Summer internship project on angel broking


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Summer internship project on angel broking

  1. 1. 1Angel Harmonized AscendFund“A new Portfolio Product for Angel Broking”Submitted toCHITKARA BUSINESS SCHOOLin partial fulfillment of the requirements for the award of degree ofMaster of Business AdministrationSubmitted by: Supervised by:Mehak Mehta Mr. Deepak ChaudharyCUN120550046 (Branch Manager)
  2. 2. 2DeclarationI, "________________________________”, hereby declare that the workpresented herein is genuine work done originally by me and has not beenpublished or submitted elsewhere. Any literature, data or work done byothers and cited in the report has been given due acknowledgement andlisted in the reference section._______________________(Students Name & Signature)_______________________(Roll No.)Date: __________________
  3. 3. 3AcknowledgementI would like to express my gratitude to all those who gave me the possibility to completethis project. I want to thank the Department of Chitkara Business School for giving methe opportunity to do such an interesting and wide topic, i.e., to create a portfolio productfor Angel Broking.I would like to thank my Branch Manager for being a support throughout my Projectwork. Mr. Deepak Chaudhary has always encouraged me to stay focused towards myproject no matter what the conditions are.I have furthermore to thank my respected Project Guide Dr. Renuka Sharma who gaveand confirmed this permission and encouraged me to go ahead with my Project. Shealways guided me in the right direction whenever I asked her for help.I would also like to thank God for giving me the patience throughout my project and myparents who supported me and helped me in all ways. Without all, I could not havesuccessfully completed my project properly in time with adequate data and relevantsubstance in it.Thanking you,Mehak MehtaCUN120550046
  4. 4. 4Executive SummaryThis project is about creating a portfolio product that would help Angel Broking. We allknow that stock market is a risky investment alternative for all but it is good if investorcan make money out of it. The regulatory body for the stock market is SEBI who controlsall the activities of the market on daily basis and try to do transaction in a legal way so asto avoid the scams and to protect the interest of the investors. Now days there are manyPortfolio managers and Fund managers who invest on the behalf of the investors and theyassured them fixed rate of return on their investment in a particular period of time. Theyall applied various kinds of model to measure the risk available in the market and thetools to manage that risk.There are various kinds of risk which is mainly categorize in two parts1. Macro level risk 2. Micro level riskI. Macro level risk :- It consist of Systematic and Unsystematic Risk.Systematic risk is that which cannot be reduced but Unsystematic risk can becontrolled.II. Micro Level risk:- It consist of various kinds of risk which are prevailing inthe market like Business risk, Market risk, Liquidity risk, Exchange rate risk,Financial risk, Currency risk and Country riskThe above are the broad categories of the risk in the market. As we can see from therecession that the global markets also have their impact on the Indian market becausenow a days companies are doing business at global level so the market of one country canaffect the market of other countries also. So we cannot avoid the risk but we can managethe risk and minimize it. In my project I have done the same thing by applying thevarious models or tools which are helpful to manage the risk while doing an investment.Purpose/Objective of the study:- The purpose of the study is to give a portfolio product to Angel Broking as per theneeds of the population of Ludhiana region. Endeavour to create wealth over the medium to longer term through investmentsin equities, across market capitalization by focusing solely on the following:- To measure the risk available in the market, taking into consideration theNifty 50 stocks. To look deep into the fundamentals of the companies as well as theconcerned industry. To calculate the expected return from the shortlisted stocks as well as fromtheir concerned industry. To measure the risk/reward value of investors’ assets class choices
  5. 5. 5Research Methodology Used in the Project:-Type of research project is Descriptive and Exploratory. To make a research project weneed to see that whether there would be scope of this study or not, because if our study isnot having scope then the whole work done will not be effective.The scope of this study is there in the market because in today scenario everyone looksfor the safe and risk free return but they don’t know how to manage the risk which isthere in the market so by the help of this study and after seeing the relevance, theFinancial managers or the investment companies can take benefit out of it. Because bythis they will come to know about the tools to manage the risk and they will be able tosell more investment products because by using it they will be able to give safe return tothe investors which will lead to an increase in their goodwill in the market.Methodology used to making of this project is Descriptive research design. Once wedecide with the type of research design we need also to know about the collection of data.I have used the secondary method to collect the data from the market. For this purposedifferent websites are being search out for the relevant information for making the projectand various research paper and articles were also studied so as to get reference from thosearticles.Once I am done with the data collection and fundamental analysis, I then need to applythe tools. In my project I have used mainly four tools BETA, CAPITAL ASSETPRICING MODEL (CAPM), STANDARD DEVIATION and SHARPE INDEX.Sharpe Index tells us the excess return we can generate from the investment. Beta tellsabout the volatility of the risk. CAPM tells us about the Expected return on the stock, andSortino ratio tells us that out of the stocks which are giving negative return which will bethe stock that will give positive return in near future.Thus by applying all these models we come to know that we can also minimize our riskbut for that analysis should be done so as to enjoy the safe return on the investment.Findings:- After applying all the above models I have come to know the Beta of myportfolio, expected return that my portfolio will generate. CAPM help us to know thathow much would be expected return on the stock and then we can compare the actualreturn with the expected return and invest accordingly. Beta helps us to know thevolatility of risk in the market and then we can do risk return tradeoff so as to invest inbest stock as per our analysis. And Result of Sharpe ratio helps us to compare with theexpected return and then do the Sortino ratio if required.
  6. 6. 6Table of ContentsI. Introduction to the corporation Business carried on by parent company and group companies along withbrief history, promoters & vision Introduction to the parent firm Main competitors Number of employees Organization Structure Study of functioning of all the departments of the company SWOT Analysis Financial Statement Analysis Trend Analysis Strategies adopted Profitability AnalysisII. Review of Literature Review of articles Need of the study Objectives of the studyIII. Research Methodology adoptedIV. Details of actual work undertakenV. Interpretation & AnalysisVI. Conclusion and Suggestions Findings of the study Recommendations of the studyVII. GlossaryVIII. Bibliography
  7. 7. 7Chapter-1Introduction to thecorporation andcompany
  8. 8. 8Business carried onby the parentcompany
  9. 9. 9Angel BrokingRegistered OfficeG-1, Ackruti Trade Center, Road No -7,MIDC,Andheri (E), Mumbai - 400 093.Tel: (022) 2835 8800 / 3083 7700Corporate Office6th Floor, Ackruti Star, Central Road -MIDC,Andheri (E), Mumbai - 400 093.Tel: (022) 3935 7600
  10. 10. 10About the companyAngel Brokings tryst with excellence in customer relations began in 1987. Today, Angelhas emerged as one of the most respected Stock-Broking and Wealth ManagementCompanies in India. With its unique retail-focused stock trading business model, Angel iscommitted to providing ‘Real Value for Money’ to all its clients.The Angel Group is a member of the Bombay Stock Exchange (BSE), National StockExchange (NSE) and the two leading Commodity Exchanges in the country: NCDEX &MCX. Angel is also registered as a Depository Participant with CDSL.VisionTo provide best value for money to investors through innovative products, trading/investmentsstrategies, state of the art technology and personalized service.MottoTo have complete harmony between quality-in-process and continuous improvement to deliverexceptional service that will delight our Customers and Clients.
  11. 11. 11CRM Policy“A Customer is the most Important Visitor on our premises. He is not dependent on us,but we are dependent on him. He is not an interruption in our work. He is the purpose ofit. He is not an outsider in our business. He is part of it. We are not doing him a favour byserving him. He is doing us a favour by giving us an opportunity to do so.”- Mahatma GandhiBusiness Philosophy Ethical practices & transparency in all our dealings Customers interest above our own Always deliver what we promise Effective cost managementQuality Assurance PolicyWe are committed to providing world-class products and services which exceedthe expectations of our customers, achieved by teamwork and a process ofcontinuous improvement.
  12. 12. 12Evolution of Angel Group MR DINESH THAKKAR, CHAIRMAN & MANAGING DIRECTOR,ANGEL GROUP, started this Journey as a SUB-BROKER in 1987 with 3Employees and 25 Clients. Dec’97: Incorporation of Angel Broking July’98: Angel Research Division started Mar’02: Web-enabled back office software developed Apr’04: Incorporation of Commodities Broking Sep’04: Launch of internet trading platform Oct’05: Awarded prestigious “Major volume driver” award1997-200320042005
  13. 13. 13 Jul’06: PMS function launched Sep’06: Commences MF and IPO distribution Oct’06: Awarded “Major volume driver” award Dec’06: Crossed 2,500 business associates Oct’07: “Major volume driver” award for third consecutive time Nov’07: Crossed 1.5 lakh mark in DP account Dec’07: IFC acquired 12.35% stake in Angel Group Jan’08: Commences insurance distribution Feb’08: Ranked 1stby NSE for Registered intermediaries May’08: Third party distribution business ramped up Sep’08: Ranked 1ston NSE for largest sub-broker network Dec’08: “Major volume driver” award for the 4thconsecutive time Jan’09: Ranked 1ston NCDEX on the basis of turnover May’09: Awarded the “Best Retail Broking House” and the “Broking Housewith Largest Distribution Network” by Dun & Bradstreet Two Analysts won the ET Starmine Analyst Award “Major volume driver” award for the 5thconsecutive time Nov’10: “Major volume driver” award for the 6thconsecutive time20062007200820092010
  14. 14. 14 Mar’11: Awarded the Best Contribution in Investor Education & CategoryEnhancement of the Year – Angel Broking Ltd and Broker with BestCommodity Research of the Year - Angel Commodities Broking Pvt. Ltd byBloomberg UTV Financial Leadership Awards 2011 Feb’11 : Angel Analysts won in 3 categories at the ET NOW StarmineawardsANGEL LOGO2011
  15. 15. 15Membership Angel Group Memberships: BSE- Cash and F&O NSE- Cash and F&O NCDEX & MCX – Commodities & Currency Futures Angel has the largest no. of sub-brokers registered on NSE Angel has the largest volume on BSE Angel has the highest number of Trading Terminals. Angel is also registered as a Depository Participant with CDSL.Retail Centric Focus Aggressive expansion (locations, products/ offerings & customer base) Scalable systems and processes Leveraging technology for cost-efficient high-quality service. Effective Human Resource Development
  16. 16. 16Angel BusinessGlobal Partner International Finance Corporation (IFC) – A Subsidiary of World Bank hasinvested in Angel Broking. This is the first time that IFC has invested in Equity Broking and WealthManagementCore BusinessBroking BusinessEquity Broking BSE, NSECommodityBrokingNCDEX,MCXCurrencyTradingNSE, MCXE-BrokingWealth Management andDistribution BusinessLife Insurance BSLIPortfoliomanagementMutual FundsIPO Advisory
  17. 17. 17Unique Propositions A very strong and dedicated Research and Advisory desk. One of the highest success ratios in both technical and fundamental calls. An excellent IT infrastructure in place with over 18144 trading terminals and 610VSATs with a server uptime of 99.9%. 100% Retail centric focus and total commitment towards retail customers. Some of the best fund managers running our Portfolio Management Services toenable clients to minimize their risk, enhance return and diversify their portfolios. Training Programs to upgrade the knowledge base & competency levels of ouremployees, channel partners & even our end customers. Our KYC operations run 24/7 to ensure a TAT of less than 48 hours to generateclient codes. One of the lowest transaction charges of depository services in the country A client can use all the three online trading platforms with same login andpassword Conducting Investor’s Camp across various places in the country to increaseawareness of retail segment about capital markets Our fund managers and analysts have been featuring daily on various businessnews channels like CNBC TV18 ET Now Zee Business Bloomberg UTV NDTV Profit CNBC Awaaz
  18. 18. 18Awards & Recognition The most trusted retail centric brokerage house with service truly personalized. Awarded the coveted Major Volume Driver trophy by the BSE for 6 years 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 Bloomberg UTV Financial Leadership Awards 2011 Broker with Best Commodity Research of the Year(Angel Commodities Broking Pvt. Ltd.) Best Contribution in Investor Education & Category Enhancement of theYear(Angel Broking Ltd.) ET Now|Starmine Analyst Award (2009 | 2011) 2009 ET Now|Starmine Analyst Award in Financial Category, ConsumersGoods and Services Category 2011 ET Now|Starmine Analyst Award in Industry Stock Picker Category(for Biotechnology & Automobiles) Industry Earning Estimators Category(Financials) Zee Business Financial Market Conclave Award 2010 | 2011 2010 Special Contribution Best Sector Analyst Best Technical Analyst 2011 Best Sector Analyst The Dun & Bradstreet Equity Broking Awards 2009 Best Retail Broking House Broking House with Largest Distribution Network
  19. 19. 19Research & Advisory ReportsMarket Outlook Provides price-sensitive information just Before the opening bell and analyzes itsImpact on the Market in terms of: Key Corporate developments Policy announcements Geo-political news and viewsTechnical Analysis report Analyzes trading patterns, and a view on the market positions of key stocks/sectors for the next trading session Short term (1-5 days) & medium term (10-20 days) view Tracks individual scrips, the SENSEX & NIFTY and other indicesDerivative analysis report FII activity in the F&O Segment Change in open interest Put-call ratio Cost of carrying stocks Index-based derivative productsWeekly Reviews on Comprehensive market overview pertaining to the week and likely trends goingahead FII and Mutual Fund activity for the week Update on International markets Analysis of new IPOs hitting the market Top picks based on in-depth analysis of fundamental & technical factors Technical Analysis of major indices and scrips as well as future outlook Short and long-term outlook on scrips and suggested trading strategies End of the week Derivative Analysis Commodities’ update on Bullion, Agri & Energy futures for both exchanges Updated stock view of about 70 prominent stocks
  20. 20. 20Angel Products and Services Portfolio Management Services Managed by our Prominent Fund Managers who are regularly fetched by TVmedia for their views on stocks Understanding client’s risk & return profile Offering the right blend of sector and stock exposure Giving dedicated Investment Advisors Giving a choice of different schemes to suit every individual investorpreferences Catering to Individuals, HUFs, Corporate, NRIs, Trusts Angel Commodities Personalized services through branches & regional hubs Trading & Relationship Mgmt. Services in Bullion, Base Metals, Energy &Agri. futures Opportunities in hedging & portfolio diversification, speculation & arbitrage Training & Educational Seminars on Commodities Angel Currency Futures Comprehensive coverage on Currencies (‘Rupee’ to ‘Euro’, ‘Dollar Index’ to‘Yen’). Reports covering in-depth fundamentals of the currencies. Latest economic data releases with their likely impact, along with “Technicallevels” Comprehensive reports on currencies ideally suited for any investor / trader. Angel Gold Personalized Investment Advisory Portfolio Restructuring & Continuous Monitoring Guidance from Experienced Research Team Periodic Group Meetings with Investors. Specialized ProductsMargin Funding Facility to allow clients to take higher exposure
  21. 21. 21 Instant Liquidity for Clients Margin is deposited in Cash as well as Collaterals Enabling Clients grab Earning OpportunityPre-Paid Brokerage Zero Account Opening Charges Attractive Brokerage Rates Free DP AMC for 1 year Assured gifts worth thousands with every account Easy & Fast Recharge Free Financial Investment Application with every account Depository Services No physical instruction required for the client’s sell obligations Lowest transaction charges in the country Acceptance & execution of instruction on fax A combined monthly ‘Bill-Transaction-Holding cum Ledger’ statement Efficient pledge mechanism Value Added ServicesNRI Services NRI Service Desk for personalized Assistance Dedicated Offline Equity Dealing Desk Online Equity Trading Platform NRI Investment Advisory Desk PAN Card Assistance Support for Banking – PIS Accounts Portfolio Management, Mutual Fund, IPO servicesM-Connect Service Market News/Analysis & Expert Views 24X7 Stock Updates & Market Statistics Real time Equity, F&O, Commodities and MF rates on a single screen Top 10 Local & Global indices Back-office Data i.e. Ledger, Open Positions, Holdings, PMS
  22. 22. 22SMS Application for clients Automated SMS at specified Intervals at no additional costExample – Trade Confirmation, Weekly Ledger update etc Request response SMSExample – DP Holding, Pool Holding, Ledger update etc Insurance Products to meet the triple objectives of risk coverage, investment and taxplanning Assessment of your Insurance needs after proper risk profiling A wide array of individual life cover plans to meet your Protection, Savingsand Retirement needs Mutual Funds Tie- ups with all major AMCs Dedicated Relationship Manager for Business Partners Exclusive MF Research Reports by Angel(Daily/ Weekly/Monthly Mutual Fund Reports) MF Portfolios as per Investors Financial Goal Common Gateway for all Mutual Funds related queries Loans, IPO and Fixed DepositsProducts distributed by Angel include:Unsecured Loans Personal/Business Loans/Credit CardsSecured Loans Home Loans/ Loan Against Properties Loan Against Securities / GoldIPO – Distribution, Advisory and HelpdeskFixed DepositsNHB Term Deposits
  23. 23. 23Distribution ModelShort form Full form DetailsCSO Central Statistical Organization MumbaiRO Regional Offices 24Branches Branches 190SB Sub-Brokers 10000+Clients Clients 1900000+
  24. 24. 24Business carried onby the particularfirm
  25. 25. 25Angel BrokingRegional OfficeSCO 13, Shanghai Towers,Feroze Gandhi Market,Ludhiana- 141001Tel: (0161) 3941394
  26. 26. 26Angel Harmony Direct Connect with Human Resource Company Profile, Management & Accolades HR Policies• Vision, Values, Motto & HR• Philosophy• Harmony Introduction• Compensation & Benefits• Performance Management System• Confirmation• General Administrative Policy• Leave Policy• Exit & Separation Policy Code of Conduct & Ethics
  27. 27. 27PRAGATI – What an Idea! A Platform to submit your creative ideas. Opportunity to be a part of Process improvements. Learning & Development Experience/ Exposure Rewards & Recognition
  28. 28. 28E-brokingUnique Online Trading products customized to suit different Investment / Trading needs– Angel Investor Angel Diet Angel TradeBack-OfficeOnline Client Details includes – Ledger balances Cash Deposits with Angel Securities Holdings Charges levied/paid in the client’s account Last auction / close-outs effected DP Holding for the last 3 transactions
  29. 29. 29AdvisoryIntraday calls BTST calls Long termcallsPositional callsAngel Trading
  30. 30. 30Main CompetitorsMajor players in the region are as follows:-
  31. 31. 31History of broking firmsBrief history of some broking firms – The birth of Karvy was on a modest scale in 1981. It began with the vision andenterprise of a small group of practicing Chartered Accountants who founded theflagship company, Karvy Consultants Limited. They started with consulting and financial accounting automation and carvedinroads into the field of registry and share accounting by 1985. Since then, karvy utilized its experience and superlative expertise to go fromstrength to strength, to better their services, to innovate, diversify and in theprocess, evolved as one of India’s premier integrated financial service enterprise. ICICI Web Trade Limited (IWTL) maintains (herein afterreferred to as the "Website") whereas IWTL is an affiliate of ICICI Bank Limitedand the Website is owned by ICICI Bank Limited. IWTL has launched and established an online trading service on the Website.
  32. 32. 32 India Securities Pvt. Ltd. is a wholly owned subsidiary of Ltd and is the stock broking arm of India The subsidiary was formed to comply with regulatory is a focused website for online stock market trading. is a trade name owned by the India group. IILSPL hasapplied for trading membership of the BSE under Securities and Exchange Boardof India (Stock Brokers and Sub-Brokers) Rules 1992. HDFC security is the subsidiary of HDFC (Housing Development FinancialCorporation). would have an exclusive discretion to decide thecustomers who would be entitled to its online investing services. also reserves the right to decide on the criteria based on whichcustomers would be chosen to participate in these services. The present web site ( contains features of services that theyoffer/propose to offer in due course. The launch of new services is subject to the clearance of the regulators i.e. SEBI,NSE and BSE. Indiabulls Securities Limited was incorporated as GPF Securities Private Limitedon June 9, 1995. ISL is a corporate member of capital market & derivative segment of TheNational Stock Exchange of India Ltd. At present, ISL accounts for approximately 3% of the total daily turnover of theExchange with 32,359 client relationships and 70 branches spread across thecountry as of April 30, 2004.
  33. 33. 33Competition AnalysisBASE EDELWEISS CDEQUIRESEARCHVIKSONUniqueSellingPoints(USP’s) Biggest ResearchHouse – Mumbai Strong RMS –Mumbai Investors likeRakeshJhunjhunwala NSEL guaranteedplan Services Stamp duty – Leastamong all otherfirms Fast servicesTerminal  Separate terminalfor Equity Separate terminalfor Commodity Separate terminalfor Currency Separate terminalfor Equity Separate terminalfor Commodity Separate terminalfor Currency Separate terminal forEquity Same terminal forcommodity &currencyCharges  Account opening –Rs.750 (lifetimevalidity) DP charges – NIL Software – FREE(Online, Offline &Mobile) Minimumbrokerage – Rs.3000 to Rs. 4000on the first tradingmonth of every Account opening –Rs.500 (one timepayment) DP charges –Rs.396 p.a. Software – Rs.500p.m. (Online &Offline) (No mobilesoftware) Minimumbrokerage – Rs.2500 on the firsttrading month ofevery client Account opening –NIL DP charges – Rs.260p.a. (only on Equity) Software – FREE(Online & Offline)(No mobile software) Minimum brokerage– Rs. 1000 to Rs.2000 on the firsttrading month of
  34. 34. 34client every clientLimits  EQUITY Intraday20x Delivery4x COMMODITY Intraday 6x Delivery1x CURRENCY No limits EQUITY IntradayCash Market 8-10xF & O 3-4x DeliveryCash Market 3-4xF & O no limits COMMODITY Intraday 3x Carry 2x CURRENCY Intraday 2x Carry 1x EQUITY Intraday 10x Delivery 4x COMMODITY Intraday 3x Carry 1x CURRENCY Intra day 2x Carry 1xSoftwareversion They use their ownproduct both forSoftware and BackOffice. They didn’tdisclose theproducts name. They use ODINsoftware They use ODINsoftwarePay in/Pay out Only throughsoftware All the clearancesthrough HDFCBank are reflectedon the same day. All the clearancesthrough otherbanks are reflectedon the next day. Through Software +Back Office Pay in/ Pay out areaccepted and paidthrough chequesonly. Through Software +Back Office Third party pay outare also possible. In Commoditypayout is reflectedon the same day. In Equity payout isreflected after 2days.
  35. 35. 35Number of employeesLudhiana – Regional OfficeFollowing are the offices under Ludhiana branch – Chandigarh Ambala Amritsar JalandharTotal number of employees in all the branches (including Ludhiana) – 106Total number of employees in Ludhiana branch – 42Total – 42 Managerial – 2 Supervisory – 2 Skilled – 38
  36. 36. 36Organizational Structure
  37. 37. 37Study of functioning of all departments of thecompanyAngel Broking, Ludhiana has following departments:- Sales department Dealing department Operations Back-Office Risk Management ServicesFUNCTIONING OF SALES DEPARTMENT Sales department has a team of around 10 Sales Executives and 1 Assistant UnitManager. Sales Executives go to the market, hunt for prospective clients, fixes up a meetingwith the interested clients and explains the company, its products and services. Unit Manager keeps a track of the whole sales team. Guides them on how to pitchin to a new client or existing client.LEAD MANAGEMENT SYSTEMThe Lead Management System (LMS) is designed to help theSales Team in: Organizing and tracking of all leads received by them Arranging and scheduling appointments and reminders Maintaining records for all conversations (meetings, telecom, e-mails) withprospective clients Capturing & Calculating Productivity & Incentives.ADD NEW LEADSThe system works on a principle that “No Lead received by any employee should gounattended”.That’s why it is obligatory that any lead should be entered in LMS. As soon as a lead isentered in the system, it goes into the pending leads pool of the Executive.FOLLOW UP
  38. 38. 38All follow-ups done on a prospective client are captured once the data is entered usingthis link. This helps the user in checking history of the meetings with a particular lead.It’s a useful reference tool for the user.Sales calls: The Funnel Effect All leads do not get converted to a meeting. Based on the data entered in LMS bythe Sales Executives, it has been found that only 50% of the prospective clientsagree to a meeting. The balance 50% takes the details and drop out. Active leads are the ones wherein the prospective client has agreed to meet theSales Executive. This shows that they are interested to know the details of ourproducts and services and hence, the chances of conversation are better. Based on the data entered in LMS by the Sales Executives, it has been found outthat only 20% of the Active Leads are closed.The balance 80% either drop out or want to take some more time. All Active Leads are met at least once (75*1 meetings a month). All Closurecases take an average of three meetings, i.e., two extra meetings (15*2 meetings amonth) totaling 105 meetings per Executive per month, i.e., average of fourmeetings per day.FUNCTIONING OF DEALING DEPARTMENT Dealing department has a dedicated team of sector specific fundamental researchanalysts, technical analysts and commodities advisors. There are around 15 Investment Advisors (IA’s) with 1 Assistant Manager. Every Investment Advisor has a large number of clients. If any client wants totrade online then he has PC and Mobile software. But if a client wants to tradeoffline then he can trade at any point of time through these Investment Advisors. Investment Advisors give the following calls :Total Leads = 150Active Leads = 75Closures= 15
  39. 39. 39 Long term fundamental calls Short term calls Intraday calls BTST calls There is a single terminal for all the three markets i.e., equity, commodity andcurrency. It is good because every person can have complete knowledge of everymarket and also the clients can have a good relation with their IA or RM becausetheir account is completely held by a single person.FUNCTIONING OF OPERATIONS & BACK-OFFICE There is only one employee in Back-Office. The task of Back Office departmentis to have a proper communication system between the Regional Office with it’ssub offices and also between the Regional Office and the Head Office. There are two employees in Operations department. They take care of thefollowing heads :- Finance/Cash KYC Finance department takes into consideration all the requirements while any payin/ pay out are made. It keeps into account the requirements of the banks that aretied up with the Ludhiana Branch. KYC department takes into consideration all the documentation part of the clientsand all the other details of the client. These details are kept confidential and arenever disclosed to any employee of the firm. The details are only communicatedto the Head Office.FUNCTIONING OF RMS DEPARTMENT RMS department helps the clients in avoiding some of the risks like credit risk,interest rate risk, liquidity risk and re-investment risk on debt investments andother fixed-income securities. They use derivative instruments like index futures, stock futures, and optionscontracts, warrants, convertible securities, swap agreements or any otherderivative instruments for the purpose of hedging and portfolio balancing, aspermitted under the regulations and guidelines. RMS department uses Stop loss and other schemes to avoid the risks associatedwith trading volumes, liquidity and settlement systems in equity and debt markets.
  40. 40. 40Sources of finance BROKERAGE – The major source of finance for Angel Broking is thebrokerage on the turnover being generated by:- B2B clients B2C clientsB2B clients are being charged as follows:-Intraday on Equity, Commodity and Currency – 0.03%Delivery on Equity, Commodity and Currency – 0.30%B2C clients are being charged as follows:-Intraday on Equity, Commodity and Currency – 0.01%Delivery on Equity, Commodity and Currency – 0.10% PRE-PAID BROKERAGE – Another source of finance is the advancebrokerage. It is the Brokerage that some clients pay in advance so as to save someof their money. ANGEL PRODUCTS – Angel Broking earns a lot from its products such as:- Margin Funding Angel Gold – Minimum Amount Rs.100000 PMS – Minimum Amount Rs.2500000 LIFE INSURANCE – Angel Broking has a tie up with BSLI (Birla Sun LifeInsurance) for distribution of the following products:- Dream Solution Common Dream Endowment Dream Child Dream Retirement Saral Solution Saral Wealth Saral Child Freedom 58 Titanium Plus Platinum Premier Plus INITIAL PUBLIC OFFERING (IPO) – Angel Broking is likely to come upwith its IPO in the market in almost a year. IPO will be the major source offinance for Angel Broking as of now.
  41. 41. 41SWOT AnalysisSTRENGTHS• Experienced player in the market• Broad product range• Wide range of distributionnetwork• Marketing team is proficientenough to cover varioussegments• Excellent image in the market• Customer Orientation• Efficient and Skilled Manpower• Excellent image in the market• Investment AdviceWEAKNESSES• Angel still could not meet thefuller customer satisfaction• There is a stiff competitionfrom the banks• After sale services• Software problemsOPPORTUNITIES• Ever increasing market ininvestment field• Emerging new technology• Unfilled needs of the customer• Education level• Untapped marketTHREATS• Price war• Substitute products• Computer literacy in theprospect investors• New competitors• Technology based business
  42. 42. 42Financial Statement Analysis of the companySummarized Financial Statements (as per audited annual reports)(Amount in Rs. Lac)Balance Sheet 31-Mar-12 31-Mar-11 31-Mar-10Sources of fundsPaid up capitalEquity Share Capital 1225.00 1225.00 1225.00Reserves & Surplus 6305.14 5272.44 4422.27Secured Loans 16131.75 5256.55 1066.23Unsecured Loans 1883.36 - -Total 25545.25 11753.99 6713.50Application of fundsNet Fixed Assets 4524.29 5243.53 4025.50Deferred Tax Assets 154.97 164.44 445.24Net Current Assets 20865.99 6346.02 2242.76Total 25545.25 11753.99 6713.50
  43. 43. 43Summarized Financial Statements (as per audited annual reports)(Amount in Rs. Lac)Income Statement 31-Mar-12 31-Mar-11 31-Mar-10Total Income 30633.07 40853.45 39023.46Total Expenditure 27760.34 38268.39 36037.11Profit/ (Loss) beforeDepreciation2872.73 2585.06 2986.38Depreciation 1220.54 1271.53 1129.77Profit/ (Loss) before taxes& extraordinary items1652.19 1313.53 1856.61Profit/ (Loss) before taxesbut after extraordinaryitems1652.19 1313.53 1856.61Less: Provision for Tax/Written back of taxprovision619.50 463.36 637.66Profit/ (Loss) after tax 1032.69 850.17 1218.95
  44. 44. 44Trend AnalysisTrend percentage of Balance SheetBalance Sheet 31-Mar-10 31-Mar-11 31-Mar-12Sources of fundsPaid up capitalEquity Share Capital 1225.00 which istaken as base year =100(1225.00/1225.00)*100 = 100(1225.00/1225.00)*100 = 100Reserves & Surplus 4422.27 which istaken as base year =100(5272.44/4422.27)*100 = 119.224(6305.14/4422.27)*100 = 142.577Secured Loans 1066.23 which istaken as base year =100(5256.55/1066.23)*100 = 493.00(16131.75/1066.23)*100 = 1512.971Unsecured Loans - - 1883.36Total 6713.50 which istaken as base year= 100(11753.99/6713.50)*100 = 175.079(25545.25/6713.50)*100 = 380.505Application of fundsNet Fixed Assets 4025.50 which istaken as base year =100(5243.53/4025.50)*100 = 130.257(4524.29/4025.50)*100 = 112.390Deferred Tax Assets 445.24 which istaken as base year =100(164.44/445.24)*100 = 36.932(154.97/445.24)*100 = 34.805Net Current Assets 2242.76 which istaken as base year =100(6346.02/2242.76)*100 = 282.955(20865.99/2242.76)*100 = 930.371Total 6713.50 which istaken as base year= 100(11753.99/6713.50)*100 = 175.079(25545.25/6713.50)*100 = 380.505
  45. 45. 45Graphical presentation of Trend percentage of Sources ofFunds/LiabilitiesGraphical presentation of Trend percentage of Application ofFunds/Assets020040060080010001200140016002010 2011 2012Equity Sh. Cap.Reserves & SurplusSecured LoansUnsecured LoansTotal010020030040050060070080090010002010 2011 2012Net Fixed AssetsDeferredTax AssetsNet Current AssetsTotal
  46. 46. 46Trend percentage of Income StatementIncome Statement 31-Mar-10 31-Mar-11 31-Mar-12Total Income 39023.46 which istaken as base year= 100(40853.45/39023.46)*100 = 104.689(30633.07/39023.46)*100 = 78.499Total Expenditure 36037.11 which istaken as base year= 100(38268.39/36037.11)*100 = 106.191(27760.34/36037.11)*100 = 77.032Profit/ (Loss) beforeDepreciation2986.38 which istaken as base year= 100(2585.06/2986.38)*100 = 86.561(2872.73/2986.38)*100 = 96.194Depreciation 1129.77 which istaken as base year= 100(1271.53/1129.77)*100 = 112.547(1220.54/1129.77)*100 = 108.034Profit/ (Loss) beforetaxes & extraordinaryitems1856.61which istaken as base year= 100(1313.53/1856.61)*100 = 70.748(1652.19/1856.61)*100 = 88.989Profit/ (Loss) beforetaxes but afterextraordinary items1856.61which istaken as base year= 100(1313.53/1856.61)*100 = 70.748(1652.19/1856.61)*100 = 88.989Less: Provision forTax/ Written back oftax provision637.66 which istaken as base year= 100(463.36/637.66) *100= 72.665(619.50/637.66)*100 = 97.152Profit/ (Loss) aftertax1218.95 which istaken as baseyear = 100(850.17/1218.95)*100 = 69.746(1032.69/1218.95)*100 = 84.719
  47. 47. 47Graphical presentation of Trend percentage of Income StatementGraphical presentation of Trend percentage of Income Statement0204060801001202010 2011 2012Total IncomeTotal Expenditure0204060801001202010 2011 2012Profit before depr.DepreciationProfit before taxesProfit after tax
  48. 48. 48Strategies adoptedMarketing StrategyAngel Diet and Angel Trade is focused on capturing the significant growth opportunitiesin the financial services market and its strategy is driven by the following key principles:-Client Referral Programs: Client referrals are the most reliable and most cost-effectivesource of new clients. We help firms maximize their success by creating process andtools that make generating client a referrals a natural and systematic part of the practice.Client Retention Programs: Maintaining and leveraging existing client relationships isfar less expensive and more productive than trying to acquire new clients. We helporganizing develop effective client communication programs that build stronger clientrelationships, encourage referrals, and produce incremental business.New Client Acquisition Programs: A diverse mix of campaigns including events,public relations, advertising and direct marketing can be an effective means of acquiringnew clients. We help firms create and implement integrated marketing strategies to reachtheir goals.Financial StrategyFinancial Strategy talks about the cost effectiveness in the work that is being done in theorganization.Targets: Every dealer and sales executive is being given targets so as to reduce theoverall cost for the organization. This helps the company generate business from dealersand sales executives more effectively.Plans & Schemes: Angel Broking has some good plans and schemes which though seemto be inexpensive to the client but actually it is not like that. The schemes and plans are assuch which ultimately generates a lot of profit for the organization.MarketingFinanceHuman Resource
  49. 49. 49Advances: Angel Broking asks for advance brokerage from the clients. In that way thecompany receives the money in advance and saves the risk of any default. Moreover, thisadvance money can be easily invested in good projects.Revenue Sharing: Angel Broking has a concept of Revenue Sharing wherein if a salesexecutive or a dealer reaches a particular level in meeting its targets then that particularperson is being given share in the company’s profits. It is strategy to motivate employeesto not just meet monthly targets but also to focus on the Revenue Sharing target.Moreover, this is also helpful in employee retention.HR StrategyHR Strategy talks about the hiring of people and most importantly the grooming andtraining of the employees, staff and even the people working at managerial levels in theorganization.Talent Building Program: The ATP Session is about grooming and making theemployee ready for the next level of responsibility in the Organization. The ATP isconducted for all the levels i.e., A, B & C in the organization.PRAGATI: It is a platform wherein employees can submit their creative ideas. It is anopportunity for employees to be a part of process improvements, learning & development,experience/ exposure, rewards and recognition.Training programs for staff members: There is special MDPS to develop talent withinthe organization. They provide training in Customer Relationship Management (CRM),in order to augment the level of customer service beyond the expectations of clients.Functional training programs for employees at all levels.Training programs for channel partners: Orientation programs are for franchisees,sub-brokers, remisers for a better understanding of Angel’s products and services,Angel’s advantages and Angel’s Unique Selling Points.Training programs for clients: Training workshops on Technical Analysis, SuccessfulDay-Trading techniques & Derivative Analysis programs are conducted to make theclient aware about the technicalities of the stock market.
  50. 50. 50Profitability AnalysisProfitability differs from profit in a very important way. Profitability is not measured interms of money, but in terms of return on some asset. This means that a profit of $100 hasnothing to do with profitability. Profitability measures how much output you can get fromemploying a certain amount of an asset.Profitability is usually expressed as a ratio, e.g. Percent.Angel Broking is not a listed company and thus there is very limited information aboutthe financial details of the company.Since the “sales data” is missing, I’m unable to measure the profitability ratios.Thus only few ratios are taken into consideration, which are as follows:- Total Income has reduced from 40,853.45 lack to 30,633.07 lack in the yearending 31-03-2012 The percentage reduction in Total Income is *100 = 25.017% Total Expenditure has reduced from 38268.39 lack to 27760.34 lack in the yearending 31-03-2012 The percentage reduction in Total Expenditure is *100 = 27.458%Although there is a fall in both the Total Income and Total Expenditure, there isan increase in the Profit after tax. Profit after tax has increased from 850.17 lack to 1032.69 lack in the year ending31-03-2012 The percentage increase in the Profit after tax is *100 = 21.468%
  51. 51. 51Chapter-2Review of Literature, Need andObjectives of the study
  52. 52. 52Review of Literature1. Popular Portfolio Types(January 26 2013)1 This article talks about the 5 most popular types of portfolios that investorsshould consider before allocating their funds into any of these.Following types of portfolios are being talked about in this article: -aggressive, defensive, income, speculative and hybrid. An aggressive portfolio includes those stocks with high risk/high rewardproposition. Stocks in this category typically have a high beta or sensitivity tothe overall market. Defensive stocks do not usually carry a high beta, and usually are fairlyisolated from broad market movements. Despite how bad the economy is,companies that make products essential to everyday life will survive. An income portfolio focuses on making money through dividends or othertypes of distributions to stakeholders. These companies are somewhat like thesafe defensive stocks but should offer higher yields. A speculative portfolio is the closest to a pure gamble. A speculativeportfolio presents more risk than any others discussed in this article.Speculative "plays" could be IPOs or stocks that are rumored to be takeovertargets. Building a hybrid type of portfolio means venturing into other investments,such as bonds, commodities, real estate and even art. Basically, a hybridportfolio would include a mix of stocks and bonds in a relatively fixedallocation proportions.2. How To Adjust Your Portfolio In A Bear Or Bull Market(April 03 2013)21
  53. 53. 53 While investors shouldnt feel compelled to change their portfolios radically inreaction to the markets daily moves, small adjustments in the face of a bull orbear market could be a prudent move. Investors should turn towards safe havens during a bear market. That couldmean adjusting the percentage of bonds you hold upward. At the same time focusing on blue chips could also prove to be fruitful. During a bull run investors should feel confident to take on more risk.3. Risk and Diversification: Diversifying Your Portfolio(May 06 2013) 3This article talks about the three main things one should do to ensure anadequately diversified portfolio:- Portfolio should be spread among many different investment vehicles such ascash, stocks, bonds, mutual funds, and perhaps even some real estate. Picking different investments with different rates of return will ensure thatlarge gains offset losses in other areas. The portfolio theory tells us that after 10-12 diversified stocks, you are veryclose to optimal diversification. You just need to buy stocks of different sizesand from various industries.4. Should You Invest Your Entire Portfolio In Stocks?(February 03 2013) 4 This article talks about the equity-dominated portfolios. It says that in the longrun, equities outperform bonds and cash; therefore, allocating your entireportfolio to stocks will maximize your returns.3
  54. 54. 54 However, the portfolio should be widely diversified across multiple assetclasses: domestic equities, international equities, emerging markets debt andequities, real assets and even junk bonds. The more diverse portfolio can be expected to reduce volatility and providesome protection against inflation and deflation.5. Simplify Your Portfolio(December 22 2012) 5 This article states that a simple and straightforward approach can be employedby anyone who wants to establish and maintain an effective long-terminvestment strategy.One just needs to keep few things in mind such as:- We should not attempt to get rich quick. We should keep accounts and product selection to a minimum. We should focus on asset class selection and the overall asset allocation ofyour entire portfolio, making sure that your asset class exposure is fullydiversified.Our approach does not have to be overly complicated, it does not have to betime consuming, and it does not require a vast array of products or accounts.In the end, we may actually find that less is more.6. Achieving Better Returns In Your Portfolio(February 21 2012) 6 Investors can structure portfolios that deliver above global market indexreturns by designing a strategic portfolio. Fundamental theories like asset allocation and the three-factor model can havea dramatic impact on the way you invest. Designing a portfolio that favors small and value companies over pure marketrisk should deliver higher expected returns over extended periods of time.5
  55. 55. 557. Make Your Portfolio Safer With Risky Investments(September 04 2011) 7 Many investors look only at the risk of their individual securities, not at thecombined effect on their portfolio. In fact, portfolios can be made safer byinvestment strategies that by themselves might be risky, but that in the contextof the portfolio make it safer. Some of the strategies that are mentioned in this article are hedging strategies,buying insurance with options, using low-correlation assets, reducingbenchmark or active risk and understanding your real risk.8. Guard Your Portfolio With Defensive Stocks(September 10 2011) 8 This article provides an overview of defensive stocks and shows how we canuse them to guard our portfolio. Defensive stocks accommodate greed by offering a higher dividend yield thancan be made in low interest rate environments. They also alleviate fearbecause they are not usually as risky as regular stocks and it usually takes amajor catastrophe to derail their business model. Some of the sectors that would be deemed defensive are foods, beverages &tobacco products, water, gas and electric utilities, pharmaceuticals andmedical stocks.7
  56. 56. 569. The 2011 Billionaire Investment Portfolio(February 16, 2011) 9 Billionaires created their wealth by focusing on running businesses that theycreated or took over from family members. Investing billionaires became wealthy by putting all of their eggs in one (orjust a few) basket and watching that basket very closely. This article puts an insight into the portfolios of the top 5 billionaires likeCarlos Slim, Bill Gates, Warren Buffet, Mukesh Ambani and Lakshmi Mittal. Instead of spreading their investments across different classes or assetallocations, their diversification has come through adding new businesses andgeographies to operate in, and individual investors can gear their portfolioswith many of the same firms these billionaires own.10. One Portfolio For Asset Allocation(December 01 2012) 10 This article states that asset allocation takes care of nearly 94% of ourportfolio’s investment profile. The rest is influenced by individual securityselection and market timing. We need to confirm that we are exposed to all areas of the asset class in orderto minimize unsystematic risk.9
  57. 57. 57Need and Usefulness of the study Angel Broking: - This study will be useful for Angel Broking, especially to theLudhiana Branch where the internship was undertaken. Angel Broking cansuggest the same portfolio to its clients. It would be helpful for the PortfolioManagers and Stock Brokers as well. The company can either suggest this funddirectly to its clients or can make some changes and then suggest the same. Investors: - This study will also be useful for the investors who wantgood/moderate return on their investment with low risk. Because stocks areselected on the basis of the fundamental analysis and for the risk parameters I hadconsidered BETA, CAPM, SHARPE and SORTINO models. These will help usto evaluate the expected return from each stock in relation to the risk involvedwith it. I have also taken into consideration the excess return that we can makewith the investment. Usually investors face huge losses during the time of switchover, thus SORTINO ratio will be useful. Students: - This study will also be helpful for the students in understanding thebasic concepts of investing and managing the risk on behalf of the clients byapplying the fundamental analysis and it will help them to learn the fundamentalsand stock selection criteria as well.Objectives Of the studyEndeavour to create wealth over the medium to longer term through investments inequities, across market capitalization by focusing solely on the following:- To measure the risk available in the market, taking into consideration the Nifty 50stocks. To look deep into the fundamentals of the companies as well as the concernedindustry. To calculate the expected return from the shortlisted stocks as well as from theirconcerned industry. To measure the risk/reward value of investors’ assets class choices.
  58. 58. 58Chapter-3Research Methodology adopted
  59. 59. 59Research MethodologyResearch Methodology has many dimensions, it include not only research methods butalso considers the logic behind the methods used in the context of the study and explainswhy only a particular method of technique has been used so that research leads to properevaluations. Thus in a way it is a written game plan for concluding research therefore inorder to solve research problem it is necessary to design a research methodology for theproblem 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 onlythe 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 ExploratoryResearch. It is a cross section of the situation design of the descriptive studies includingthe 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 DataCollection. Secondary data would be collected from the internet and different websitesand newspaper articles. And other research paper would be taken into consideration tofind out the better result from the research paper.Research Tools and TechniquesTools and techniques are used for the stock selection and to manage the risk and return onthe portfolio. Major things to be considered are the sector preference for the selection ofthe stock because diversification should be into different sectors so as to maximize thereturn and taking advantage of whole economy related environment and news. Stockselection 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 riskand selection of stock as well.Details of tools and techniques Sectors will be divided into two parts DEFENSIVE and OFFENSIVE. Indefensive bets IT, FMCG, PHARMA& HEATHCARE will be considered. Forthe offensive bets BANKING and FINANCE, AUTOMOBILE,CAPITALGOODS, INFRASTURCTURE AND, METAL, OIL & GAS will beconsidered.
  60. 60. 60 For the selection of the stock nifty 50 stocks, stocks of large capitalization andthose stocks who had major contribution in their sector and cheap via valuationwill 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 macropoint of view. After analyzing the industry, sectoral allocation would be analyzed consideringthe individual stocks. Then industry analysis and the company analysis will be done for the final stockswhich are good as per the selection criteria. In another part I will apply the fundamentals for selecting the specific stocks formy portfolio. For the further analysis and to manage the returns and risk involved in theinvestment 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 wrongdecision of elimination or for the restructuring purpose and for the eliminating ofthe 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 theabove analysis part will be used for the stocks and investment decision will be made onthe behalf of above analysis. The investment amount limit will be same as it has been setby SEBI (Min 25lacs for the portfolio).The above analysis is made to the best of my knowledge. There will be fee charged bythe fund manager or portfolio manager or by the company who will manage thisinvestment on the behalf of the client.
  61. 61. 61Chapter-4Details of actual work undertaken
  62. 62. 62Portfolio Management ServicesDefinitionPortfolio Management Services (PMS) is an investment portfolio in stocks, fixed income,debt, cash, structured products and other individual securities, managed by a professionalmoney manager that can potentially be tailored to meet specific investment objectives.When one invests in PMS, investor owns individual securities unlike a mutual fundinvestor, who owns units of the entire fund. One has the freedom and flexibility to tailorthe portfolio to address personal preferences and financial goals.Although portfolio managers may oversee hundreds of portfolios, individual account maybe unique.PMS at Angel Broking Ltd:Portfolio Management Service is a highly customized service offering a range ofinvestment options best suited in the current market scenario.Angel offers professional PMS to HNI’s who seek customized solutions to realize theirinvestment goals.Angel’s Portfolio Managers are equipped to design an investment portfolio across variousinvestment avenues like Equities, Fixed Deposits, and Bonds etc. in sync with the client’sunique needs.Approach to PMS Risk Profiling Research & Asset Allocation Stock Selection Review & RebalancingAngel, with years of experience and research expertise, offers the best in class PortfolioManagement Services.
  63. 63. 63Benefits at Angel Investment in companies that have a strong competitive advantage over theirpeers. Well laid-out investment philosophy. Pro-active management of funds. Dedicated Relationship Manager. Quarterly newsletter from fund management team. Regular Conference Calls & Periodic Meets with Angel Fund Managers.PMS products:-1. ANGEL BLUECHIP FUNDThe objective of the scheme is to generate capital appreciation in medium to long termthrough equity and equity related instruments mainly comprising of large-cap companies.2. ANGEL GROWTH FUNDThe objective of the scheme is to render capital appreciation in medium to long term,through equity and equity related instruments largely comprising of mid-cap and small-cap companies.3. ANGEL GOLDIn a volatile market, it is very difficult for an investor to pick up value stocks which willgive decent returns in the long run.Angel Gold helps investor’s with professional financial advises and assists investors inmaking wise and profitable decisions.ANGEL HARMONIZED ASCEND FUNDAngel Harmonized Ascend Fund is an investment portfolio in some of thefundamentally strong Nifty 50 stocks.I have suggested this Fund as a new product for Angel Broking under itsPortfolio Management Services schemes.
  64. 64. 64AngelHarmonizedAscend Fund
  65. 65. 65OverviewAs market becomes extremely dynamic and there is multiplicity of information andopinion, it becomes very difficult to take decision at the right time.Moreover, as your responsibilities and challenges increase, it may be more difficult foryou to find the time to make well informed decisions with regard to your portfolio.A good investment decision is the right decision taken at the right time, which is why myfocus is on understanding the customers investment needs, their risk profile and theinvestment time horizon that client’s normally look for.Investment ObjectiveTo generate long term capital appreciation from a portfolio that is invested predominantlyin the fundamentally strong equity and equity related instruments.How to invest in Angel Harmonized Ascend Fund?The minimum amount you can invest in this fund is Rs 25 lacks.Your investment can go up beyond that in multiples of Re 1.You could make the investment either through cheque or stock transfers or a combinationof both.To invest in this Portfolio you need to- Sign a KYC & DP-POA agreement Provide all statutory account opening documents Payment instrument of investment amount or stock transfer slipWho can invest? Individuals NRIs Hindu Undivided Families Association of persons Companies Partnership Firms Societies, and Overseas Trusts (subject to RBI approval)
  66. 66. 66Investment Strategy Principles of Value and Growth investing followed. Focus on Capital preservation. Impetus to low-risk high-return stock, by capturing the complete up moves in thestock. Contrarian at times, investing in less known & unpopular businesses havingpotential to deliver much superior returns. A bottom up stock picking is the key to generating alpha. Manager carries outextensive research to select companies mainly on its individual merits that offerhigher growth potential. Diversification of portfolio across sectors and businesses in order to avoidexcessive concentration in a single sector or stock. Disciplined, long term & patient portfolio management approach. Active Portfolio management, with continuous risk management of the portfolioalong with realigning it with newer opportunities for superior returns. Profit booking at opportune moments.Scheme DetailsInvestment Plan – Balanced GrowthBenchmark – CNX Nifty 50Minimum Investment – Rs.25 lacksFund Manager – Mehak MehtaFee Structure & Other DetailsNature of Fees FeesOne Time upfront Fee / Processing Fee NilFixed Management Fees (on AverageAssets under management charged onquarterly basis)2% p.a.*Exit Load Refer Note Below
  67. 67. 67Custodian Fees NilDepository Charges As ApplicableRegistrar & Transfer Fees NilService Tax, Security Transaction Tax &Other Statutory leviesAs ApplicableBrokerage 0.5% per Transaction*In the case of redemption (Partial for full) with in the first year, a fixed management feeof 2% will be levied on the average assets under management for the residual period.Residual Period =365 days- Actual number of days for which the investor participated in the respectivescheme.
  68. 68. 68Benchmark – CNX Nifty 50The CNX Nifty is a well diversified 50 stock index accounting for 22 sectors of theeconomy. It is used for a variety of purposes such as benchmarking fund portfolios, indexbased derivatives and index funds.CNX Nifty is owned and managed by India Index Services and Products Ltd. (IISL),which is a joint venture between NSE and CRISIL. IISL is Indias first specializedcompany focused upon the index as a core product. The CNX Nifty Index represents about 68.03% of the free float market capitalization ofthe stocks listed on NSE as on March 28, 2013. The total traded value for the last six months ending March 2013 of all index constituentsis approximately 50.23% of of the traded value of all stocks on the NSE. Impact cost of the CNX Nifty for a portfolio size of Rs.50 lakhs is 0.06% for the monthMarch 2013. CNX Nifty is professionally maintained and is ideal for derivatives trading.From June 26, 2009, CNX Nifty is computed based on free float methodology.CNX Nifty Index : April 2013Industry Percentage (%)Aluminum 2Automobiles - 2 & 3 wheelers 4Automobiles - 4 wheelers 6Banks 16Cement & Cement Products 8Cigarettes 2Computers - Software 6Construction 4Diversification 2Electrical Equipment 2Engineering 2
  69. 69. 69Finance - Housing 2Financial Institution 2Gas 2Mining 6Oil Exploration 4Paints 2Pharmaceuticals 10Power 8Refineries 4Steel & Steel Products 4Telecommunication 2CNX NIFTY 50 composition AluminiumAutomobiles - 2 & 3wheelersAutomobiles - 4wheelersBanksCement & CementProductsCigarettesComputers - SoftwareConstructionDiversificationElectrical EquipmentEngineeringFinance - HousingFinancial InstitutionGasMiningOil ExplorationPaintsPharmaceuticalsPowerRefineriesSteel & Steel ProductsTelecommunication
  70. 70. 70Chapter-5Interpretation and Analysis
  71. 71. 71Stocks Selection CriteriaIndustry AnalysisThe first step that I have taken into consideration is the macro level returns. Beforeselecting a particular stock in a portfolio one must look deep into the industry which thatparticular stock comes under.Individual Stocks AnalysisThe second important step is the analysis of Individual stocks wherein I have taken intoaccount the fundamentals of the Nifty 50 companies.My focus in this part of the analysis was not just on the stocks of a particular sector butrather it was also on the optimum diversification of my Portfolio so that in any marketconditions my Portfolio would give good returns only.Fundamentals of the shortlisted companiesThe third and the last step for stock selection is the fundamentals of the shortlisted stocksof major growing sectors.In fundamentals I have taken into consideration the following things :- Ownership Pattern Performance Chart Price Movement Business/Businesses of the CompanyIndustry AnalysisIndividual Stocks AnalysisFundamentals of theshortlisted companies
  72. 72. 72Industry Analysis The first and foremost thing that one needs to do before selecting any stock forinvestment purposes is to look for the growth of the particular industry that thestock comes under. In my study I have taken into account Nifty 50 companies. Nifty comprises of 22sectors at present. I have studied the basis and most considered sectors for my study. Some of themare FMCG, Banking, Auto, IT, Pharmaceutical etc which imposes serious impacton the index Nifty.Following is a graph showing the last 1 year returns of the most consideredsectoral indices.-30 -20 -10 0 10 20 30 40 50CNX FMCGCNX AUTOCNX BANKCNX ENERGYCNX FINANCECNX ITCNX MEDIACNX METALCNX PHARMACNX PSU BANKCNX REALTY1 Year Performance Comparison of Sector IndicesReturns(%)Returns(%)
  73. 73. 73Following is the Performance of various indices as of end Apr 2013(in %)Index 1 month 3 month 6 month 1 yearCNX Nifty 4.36 -1.73 5.53 13CNX IT Index -16.23 -10.77 -0.66 -0.62CNX Bank Index 10.56 -1.16 11.47 22.23CNX Realty 7.72 -18.16 3.03 6.42CNX INFRASTRUCTURE 9.94 -5.16 -2.27 2.82CNX ENERGY INDEX 5.08 -6.45 1.92 5.75CNX FMCG INDEX 9.75 10.16 15.78 38.52CNX MNC INDEX 14.22 4.94 1.31 11.56CNX PHARMA INDEX 10.03 10.36 15.58 27.05CNX PSE INDEX 6.16 -5.71 2.33 2.75CNX PSU BANK 7.89 -11.09 4.72 -0.76CNX SERVICE SECTOR 2.01 -2.53 7.87 14.33Interpretation The maximum growth can be seen in Media Sector but I cannot take thissector into consideration because there is no company in Nifty 50 which iscovered by this sector. The next best growth is seen in FMCG sector which will be my top mostpriority sector when it comes to stock selection. Pharmaceutical is another sector which performs well in the market. Finance and Banking are the other 2 sectors that are performing quite well inthe market. Information Technology is a sector which is giving negative returnsthroughout the year. According, it should be a part of portfolio because it isnegatively correlated with other sectors.Thus if market conditions wouldn’t be favorable and all the sectors wouldstart performing negatively then at least IT sector would save us.The reason behind Media, FMCG and Pharmaceuticals sector performing sowell is that all these three sectors are dealing in things which are either basicnecessities or without which a person cannot do things well.Thus, these sectors are bound to perform well no matter what the marketconditions are.
  74. 74. 74CNX FMCGStatisticsQTD YTD 1 Year 5 years SinceInceptionReturns (%) 0.97 0.97 34.74 20.94 17.141 Year 5 Years Since InceptionStd. Deviation 0.94 1.27 1.53Beta (Nifty) 0.54 0.50 0.69Correlation(Nifty)0.47 0.67 0.74CNX PHARMAStatisticsQTD YTD 1 Year 5 years SinceInceptionReturns (%) -1.36 -1.36 21.53 15.02 15.681 Year 5 Years Since InceptionStd. Deviation 0.71 1.20 1.28Beta (Nifty) 0.35 0.48 0.55Correlation(Nifty)0.41 0.68 0.68
  75. 75. 75CNX BANKStatisticsQTD YTD 1 Year 5 years SinceInceptionReturns (%) -8.92 -8.92 14.07 10.05 20.141 Year 5 Years Since InceptionStd. Deviation 1.22 2.22 2.06Beta (Nifty) 1.36 1.18 1.04Correlation(Nifty)0.91 0.90 0.82CNX FINANCEStatisticsQTD YTD 1 Year 5 years SinceInceptionReturns (%) -7.53 -7.53 16.92 8.87 18.311 Year 5 Years Since InceptionStd. Deviation 1.14 2.18 2.09Beta (Nifty) 1.28 1.19 1.13Correlation(Nifty)0.92 0.92 0.90
  76. 76. 76CNX ITStatisticsQTD YTD 1 Year 5 years SinceInceptionReturns (%) 19.82 19.82 11.91 13.07 28.161 Year 5 Years Since InceptionStd. Deviation 1.30 1.91 2.49Beta (Nifty) 0.68 0.84 1.03Correlation(Nifty)0.43 0.74 0.69CNX AUTOStatisticsQTD YTD 1 Year 5 years SinceInceptionReturns (%) -12.54 -12.54 3.44 17.30 16.871 Year 5 Years Since InceptionStd. Deviation 1.07 1.60 1.63Beta (Nifty) 0.97 0.76 0.81Correlation(Nifty)0.75 0.81 0.83
  77. 77. 77Individual Stocks AnalysisStock No.1 – ITC Ltd. It can be clearly seen in the Chart 1 that the Market Price of ITC is increasing oncontinuous basis. Chart 2 shows that the Market Capitalization is almost stable for last 5-6 years butits Net Profit and Net Sales are increasing on annual basis. From the FMCG sector I have shortlisted ITC because it is a fully diversifiedproduct portfolio, which reduces our investment risk. Although, it’s BETA is comparatively much more than the other FMCG sectorstocks but following 2 reasons makes it a good company to invest in:- It’s a cash rich company Its major revenue is from CIGARETTES whose demand is always there.Moreover, there is no cost involved for promotional purposes.
  78. 78. 78 Another most innovative initiative by ITC is its E-chaupal concept. Last but not the least, it is a fully diversified product portfolio in different sectorslike hotels, FMCG, Cigarettes, Stationary etc.Thus ITC is the best buy for my portfolio.Stock No.2 – Sun Pharmaceuticals Industries Ltd.
  79. 79. 79 It can be clearly seen in the Chart 1 that the Market Price of Sun Pharma isincreasing on continuous basis. Chart 2 shows that the Market Capitalization is almost stable since 2009 but thesales and profits have reduced. The decline in net profit has never created animpact on the overall performance of the company. The last Chart shows the shareholding pattern of different investment houses inthe company. The maximum stake is held by the promoters which is a bullishtrend for the company.General public is having a very less stake in comparison to the promoters’ stakewhich seems to be a very supportive point for us. Sun Pharmaceuticals is the low BETA stock in the pharma sector and it has itsorders books fully filled with orders. It has a very strong research team which provides them with innovative and goodpatents for its products. Ranbaxy is a highly volatile stock due to its high BETA among Sun Pharma,Cipla and itself.Thus Sun Pharmaceuticals Industries a good stock to invest in.Stock No.3 – CIPLA Ltd.
  80. 80. 80 It can be clearly seen in the Chart 1 that the Market Price of CIPLA Ltd. isincreasing on continuous basis. Chart 2 shows that the Market Capitalization of CIPLA Ltd. is the same since2009.The Net Profit and Sales of CIPLA Ltd. is increasing year on year. CIPLA Ltd. sells very expensive Cancer and Heart disease medicines and whichstill has huge demand in the market. Thus its earnings due to these two variantsare the best. It gives a very good dividend per share and is a well known and trusted brand inthe market. Ranbaxy is a highly volatile stock due to its high BETA among Sun Pharma,Cipla and itself.Thus CIPLA another good stock to invest in Pharmaceutical sector.Stock No.4 – STATE BANK OF INDIA
  81. 81. 81 In Chart 1 it can be clearly seen that the market price of SBI is not increasing butrather its fluctuating. Thus it is a good bet earning huge profits.This is going to be an investment which will help the investors earn a lot fromtheir portfolio. Chart 2 shows a huge jump in the net profits of SBI from March 2011 to March2012. This shows that this company has a huge potential to come out with hugeprofits even in poor conditions. The last Chart shows the shareholding pattern of different investment houses inthe company. The maximum stake is held by the promoters which is a bullishtrend for the company.General public is having a very less stake in comparison to the promoters’ stakewhich seems to be a very supportive point for our portfolio. SBI is a leading public sector bank, having a very good market. Though it has gota good weight on Nifty index but still it is on the expansion mode. Another reason is that most of the Government financial transactions are donethrough SBI only, thus it plays a crucial role in the decision making for all theother banks.
  82. 82. 82Stock No.5 – HDFC Bank Ltd. It can be clearly seen in the Chart 1 that the Market Price of HDFC Bank isincreasing on continuous basis. Chart 2 shows that the Market Capitalization of HDFC Bank Ltd. is the samesince March 2009. There is a consistent increase in the Net Sales and Net Profit ofthe company.There was a huge rise followed by a huge fall during March 2011-12. Since thenthe company is earning stable returns. Like SBI which is a leading bank in Public Sector, HDFC Bank is a leading bankin Private Sector. There is no doubt that HDFC Bank already has a good weight on the index, butstill much more momentum is expected upside due to its aggressive operationalwork and efficiency of the service.
  83. 83. 83 Axis Bank is also a growing bank in the private sector but I have not consideredthe same due to its higher BETA. My portfolio is more towards a balance growthso I am selecting a bit defensive stock rather than being more aggressive byselecting Axis Bank.Stock No.6 – Tata Consultancy Services Ltd. It can be clearly seen in the Chart 1 that the Market Price of TCS is increasing oncontinuous basis. Chart 2 shows that a very high percentage of shareholding of TCS is with thepromoters of the company.The maximum stake being with the promoters shows a bullish trend for thecompany.General public is having a very less stake in comparison to the promoters’ stakewhich seems to be a very supportive point for our portfolio.
  84. 84. 84 TCS has the lowest BETA in comparison to other Nifty 50 stocks of IT sector andit also has less weight on Nifty index in comparison to Infosys. TCS has major business operations in India only whereas Infosys has its majorbusiness in exports. Thus TCS is a comparatively safer bet than Infosys. From returns perspective Infosys has grown to its maximum level and now thereturns are less likely to be expected in near future. HCL technologies is another giant in IT sector but it has a very high BETA incomparison to other IT sector stocksThus TCS is a better investment option in comparison to HCL and Infosys.Stock No.7 – Mahindra & Mahindra Ltd.
  85. 85. 85 It can be clearly seen in Chart 1 that the Market Price of Mahindra & Mahindrawas consistent till July 2012 but post that period the price has increasedcontinuously month after month. Chart 2 shows that the Market Capitalization is stable since March 2009. The NetProfit and Net Sales has been consistently increasing year on year. Automobile sector always remain as an attractive point of investment for thosewho want aggressive return on their portfolio. Beta of M&M is less in its industry in comparison to other stocks. No doubt itsweight in Nifty is already high but still if we talk about the marketing strategy andproduct preference, it is much better than its competitors. Most of the Indian market stays in rural areas and M&M has a good hold in therural sector, which is a positive point for this company. In order to compete with the Sedan and SUV segment, M&M has launchedQuanto and XUV500. M&M has one of the best technologies for SUVs segment and Maruti Suzuki hasa good range of Sedan. It is good for M&M because the taste of Indian customersis gradually shifting from Sedans to SUVs due to more comfort and space that isinvolved in SUVs.Thus from competition as well as risk point of view it is a worth investing stock.Stock No.8 – Bajaj Auto Ltd.
  86. 86. 86 It can be clearly seen in the Chart 1 that the Market Price of Bajaj Auto isincreasing on continuous basis. Chart 2 shows that although Net Sales are more or less the same, but Net Profithas increased due to its innovation and marketing strategies. Bajaj Auto has its major competition with Hero Motor Corp. BETA of Bajaj Autois less than that of Hero Motor Corp. but the weight of Bajaj Auto iscomparatively higher in Nifty index. Hero Motor Corp. has good management leaders who are leading the companyand the product diversification is comparatively good than other 2 and 3 wheelerautomobiles.Stock No.9 – GAIL (India) Ltd.
  87. 87. 87 It can be clearly seen in Chart 1 that GAIL’s Market Price has continuouslyreduced during the last 1 year. Chart 2 shows that the sales are increasing year on year but still the net profits arefalling down. BETA and weight of GAIL in Nifty index is comparatively less and in the nearfuture it is expected that GAIL will outperform in the industry like CAIRN andONGC are currently doing. ONGC and CAIRN are facing tough competition from GAIL due to an increase inits efficiency of operational process. GAIL is on the growth stage while ONGC and CAIRN had already grown andhad given sufficient returns to their investors.Thus GAIL seems to be a good buy for my fund.Stock No.10 – Tata Steel Ltd.
  88. 88. 88 It can be clearly seen in Chart 1 that the Market Price of Tata Steel Ltd. iscontinuously falling. And now is a good time to invest in this stock. Chart 2 shows that the Market Capitalization of Tata Steel Ltd. is stable but theNet Sales and Net Profit are highly correlated. Tata Steel is a leading company from investment perspective because it has awide range of customers in the industry. It has a very big client base (corporate client + industry client) that makes a goodhold of this company in the steel market. The management of this company is very sound and it is a leader in Steel marketfor a very long time.Thus, strong management, good client base and market leader kind of qualitiesmakes this stock a good buy for my portfolio.Stock No.11 – Larsen & Turbo Ltd.
  89. 89. 89 It can be clearly seen in Chart 1 that the Market Price of Larsen & Turbo fell forsome months but now for last 4-5 months it is giving good returns. Chart 2 shows that the Market Capitalization of Larsen & Turbo is stable sinceMarch 2009. The Net Profit and Net Sales are highly correlated. In terms of returns it is a stable company and also it’s a large cap company. The management and order books of Larsen & Turbo are always filled and theyare duly met. It is into many diversified businesses like motors, mutual funds and finance etc.Thus there is huge potential in this company and hence it is being considered inportfolio for investment purposes.Stock No.12 – Coal India Ltd.
  90. 90. 90 It can be clearly seen in the Chart 1 that the prices of Coal India has been fallingfor some months and now it’s is good move to buy this stock. Chart 2 shows the Net Profit and Net Sales where we can see that the Net Salesare stable throughout the year but the Net Profit is fluctuating. This is becausecoal is demanded at a particular period during a month. Chart 3 shows the shareholding pattern where the maximum hold is with thepromoters.The maximum stake with the promoters is the strength of a company and also isbullish for the company.Coal India came up with its IPO which had an all time high fund requirementfrom general public and still the share were oversubscribed that time. It is India’s largest coal mining government company Coal India is one of the most trusted companies in terms of investment.Thus it will be a good stock for my portfolio.
  91. 91. 91Chapter-6Findings and Recommendations
  92. 92. 92Findings of the studyPortfolio classificationMinimum Investment Amount – Rs 25,00,000Benchmark – CNX Nifty 50Fund Manager – Mehak Mehta10%12%5%7%15%13%11%4%7%2%9%5%Sectoral AllocationCigarettesPharmaceuticalsPSU BanksPrivateBanksComputers - SoftwareAutomobiles 4 wheelersAutomobiles 2 & 3 wheelersGasSteel & Steel ProductsEngineeringMiningCash
  93. 93. 93Portfolio BETAValiant investors trade aggressively by investing in high beta (high risk) stocks like realty,metals etc. But the cautious ones should stick to quality stocks which are fundamentallystrong.Cautious or long term investors however are cautioned to stay invested in good qualitysectors and selectively book profits.This is the reason that I have suggested a Balanced Growth Fund to Angel Broking.It is a fund for cautious investors who don’t want to play aggressively rather who want toplay safe with quality stocks.Industry Security Name BETACigarettes ITC Ltd. 0.65Pharmaceuticals Sun Pharmaceuticals 0.49Pharmaceuticals CIPLA Ltd. 0.54PSU Banks State Bank of India 1.49Private Banks HDFC Bank Ltd. 1Computers – Software TCS Ltd. 0.36Automobiles – 4 wheelers Mahindra & Mahindra Ltd. 0.89Automobiles – 2 & 3 wheelers Bajaj Auto Ltd. 0.61Gas GAIL (India) Ltd. 0.69Steel & Steel Products Tata Steel Ltd. 1.4Engineering Larsen & Turbo Ltd. 1.56Mining Coal India Ltd. 0.54Portfolio BETA = Average BETA of individual stocks= 10.22/12= 0.8516My portfolio’s BETA is = 0.8516It means that for every 100% change in CNX Nifty, there will be around85% change in the fund that I have created.
  94. 94. 94Portfolio CAPMNo matter how much we diversify our investments, its impossible to get rid of all the risk.As investors, we deserve a rate of return that compensates us for taking on risk.The capital asset pricing model (CAPM) helps us to calculate investment risk and whatreturn on investment we should expect.Here is the formula:Risk free rate - Generally, return on government bonds, interest rates on fixed depositsfor one year, 365-day T-Bills, and so on serve as a good proxy for the risk free rateprevailing in the market.For the purpose of computation in the present study, risk-free rate was used as one of theinputs to the capital asset pricing formula. The one-year term deposit rate of the StateBank of India (SBI) was used as a proxy for the risk-free rate.The term deposit rate of State Bank of India is 7.50-10%. While the domestic termdeposit rate of SBI for 1 year to less than 2 years in 8.75%.11Beta of the portfolio - According to CAPM, beta is the only relevant measure of a stocksrisk.It measures a stocks relativevolatility - that is, it shows how much the price of aparticular stock jumps up and down compared with how much the stock market as awhole jumps up and down.If a share price moves exactly in line with the market, then the stocks beta is 1.Portfolio BETA = Average BETA of individual stocks= 10.22/12= 0.851611,16,384,385
  95. 95. 95My portfolio BETA is = 0.8516Expected Market Return - The market rate of return is the return that an investor expectsfrom an investment in a market portfolio.The annualized rate of return of the market over the years can be calculated in severalways. The following procedure was used in this study.The daily closing price of CNX NIFTY index from 1st May 2012 to 30th April 2013 wastaken and the logarithmic scale was used to get the daily rate of return.The average of this value provides the average daily rate of return; multiplying this with365 yields the average yearly rate of return.Average daily return – 0.00049959112The annual average rate of return is – 0.000499591 * 356= 0.18235= 18.23% Risk free rate = 8.75% Portfolio Beta = 0.8516 Expected Market Return = 18.23%Portfolio CAPM = 8.75 + 0.8516 (18.23 - 8.75)= 8.75 + 0.8516*9.48= 8.75 + 8.073168= 16.8231 %My Portfolio’s CAPM = 16.8231%This shows that by investing in the portfolio that I have created, an investorcan expect a return of 16.8231%.This is a really good return in comparison to the normal return of 15% (atthe most) that one can expect from Equity Market.12
  96. 96. 96Portfolio Standard DeviationThe Standard Deviation is a measure of how spread out the prices or returns of asset areon average. It is the most widely used risk indicator in the field of investing and finance.Standard Deviation is commonly used to measure the confidence in statisticalconclusions regarding certain equity instrument or portfolio of equities.A large standard deviation usually indicates that the data points are far from the mean anda small standard deviation indicates that they are clustered closely around the mean.Industry Security Name Standard DeviationCigarettes ITC Ltd. 313Pharmaceuticals Sun Pharmaceuticals Ltd 2.27Pharmaceuticals CIPLA Ltd. 1.14PSU Banks State Bank of India 1.78Private Banks HDFC Bank Ltd. 1.08Computers – Software TCS Ltd. 1.79Automobiles 4 wheelers Mahindra & Mahindra Ltd. 2.53Automobiles 2 & 3 wheelers Bajaj Auto Ltd. 1.62Gas GAIL (India) Ltd. 2.64Steel & Steel Products Tata Steel Ltd. 1.71Engineering Larsen & Tourbo Ltd. 1.5Mining Coal India Ltd. 0.54Portfolio Standard Deviation = Average S.D. of all the securities= 22.99/12= 1.91583My Portfolio’s Standard Deviation is = 1.91583Thus the Standard Deviation of my portfolio is 1.91583 which seems to be agood number.13
  97. 97. 97Portfolio Sharpe RatioThe Sharpe ratio tells us whether a portfolios returns are due to smart investmentdecisions or a result of excess risk.This measurement is very useful because although one portfolio or fund can reap higherreturns than its peers, it is only a good investment if those higher returns do not comewith too much additional risk.The greater a portfolios Sharpe ratio, the better its risk-adjusted performance has been. Anegative Sharpe ratio indicates that a risk-less asset would perform better than thesecurity being analyzed.Expected portfolio return = 16.8231%Risk free rate = 8.75%Portfolio Standard Deviation = 1.91583Portfolio Sharpe Ratio = (16.8231-8.75)/1.91583= 8.0731/1.91583= 4.21389My Portfolio’s Sharpe Ratio = 4.21389Thus the value of my portfolio is 4.21389 and it shows the excess returnsthat the investors can expect for the extra volatility they are exposed to byholding a riskier asset.
  98. 98. 98Angel Harmonized Ascend Fund“A new Portfolio Product for Angel Broking”Benchmark – CNX Nifty 50Minimum Investment Amount – Rs.25,00,000Fund Manager – Mehak MehtaPortfolio Beta 0.8516Portfolio CAPM 16.8231%Portfolio Standard Deviation 1.91583Portfolio Sharpe Ratio 4.21389
  99. 99. 99Recommendations of the StudyFollowing are some of the recommendations of the study that is being carried on theexisting portfolio products of Angel Broking and on the basis of technical andfundamental analysis giving a new product to Angel Broking, Ludhiana:- Angel Broking can check out the performance and returns for 2- 3 years of theportfolio that I have created and only after that I should of using this portfolio. Angel Harmonized Ascend Fund is a product for all those investors who wantgood returns but who are afraid of playing aggressively. Angel Broking must look for the new product that I have suggested because myfocus was basically to judge the psyche of the people living in Ludhiana. The maximum population of Ludhiana is into handling of businesses only, eitherself made business or family owned business. People in Ludhiana have a lot of money that they want to invest in stock marketbut the only problem that they face is lack of awareness about stock market andalso lack of time. Ludhiana Branch of Angel Broking should focus more on its portfolio productsinstead of the simple demat account opening because of the psyche of thepopulation living in and near Ludhiana. Portfolio Management Services according to me are more for such areas wherepeople have money but they either don’t have awareness or they don’t have time.
  100. 100. 100Glossary Benchmark The performance of a predetermined set of securities, for comparisonpurposes. Such sets may be based on published indexes or may be customized tosuit an investment strategy. Beta equation (Stocks)The beta of a stock is determined as follows:[(n) (sum of (xy)) ]-[(sum of x) (sum of y)][(n) (sum of (xx)) ]-[(sum of x) (sum of x)]where: n = # of observations (24-60 months)x = rate of return for the S&P 500 Indexy = rate of return for the stock Capital asset pricing model (CAPM) An economic theory that describes therelationship between risk andexpected return, and serves as a model for the pricing of risky securities. TheCAPM asserts that the only risk that is priced by rational investors is systematicrisk, because that risk cannot be eliminated by diversification.The CAPM says that the expected return of a security or a portfolio is equal to therate on a risk-free security plus a risk premium. Portfolio A collection of investments, real and/or financial. Return The change in the value of a portfolio over an evaluation period,including any distributions madefrom the portfolio during that period. Return on investment (ROI) generally, book income as a proportion of net bookvalue. Sharpe ratio A measure of a portfolios excess return relative to the totalvariability of the portfolio. Standard deviation the square root of the variance. A measure of dispersion of aset of data from their mean.
  101. 101. 101Bibliography/ References