U = EV –.005Aσ2 where:

U = utility value

50
A = an index of the investor’s aversion, (the factor of .005 is a scaling convention
that allows expression of the expected return and standard deviation in the
equation as a percentage rather than a decimal).

Utility is enhanced by high expected returns and diminished by high risk.

Investors choosing amongst competing investment portfolios will select the one
providing the highest utility value. Thus, in the example above, the investor will
select the investment (portfolio) with the higher utility value of 18.

Unsystematic and systematic risk

As mentioned previously, diversification diminishes risk: the more shares or

assets held in a portfolio or in investments, the greater the risk reduction.
However, it is impossible to eliminate all risk completely even with extensive
diversification. The risk that remains is called market risk; the risk that is caused
by general market influences. This risk is also known as systematic risk or non-
diversifiable risk. The risk that is associated with a specific asset and that can be
abolished with diversification is known as unsystematic risk, unique risk or
diversifiable risk.

Total risk = Systematic risk + Unsystematic risk

Systematic risk = the potential variability in the returns offered by a security or
asset caused by general market factors, such as interest rate changes, inflation rate
movements, tax rates, state of the economy.
Unsystematic risk = the potential variability in the returns offered by a security
or asset caused by factors specific to that company, such as profitability margins,
debt levels, quality of management, susceptibility to demands of customers and
suppliers.

51
As the number of assets in a portfolio increases, the total risk may decline as a
result of the decline in the unsystematic risk in that portfolio. The relationship
amongst these risks can be quantified as follows

TECHNIQUES OF PORTFOLIO MANAGEMENT

Various types of portfolio require different techniques to be adopted to achieve

the desired objectives. Some of the techniques followed in India by portfolio
managers are summarized below.

(1). Equity portfolio-

Equity portfolio is affected by internal and external factors:

(a) Internal factors –

Pertain to the inner working of the particular company of which equity shares are
held. These factors generally include:

(1) Market value of shares

(2) Book value of shares
(3) Price earnings ratio (P/E ratio)
(4) Dividend payout ratio

(b) External factors –

(1) Government policies

(2) Norms prescribed by institutions
(3) Business environment
(4) Trade cycles

52
(2). Equity stock analysis –

The basic objective behind the analysis is to determine the probable future – value
of the shares of the concerned company. It is carried out primarily fewer than two
ways. :

(a) Earnings per share

(b) Price earnings ratio

(A) Trend of earning: -

 A higher price-earnings ratio discount expected profit growth. Conversely,

a downward trend in earning results in a low price-earnings ratio to
discount anticipated decrease in profits, price and dividend. Rising EPS
causes appreciation in price of shares, which benefits investors in lower
tax brackets? Such investors have not pay tax or to give lower rate tax on
capital gains.
 Many institutional investor like stability and growth and support high EPS.

 Growth of EPS is diluted when a company finances internally its

expansion program and offers new stock.
 EPS increase rapidly and result in higher P/E ratio when a company
finances its expansion program from internal sources and borrowings
without offering new stock.

53
(B) Quality of reported earning: -

Quality of reported earnings affects P/E ratio. The factors that affect the quality
of reported earnings are as under:

 Depreciation allowances: -
Larger (Non Cash) deduction for depreciation provides more funds to
company to finance profitable expansion schemes internally. This builds
up future earning power of company.

 Research and development outlets: -

There is higher P/E ratio for a company, which carries R&D programs.
R&D enhances profit earning strength of the company through increased
future sales.

 Inventory and other non-recurring type of profit: -

Low cost inventory may be sold at higher price due to inflationary
conditions among profit but such profit may not always occur and hence
low P/E ratio.

(C) Dividend policy: -

Dividend policy is significant in affecting P/E ratio. With higher dividend ratio,
equity price goes up and thus raises P/E ratio. Dividend rates are raised to push
in share prices up. Dividend cover is calculated to find out the time the dividend
is protected, In terms of earnings. It is calculated as under:
Dividend Cover = EPS / Dividend per Share

54
(D) Investors demand: -
Demand from institutional investors for equity also enhances the P/E ratio.

(3) Quality of management: -

Investors decide about the ability and caliber of management and hold and
dispose of equity academy. P/E ratio is more where a company is managed by
reputed entrepreneurs with good past records of management performance.

Types of Portfolios

The different types of Portfolio which is carried by any Fund Manager to

maximize profit and minimize losses are different as per their objectives .They
are as follows.

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.

55
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.

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

56
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.

57
Portfolio Management Service modal by Sharekhan large capital

1. Prime Pick Strategy :-

2. Power Model Portfolio :-

3. Third Party Portfolio Management Service:-

1. Prime Pick Strategy :-

Prime Picks is multi-cap discretionary PMS scheme with aim to generate

superiorrisk adjusted returns across market cycles, benchmark with BSE 200.
Prime Picks follows a dual investment approach with two distinct portfolios,
Quality and Alpha, to maintain disciplined allocation between core portfolio of
proven structural growth companies (Quality) and an aggressive portfolio of
midcap companies (Alpha).
INVESTMENT STRATEGY

• Maintain disciplined investment approach by building a core portfolio of

proven secular growth companies that provide steady returns over period of
time.
• Use allocation in Alpha portfolio to generate outperformance through superior
selection of stocks in the midcap space.
• Investors get to choose allocation options between Quality and Alpha
portfoliosdepending upon the risk profile and market conditions.

58
 Price and product fatures

Particulars

Plan A Plan B Plan C

Minimum Investment
50 lakh 50 lakh 50 lakh

Additional
Investments Multiples of 1 Multiples of 1 Multiples of 1 lakh
lakh lakh
Management Fees
2% p.a. + 2% p.a. + 1% p.a. + taxes
taxes taxes

Brokerage 0.5% + 0.1% + 0.1% + statutory

statutory charges statutory charges charges

Hurdle Rate 18% (net of all 15% (net of all 12% (net of all the cost)
the cost) the cost)

Profit Sharing Fees 20% profit Management 20% profit sharing post
sharing post Fees hurdle rate
hurdle rate

Lock-in period No Yes Yes

59
 3% if exit 3% if exit within 1
within 1 year; year;
Exit Load Nil 2% if exit 2% if exit within 2
within 2 years; years;
1% if exit 1% if exit within 3
within 3 years years

2. Power Model Portfolio :-

Prime Picks is multi-cap discretionary PMS scheme with aim to generate

superiorrisk adjusted returns across market cycles, benchmark with BSE 200.
Prime Picks follows a dual investment approach with two distinct
portfolios, Quality and Alpha, to maintain disciplined allocation between
core portfolio ofproven structural growth companies (Quality) and an
aggressive portfolio of midcap companies (Alpha).

INVESTMENT STRATEGY
• Maintain disciplined investment approach by building a core portfolio of
provensecular growth companies that provide steady returns over period of
time.
• Use allocation in Alpha portfolio to generate outperformance through
superiorselection of stocks in the midcap space.
• Investors get to choose allocation options between Quality and Alpha
portfoliosdepending upon the risk profile and market conditions
Features (Support/Services):-

• Centralised execution and customer support teams

• Sharing of rationale for each recommendation/switch in portfolios
• No lock-in for investments
• No profit sharing
• No Leverage or Margin.
• No annual maintenance charge

Inverstment objective:-

60
 Product :
Large -cap investment portfolio built using a
quantitative model and managed by an
experienced team

Investment Objective :
Wealth creation through disciplined investing, based on
a pre-definedrules and outperform set benchmark indices
such as the Nifty, across market cycles.

Product: Risks-Rewards

• For investors seeking long-term wealth creation

• Product Risk-Reward: This product is suitable for investors

having a moderate to medium risk profile and seeking to
generate superior risk-adjusted return over 2-5 years with no
lock-inobligation.

• The returns are benchmarked to the Nifty Index

Investment size and charges

Minimum ticket size Rs. 500,000

Top-up facility Rs. 100,000 & in multiples of

same
Brokerage Delivery 0.50% + Stat cost
Account opening charges Rs. 499 (Annual)
Risk profile Moderate risks & moderate churns
Moderate risks & moderate churns Nil

61
 Silent Features

Launch May 2015

Ideal Investment Horizon 3-5 years

Investment Universe Sharekhan Research – Market cap of over Rs.

10,000 crore
Number of Stocks 10

Stocks Weightage Equally divided into each stock, 10% weightage

for each stock
Sector Exposure Rule 30% max exposure/ 3 stocks from preferred sectors
Risk Profile Moderate risks & moderate churns

Portfolio Execution Centralised execution

Mode of Communication for SMS/E-mail/Registered mobile number

Trade
Stocks / Demat Tracking Dedicated portal/ E-mail

Performance Reporting As and when required via E-mail

Performance Newsletters Monthly

62
 3. Third Party Portfolio Management Service:-
1. Sundaram Alternates
2. Marcellus InvestmentManagers
3. ICICI Prudential
4. White OAK InvestmentManagers
5. Equirus Capital
6. Purnartha

1. Sundaram Alternates:- ( Multi Cap)

Sundaram Emerging Leaders Fund aims to invest in "Future

Leaders" companies .companies which are growing faster than industry with
major focus on Mid/ Small Cap. The Portfolio consists of ~20 to 25 high
conviction stocks. Ideal for long-term investors seeking returns through
investments predominantly in small and midcap stocks and are comfortable
with short-term volatility.
2. Marcellus Investment Managers :- ( Multi Cap)
Marcellus Investment Managers was founded in 2018 with their main objective
of impacting the Indian economy’s effective capital allocation. We plan to accomplish this by
directing household savings into high-quality Indian enterprises with a long history of sound
governance and capital allocation. Our portfolio management strategy not only strives to provide
healthy returns to our investors but also to do so by assuming relatively moderate risks.
Marcellus’ core investment management team has been together for 15 years, and their
experiences and lessons learned throughout that time have shaped the company’s investment
philosophy.

3. Icici Prudential :- ( Multi Cap)

Flexi-cap Strategy is a diversified equity strategy that endeavors to achieve long
term capital appreciation by investing across market capitalizations. This PMS comprises a
‘Core’ and ‘Satellite’ portfolio strategy. The Core portfolio could be 60% - 70% is
predominantly targeted towards sectors which are value on an absolute and relative basis. The
Satellite portfolio will be a blend of investment strategies that are aimed to be inline with the
GARP (Growth at Reasonable Price) Philosophy

4. White OAK InvestmentManagers:- ( Multi Cap)

The Objective Of The Strategy Is To Achieve Long Term Capital Appreciation By
Primarily Investing In ‘Listed Securities’ In India. The Investment Strategy Is Long Only
With A Bottom-Up Stock Selection Approach. The Investment Philosophy Is, That Outsized
Returns Are Earned Over Time By Investing In Great Businesses At Attractive Values. A
Great Business, In Our View, Is One That Is Well Managed, Scalable, And Generates
Superior Returns On Incremental Capital. Valuation Is Attractive When The Current Market
Price Is At A Substantial Discount To Intrinsic Value.

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5. Equirus Capital :- (Small & Mid Cap)
Equirus PMS Investment Philosophy Is Based On The Synergies Of Value
& Quality. Fund Intends To Invest In Undiscovered Business Leaders With Long
Term Potential Growth. To Be Suitable For Their Portfolio, Business Must Have
Some Strong Merits Most Relevant To Long Term Investing-Qualities Recognized
Over Time By Investors And Are Selling It At A Price Below The Intrinsic Value.

6. Purnartha:- (Small & Mid Cap)

In this approach we aim to create a diversified portfolio with strong
Lfundamentals that are market cap and sector agnostic. Their philosophy is based
on choosing non-cyclical companies, ensuring that the investments are poised to
reap long-term gains. Fund follows bottom up stock picking approach without bias
towards market cap or sector.

64
Portfolio management service modal by Sharekhan small capital Invets
tiger app advisory
1. Star Portfolio

2. Power Portfolio

3. Economic recovery pack

1. Star Portfolio:-

Star Portfolio is a well balanced multi - cap portfolio with mandate to

invest in quality companies under Sharekhan coverage that have market

cap . of over Rs.5,000cr .

Min amount No of share Risk

100000 10 Balanced

Star Portfolio– Key Recommendations:-

Company Price target (rs) reco

Aditya Birla Fashion 370 BUY

and RetailLimited

APL Apollo Tubes 1,100 BUY

Limited

Ashok Leyland 165 BUY

Limited
Axis Bank Limited 940 BUY

DLF Limited 455 BUY

ICICI Bank Limited 970 BUY

Infosys Limited 2,150 BUY

65
 Reliance Industries 3,050 BUY
Limited
Tata Elxsi Limited 9,750 BUY

Tata Power 315 BUY

Company Limited

2. Power portfolio

Power Portfolio is a large - cap oriented diversified portfolio of

well researched quality companies with market cap of over Rs10,000 crore
Min amount No of share Risk

100000 10 Balanced

Power Portfolio– Key Recommendations:-

COMPANY Price target (rs) reco

Bharti Airtel 910 BUY

Limited
HDFC Bank 1,800 BUY
Limited
Hero MotoCorp 3,210 BUY
Limited
ICICI Bank 970 BUY
Limited
Mahindra & 1,267 BUY
Mahindra Limited
Oil India Limited UR BUY
Reliance Industries 3,050 BUY
Limited
SRF Limited 2,800 BUY
Tata Consultancy 4,600 BUY
Services Limited
Titan Company 2,900 BUY
Limited

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 3. Economic recovery pack

Economic Recovery Picks is a multicap concentrated portfolio

curated with the objective to ride the recovery in the economy
Min amount No of share Risk

50000 10 Balanced

Economic recovery – Key Recommendations:-

COMPANY Price target (rs) reco

DLF Limited 455 BUY

ICICI Bank 970 BUY
Limited
Kajaria Ceramics 1,200 BUY
Limited
Larsen & Toubro 1,970 BUY
Limited
Mahindra & 1,267 BUY
Mahindra Limited
Polycab India 3,000 BUY
Limited
State Bank of India 600 BUY
SRF Limited 2,800 BUY
Tata Consultancy 4,600 BUY
ServicesLimited
Titan Company 2,900 BUY
Limited

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 CHAPTER -5

DATA ANALYSIS AND

INTERPRETATION

1. What is the basic purpose of your Investments?

D) RISK COVERING
20%

C) TAX BENEFITS
21%

B)RETURN
42%

A) LIQUIDITY
17%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

Interpretation

As with the above analysis, it is found 42% people are interested in liquidity, 17%
people intrested in returns , 21% people intrested in tax benefits. And remaining
20% are interested in risk covering. In the entire respondent it is common that
this time everyone is looking for maximizing their return(profit) with the short
time of period.

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2. What is the most important factor you consider at the time of Investment?

A) Risk
27%
C) Both
44% A) Risk
B) Return
B) Return C) Both
29%

Interpretation

As the above analysis gives the clear idea that most of the Investors considered
the market factor as around 27% for Risk and 29% Return, but most important
common things in all are that they are even ready for taking both Risk and Return
in around 44% investor.

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3. Which Portfolio Managment service Type you preferred ?

49%
41%

10%

A) Equity B) Balanced c) debt

Interpretation

As per above chart we clearly said that maximum investors likes to go for Equity
Portfolio (49%) and 41% investors go with Balanced Portfolio, whereas around
10% investors like to go with Debt Portfolio.

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 4. Which feature you mostly Like about portfolio management service.

.
41.20%
38.10%

20.60%

A)Allocation of Assets B)Diversification of C)Investment

Investment Rebalancing

Interpretation

As per above chart it can be easily said that 41.20% investors like PMS due to
Diversification of investment feature, 38.10% investor like PMS because of Allocation of
assets and rest of all like Investment rebalancing feature.

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5 . “Investing in PMS is far safer than Investing in Mutual Fund”. Do you agree?

40%

35% 37%

30%

25%

20%
20% 20%
15% 17%

10%

5%
6%
0%
A) Strongly B) Agree C) Neutral D) Disagree E) Strongly
AGREE Disagree

Interpretation

According to above chart it can be said that maximum investors thinks that investing in
PMS is not far safer than investing in mutual fund. Maximum investors assumes that
investing in PMS is as risky as investing in mutual fund. As per chart I can said that
maximum investors are disagree with this statement.

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6. How long have you use portfolio Management service?

8%
A) less than 1 year
19% 34%
B) 1 year to 3 year
C) 3 year to 5 year
D) more than 5 year

39%

Interpretation

As per above graph it is clear that 39% investors are using PMS service from 1 year to
3 year. 34% investors use less than year, 19% investors used this service for 3 year to 5
year and rest of all using more than 5 years.

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7.How much you carry the expectation in Rise of your Income from Investments portfolio
management services?

16% 24%

19%

41%

A) Upto 15% B) 15-25% C) 25-35% D) More than 35%

Interpretation

As per above graph it is clear that 41% investors aspects 15-25% return from their
investment. 24% aspects upto 15% return,19% investors aspects 25-35% return,
and rest 16% aspects more than 35% return.

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8. If, you trade with sharekhan Portfolio Management service then why?

17%
34% A) Research
B) Brokerage

23% C) Services
D) Investments Tips

26%

Interpretation

As per above graph I can clearly said that 34% inestors trade with sharekhan PMS
due to their research , 26% like shrekhan due to low brokerage,17% used due to
their investments tips and 23% trade with sharekhan due to their services.

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9. If you invested in sharekhan Portfolio Management services , What has been your
experience?

4%

24%

38%

27%

A) Extrem satisfactory
B) satisfactory C) Nutral
D) DisSatisfactory E) Extrem dissatisfactory

According to above graph 38% investors has nutral experince , 24% has extrem satisfactory
experince ,27% investors has satisfactory experince .so it is clear that investors like to trade
with sharekhan PMS.

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10. Does Share khan Limited keep it Portfolio Management Service process Transparent?

23%

A) YES
B) NO

77%

Interpretation

As per above graph it is clear that 77% investors thinks that sharekhan PMS
are transparent and easy to understand. 23% investors thinks that sharekhan
PMS is difficult to understand.

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11. Do you recommend Share khan Portfolio Management Service to others?

21%
A) YES
B) NO

79%

Interpretation

As per above graph it is clear that 79% investors recommend sharekhan

PMS to others and 21% give negative review about sharekhan PMS.

78
 CHAPTER-6

CONCLUSION

AND

SUGGESTIONS

CONCLUSION

On the basis of the study it is found that Share khan Ltd is better services provider
than the other stockbrokers because of their timely research and personalized
advice on what stocks to buy and sell. Share khan Ltd. provides the facility of
Trade tiger as well as relationship manager facility for encouragement and
protects the interest of the investors. It also provides the information through the
internet and mobile alerts that what IPO’s are coming in the market and it also
provides its research on the future prospect of the IPO. We can conclude the
following with above analysis.

 Share khan Ltd has better Portfolio Management services than Other
Companies

 It keeps its process more transparent.

 It gives more returns to its investors.

 It charges are less than other portfolio Management Services

 It provides daily updates about the stocks information.

79
  Investors are looking for those investment options where they get
maximum returns with less returns.

 Market is becoming complex & it means that the individual investor will
not have the time to play stock game on his own.

 People are not so much ware aware about the Investment option available
in the Market.
Finding

 From Tha Data Analysis Investment Point Of View Invester High Deamnd Good Return

 At The Time Of Investment The Investors Basically Considered The Both Risk
And Return In More %Age Around 44%.

 From Data Anaalysis Investe More Like Diversifired Investment Portfolio

Managemant Service Invester Strust Portfolio Managemant Service

 As Among All Investment Option For Investor The Most Important Area To Get
More Return Is Share That Mutual Fund Than Pms

 As expected return from the Market more than 48% respondents expect the rise
in Income more than 15% to 25%, 15%% respondents are expecting between
15% return.
 From data analysis 34% repondent trast sharekhan reserarch portfolio
managemant service research most important them
 From data analysis respondent not much happy sharekhan pms service
 More than 77.3% Investor are happy with the Transparency system of Sharekhan

SUGGESTIONS

80
 The company should also organize seminars and similar activities to
enhance the knowledge of prospective and existing customers, so that they
feel more comfortable while investing in the stock market.
 Investors must feel safe about their money invested.

 Investor’s accounts must be more transparent as compared to other

companies.

 Share khan limited must try to promote more its Portfolio Management
Services through Advertisements.
 Share khan needs to improve more it’s Customer Services
 Share khan need improve app and software.it very complex and difficult to
other app grow, zerodha ,angle one
 Sharekhan need to improve technical

BIBLIOGRAPHY

81
REFERENCES

 www.sharekha.com
 www.sebi.gov.in

 https://www.investopedia.com/terms/s/stockmarket.asp
 www.valueresarchonline.com
 www.yahoofinance.com
 www.theeconomist.com
 www.nseindia.com
 www.bseindia.com

Book Referred

 Value guide by Share khan

 Investors Eyes by Share khan

Questionnaire
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1. What Is The Basic Purpose Of Your Investments?

A) Liquidity
B)Return
C)Tax Benefits
D)Risk Covering

2. What Is The Most Important Factor You Consider At The Time Of Investment?
A) Risk
B) Return
C) Both

3. Which Portfolio Managment Service Type You Preferred?

A) Equity
B) Balanced
C) Debt
4. Which Feature You Mostly Like About Portfolio Management Service.
A)Allocation Of Assets
B)Diversification Of Investment
C)Investment Rebalancing

5 . “Investing In PMS Is Far Safer Than Investing In Mutual Fund”. Do You Agree?
A) Strongly Disagree
B) Disagree
C) Neutral
D) Agree
E) Strongly Agree

6. How Long Have You Use Portfolio Management Service?

A) Less Than 1 Year
B) 1 Year To 3 Year
C) 3 Year To 5 Year
D) More Than 5 Year

7.How Much You Carry The Expectation In Rise Of Your Income From Investments
Portfolio Management Services?*
C) 25-35%
A) Upto 15%
B) 15-25%
D) More Than 35%

83
8.If, You Trade With Sharekhan Portfolio Management Service Then Why?
A) Research
B) Brokerage
C) Services
D) Investments Tips

9. If You Invested In Sharekhan Portfolio Management Services , What Has Been Your
Experience?
A) Extrem Satisfactory
B) Satisfactory
C) Nutral
D) Dissatisfactory
E) Extrem Dissatisfactory

10. Does Share Khan Limited Keep It Portfolio Management Service Process
Transparent?
A) YES
B) NO

11. Do You Recommend Share Khan Portfolio Management Service To Others?

A) YES
B) NO

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