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  • 1. A STUDY OF CUNSTRUCTION OF OPTIMUM PORTFOLIO AT VISHAL INVESTMENT, BANGALORE INTRODUCTION Portfolio is a combination of securities such as stocks, bonds and money market instruments. The process of blending together the broad assets classes so as to obtain optimum return with minimum risk is called portfolio Construction. Diversification of investment helps to spread risk over many assets. A diversification of securities gives the assurance of obtaining the anticipated return on the portfolio. In a diversified portfolio, some securities may not perform as expected but others may exceed the expectation and making the actual return of the portfolio reasonably close to the anticipated one. LITERATURE REVIEW Rachel Campbell (2001), says about optimal portfolio selection is that a portfolio selections a model which allocates financial assets by maximizing expected return subject to the constraint that the expected maximum loss should meet the Value-at-Risk limits set by the risk manager. Connor (2011), in his study compared the financial performance of portfolio of 90 high sustainability companies (who can’t adopt ESG value without sacrificing shareholder wealth) for an 18 year period till 2010 end. He observed that an investment of $1 in 1993 in the former portfolio would grow to $22.60 by end of 2010, whereas the same would grow to only $15.4 in latter case. This finding suggests that companies can adopt ESG value without sacrificing shareholder wealth. S. Narayan Rao – evaluate performance of Indian mutual fund in a bear market through relative performance index, risk – return analysis, Treynor’s ratio, Sharpe’s ratio & measure, Jensen’s measure.
  • 2. Statman (2000), Kreander et al. (2005), Asset management working group (2006), and Connor (2011) showed superior performance by ethical portfolios while Renneboog et al (2007a) and Norup and Gottlieb (2011) showed that ethical funds/portfolios underperformance in comparison to the conventional fund/benchmarks. Again, Bauer et al (2009) and (2007) fond no significant difference in their performance as compared to bench marks. Zakri Y. Bello (2005) -matched a sample of socially responsible stock mutual fund matched to randomly select conventional fund of similar net assets to investigate difference in characteristic of asset held, degree of portfolio diversification on investment performance. NEED FOR THE STUDY As I have observe after entering the organization that investors who are investing through this company they don’t have efficient knowledge of investment strategies, also investors are risk averse, so for providing them better one to invest and managing money effectively it is very necessary to study of portfolio management. OBJECTIVES 1. To construct an optimal portfolio in different market scenario. 2. Increasing the performance by constructing optimum portfolio. 3. To construct an optimal portfolio and analyze the risk and return, which notifies the company to meet the future needs of capital. 4. To guide investors to find out the company that gives the maximum return with minimum risk.
  • 3. HYPOTHESIS H0 – The return on portfolio can’t increase by constructing optimal portfolio. H1 – The return on portfolio can increase by constructing optimal portfolio. SCOPE OF THE STUDY Selections of companies are restricted to nifty index and Nifty Junior Index only. The companies are chosen and analyzed based on their performance in the past three years. No other factor other than the share price movements, index movement, rate of return on government securities and beta values for the securities for the past three years are taken for analysis. METHODOLOGY In this study secondary data source is used. This is a research study on the construction of portfolio of stocks. In this study secondary data source is used. This project also consider the movement of share price, expected returns, standard deviation and beta values. The stock price movement and beta values for the past 3 years are collected for analysis. Descriptive/quantitative methodology will be used for analyzing the data. DATA COLLECTION PRIMARY DATA:  From Company’s finance manager. SECONDARY DATA:  Data collected from various books and sites, Company’s journals, magazines and NSE website:,, etc.
  • 4. PLAN OF ANALYSIS  Sharpe’s Optimal Portfolio  Beta Coefficient  Cut-off point  Return CHAPTER SCHEME 1. Introduction 2. Profile of organization 3. Research Design 4. Data Analysis and Interpretation 5. Summary of findings, conclusion and suggestions I. Bibliography II. Appendices BIBLIOGRAPHY  Statman (2000), Kreander et al.(s2005), asset management working group (2005) and Connor (2001)  Taylor,J.W. & Buizza, R.(2006). Density forecasting of weather derivatives pricing, International Journal of Forecasting 22(1), 29-42,  Kroner, K. F. & Ng, U.K. (1998). Modelling asymmetric movement of asset prices, review of financial studies.  Business 
  • 5. “A STUDY OF CUNSTRUCTION OF OPTIMUM PORTFOLIO AT VISHAL INVESTMENT, BANGALORE” Dissertation submitted in partial fulfilment of requirement for the award of the Degree of MASTER OF BUSINESS ADMINISTRATION Of BANGALORE UNIVERSITY By PARUL GUPTA 12KXCMA034 UNDER THE GUIDANCE OF Internal guide: External guide. Prof. Shreelatha Mr. Satya Assistant Professor Branch Manager Surana College Vishal Investment SURANA COLLEGE CENTRE FOR POST GRADUATE STUDIES #17 KENGERI SATELLITE TOWN, BANGALORE – 560060 Bangalore University 2013-2014