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A STUDY OF CUNSTRUCTION OF OPTIMUM PORTFOLIO AT
VISHAL INVESTMENT, BANGALORE
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.
Rachel Campbell et.al (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
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
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
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.
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.
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.
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.
From Company’s finance manager.
Data collected from various books and sites, Company’s journals, magazines and NSE
website: www.nseindia.com, www.marketwatch.com, www.investopedia.com etc.
PLAN OF ANALYSIS
Sharpe’s Optimal Portfolio
2. Profile of organization
3. Research Design
4. Data Analysis and Interpretation
5. Summary of findings, conclusion and suggestions
Statman (2000), Kreander et al.(s2005), asset management working group (2005) and
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.
“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
UNDER THE GUIDANCE OF
Internal guide: External guide.
Prof. Shreelatha Mr. Satya
Assistant Professor Branch Manager
Surana College Vishal Investment
CENTRE FOR POST GRADUATE STUDIES
#17 KENGERI SATELLITE TOWN, BANGALORE – 560060