A Project on creating an Optimal Portfolio on BSE Sensex using Sharpe's Index Model at Anand Rathi Securities

1. Introduction
Investment is the employment of funds on assets with the aim of earning income or
capital appreciation. Every investment involves a return and risk. The possibility of variation
in the actual return is known as investment risk. To make wise decisions in investment, there
is a need for knowledge on security analysis and portfolio management. A portfolio is a
combination of securities. Any portfolio constructed, either by an individual investor or a
fund manager is expected to meet the investor’s goals.
Any rational investor, before investing his or her investible wealth in the stocks,
analyses the risk associated with the particular stock. The actual return he receives from a
stock may vary from his expected return and the risk is expressed in terms of variability of
return. He also has to decide about his risk tolerance level and the nature of assets to be
bought whether they are stocks or bonds or real estates.
Individual securities have risk return characteristics of their own. Portfolio, which is
combination of securities, may or may not take on the aggregate characteristic of their
individual parts. Portfolio analysis considers the determination of risk and return in holding
various blends of individual securities. So in order to have optimum returns with minimum
risk we need to have a proper blend of securities, i.e. the best portfolio. So in order to form
the best portfolio we need to have the security analysis with available technique. And at last
the best portfolio will help the investors to earn maximum returns with minimum risk. It is,
therefore, important to construct a portfolio using either of the two popular approaches,
namely, traditional and modern.
In the traditional approach, investor’s needs in terms of income and capital
appreciation are evaluated and appropriate securities are selected to meet the needs of the
investor. In the modern approach, Markowitz model is used in selection of securities based on
to the risk and return analysis. Markowitz laid foundation for quantifying risk and his
contribution is popularly known as ‘Modern Portfolio Theory’. He has provided analytical
tools for analysis and selection of optimal portfolio. He won Nobel Prize for this contribution
to portfolio management in 1990. But, William Sharpe extended the work done by
Markowitz. He considered market index while analyzing the portfolio. He simplified the
amount and type of input data required to perform portfolio analysis. He made the numerous
and complex computations easy which were essential to attain the optimal portfolio. He
developed the Single Index Model to make these computations easy and construct an optimal
portfolio.
ANAND RATHI SECURITIES, BELAGAVI Page 1

1.1. Background of the Study
Portfolio management involves deciding what assets to include in the portfolio, given
the goals of the portfolio owner and changing economic conditions. Selection involves
deciding what assets to purchase, how many to purchase, when to purchase them, and what
assets to divest. These decisions always involve some sort of performance measurement,
most typically expected return on the portfolio, and the risk associated with this return (i.e.
the standard deviation of the return). Typically the expected return from portfolios comprised
of different asset bundles is compared.
A rational investor aims at attaining maximum return with minimum risk. The
Bombay Stock Exchange Ltd (BSE) that was established in 1875 is the Asia’s First Stock
Exchange and one of the leading exchanges in India. Over the past 137 years, the BSE has
facilitated the growth of the Indian corporate sector by providing it an efficient capital-raising
platform. It provides an efficient and transparent market for trading in equity, debt
instruments, derivatives, mutual funds. More than 5000 companies are listed on BSE making
it world's No. 1 exchange in terms of listed member companies. BSE’s popular equity index -
the S&P BSE SENSEX - is India's most widely tracked stock market benchmark index.
Indian Stock Market
Indian Stock Markets are one of the oldest in Asia. Its history dates back to nearly 200
years ago. The earliest records of security dealings in India are meagre and obscure. The East
India Company was the dominant institution in those days and business in its loan securities
used to be transacted towards the close of the eighteenth century.
By 1830's business on corporate stocks and shares in Bank and Cotton presses took
place in Bombay. Though the trading list was broader in 1839, there were only half a dozen
brokers recognized by banks and merchants during 1840 and 1850.
The 1850's witnessed a rapid development of commercial enterprise and brokerage
business attracted many men into the field and by 1860 the number of brokers increased into
60. In 1860-61 the American Civil War broke out and cotton supply from United States of
Europe was stopped; thus, the 'Share Mania' in India begun. The number of brokers increased
to about 200 to 250. However, at the end of the American Civil War, in 1865, a disastrous

slump began (for example, Bank of Bombay Share which had touched Rs 2850 could only be
sold at Rs. 87).
At the end of the American Civil War, the brokers who thrived out of Civil War in
1874, found a place in a street (now appropriately called as Dallal Street) where they would
conveniently assemble and transact business. In 1887, they formally established in Bombay,
the "Native Share and Stock Brokers' Association" (which is alternatively known as “The
Stock Exchange "). In 1895, the Stock Exchange acquired a premise in the same street and it
was inaugurated in 1899. Thus, the Stock Exchange at Bombay was consolidated.
Development in Indian stock Market:
Many steps have been taken in recent years to reform the secondary market so that it may
function effectively, steps are also being taken to broaden the market and make it function
with greater degree of transparency and in the best interest of investors.
1. Regulation of intermediaries: to improve the functioning of intermediaries in the
capital market, strict control is being exercised on them By SEBI.
2. The intermediaries such as Merchant Bankers, Underwriters, Brokers, Sub-Brokers,
to the issue must be registered with the SEBI.
3. Capital Adequacy norms have been fixed the Brokers are expected to maintain a
minimum capital of Rs.5 Lakhs in major exchanges and Rs.2 Lakhs in minor
exchanges again they have to keep a minimum net worth of 8% of the annual
turnover.
4. Change in Management Structure: the SEBI now require that 50% of the Directors
must be non Broker Directors or Govt. Representative.
5. Transparency of accounting practices: brokers are required to show the prices,
brokerage services, tax etc. separately in the contact notes and their accounts.
6. Prevention of price rigging: greater power has been given to SEBI to curb price
rigging. All efforts are being taken to protect the interest of the genuine investors.
7. Encouragement of market making: market making has been made compulsory and
OTCEI at least for a period of 18 months from the date of opening of the offer by the
sponsor or designated member.

Functions of stock Exchange
 It builds the real shareholder’s democracy
 To make perfect in social and ethical sense
 To protect the interest of investing public
 To ensure the flow of savings
 To regulate and provide reliable information
 To make simple and fair process of exchanging the stock
 It indirectly gives employment
 It serves as an economic barometer
• Trading Pattern of the Indian Stock Market
Trading in Indian stock exchanges is limited to listed securities of public limited
companies. They are broadly divided into two categories, namely, specified securities
(forward list) and non-specified securities (cash list). Equity shares of dividend paying,
growth-oriented companies with a paid-up capital of at least Rs. 1 Crore and a market
capitalization of at least Rs. 3 Crore and having more than 20,000 shareholders are, normally,
put in the specified group and the balance in non-specified group.
Two types of transactions can be carried out on the Indian stock market:
(a) Spot delivery transactions (Intraday)
For delivery and payment within the time or on the date stipulated when entering into
the contract which shall not be more than 1 day following the date of the contract the
transaction will have to be squared off on that day itself and the payment is to be done
(b) Forward transactions (Delivery)
In this type of transaction delivery and payment can be extended by further period of
T + 2 Days each so that the overall period does not exceed 2 days from the date of the
contract. The latter is permitted only in the case of specified shares. The brokers who carry
out the transaction charge a commission of 0.5% of the total contract value which are usually
included in the contract directly.

A member broker in an Indian stock exchange can act as an agent, buy and sell
securities for his clients on a commission basis and also can act as a trader or dealer as a
principal, buy and sell securities on his own account and risk, in contrast with the practice
prevailing on New York and London Stock Exchanges, where a member can act as a jobber
or a broker only.
The nature of trading on Indian Stock Exchanges are that of age old conventional
style of face-to-face trading with bids and offers being made by open outcry. However, there
is a great amount of effort to modernize the Indian stock exchanges in the very recent times.
• Bombay Stock Exchange (BSE)
The Stock Exchange, Mumbai, popularly known as "BSE" was established in 1875 as "The
Native Share and Stock Brokers Association". It is the oldest one in Asia, even older than the
Tokyo Stock Exchange, which was established in 1887. It is a voluntary non- profit making
Association of Persons (AOP) and is currently engaged in the process of converting itself into
demutualised and corporate entity. It has evolved over the years into its present status as the
premier Stock Exchange in the country. It is the first Stock Exchange in the Country to have
obtained permanent recognition in 1956 from the Govt. of India under the Securities
Contracts (Regulation) Act, 1956.
The Exchange, while providing an efficient and transparent market for trading in
securities, debt and derivatives upholds the interests of the investors and ensures reprisal of
their grievances whether against the companies or its own member-brokers. It also strives to
educate and enlighten the investors by conducting investor education programmers and
making available to them necessary informative inputs. A Governing Board having 20
directors is the apex body, which decides the policies and regulates the affairs of the
Exchange. The Governing Board consists of 9 elected directors, who are from the broking
community (one third of them retire ever year by rotation), three SEBI nominees, six public
representatives and an Executive Director & Chief Executive Officer and a Chief Operating
Officer.
The Executive Director as the Chief Executive Officer is responsible for the day- to-
day administration of the Exchange and he is assisted by the Chief Operating Officer and
other Heads of Departments. The Exchange has inserted new Rule No.126 A in its Rules,
Bye-laws & Regulations pertaining to constitution of the Executive Committee of the
Exchange. Accordingly, an Executive Committee, consisting of three elected directors, three

SEBI nominees or public representatives, Executive Director & CEO and Chief Operating
Officer has been constituted. The Committee considers judicial & quasi matters in which the
Governing Board has powers as an Appellate Authority, matters regarding annulment of
transactions, admission, continuance and suspension of member- brokers, declaration of a
member-broker as defaulter, norms, procedures and other matters relating to arbitration, fees,
deposits, margins and other monies payable by the member-brokers to the Exchange, etc
• National Stock Exchange (NSE)
With the liberalization of the Indian economy, it was found inevitable to lift the
Indian stock market trading system on par with the international standards. On the basis of
the recommendations of high powered Pherwani Committee, the National Stock Exchange
was incorporated in 1992 by Industrial Development Bank of India, Industrial Credit and
Investment Corporation of India, Industrial Finance Corporation of India, all Insurance
Corporations, selected commercial banks and others.
Trading at NSE can be classified under two broad categories:
(a) Wholesale debt market and Capital market.
Wholesale debt market operations are similar to money market operations -
institutions and corporate bodies enter into high value transactions in financial instruments
such as government securities, treasury bills, public sector unit bonds, commercial paper,
certificate of deposit, etc.
There are two kinds of players in NSE:
(a) Trading members and
(b) Participants.
Recognized members of NSE are called trading members who trade on behalf of themselves
and their clients. Participants include trading members and large players like banks who take
direct settlement responsibility.
Trading at NSE takes place through a fully automated screen-based trading mechanism which
adopts the principle of an order-driven market. Trading members can stay at their offices and
execute the trading, since they are linked through a communication network. The prices at
which the buyer and seller are willing to transact will appear on the screen. When the prices

match the transaction will be completed and a confirmation slip will be printed at the office
of the trading member.
Approaches in Portfolio Construction
Commonly, there are two approaches in the construction of the portfolio of securities i.e
a) Traditional Approach
In the traditional approach investor’s needs in terms of income and capital
appreciation are evaluated and appropriate securities are selected to meet the needs of
the investors. The common practice in the traditional approach is to evaluate the entire
financial plan of the individual.
Steps in Traditional Approach
b) Modern Approach
In the modern approach, portfolios are constructed to maximise the expected return
for a given level of risk. It views portfolio construction in terms of the expected return
and the risk associated with obtaining the expected return. The modern approach
includes Markowitz model which gives more attention to the process of selecting
Analysis of Constraints
Determination of Objectives
Selection of Protfolio
Assessment of risk and return
Diversification
BondBond and Common stock Common stock

portfolio. The stocks are not selected on the basis of need for income or appreciation.
But the selection is made based on the risk and return analysis. Return includes the
market return and dividend
There are various ways to construct an optimal portfolio. But the most popular once are
1. Markowitz Model
The optimal portfolio concept falls under the modern portfolio theory. The theory
assumes that investors fanatically try to minimize risk while striving for the highest return
possible. The theory states that investors will act rationally, always making decisions aimed
at maximizing their return for their acceptable level of risk. The optimal portfolio was used in
1952 by Harry Markowitz, and it shows us that it is possible for different portfolios to have
varying levels of risk and return. Each investor must decide how much risk they can handle
and then allocate or diversify their portfolio according to this decision.
The chart below illustrates how the optimal portfolio works. The optimal – risk portfolio is
usually determined to be somewhere in the middle of the curve because as you go higher up
the curve, you take on proportionately more risk for a lower incremental return. On the other
end, low risk / low return portfolios are pointless because you can achieve a similar return by
investing in risk – free assets, like government securities
The investor can choose how much volatility the investor is ready to bear in his portfolio
by picking any other point that that falls on the efficient frontier. This will give the investor
the maximum return for the amount of risk he wishes to accept. Optimizing the portfolio is
not something that can be calculated in your head. There are computer programs that are

dedicated to determining optimal portfolios by estimating hundreds (and sometimes
thousands) of different expected returns for each given amount of risk.
2. Sharpe Index Model
Sharpe’s performance index gives a single value to be used for the performance
ranking of various funds or portfolios. Sharpe index measures the premium of portfolio
relative to the total amount of risk in the portfolio. This risk premium is the difference
between the portfolio’s average rate of return and the riskless rate of return. The standard
deviation of the portfolio indicates the risk. The index assigns the highest values to assets that
have best adjusted average rate of return.
Sharpe’s Model proposes that the relationship between each pair of securities can indirectly
be measured by comparing each security to a common factor ‘market performance index’ that
is shared amongst all the securities. This helps in reducing the burden of large input
requirements and difficult calculations required in Markowitz’s mean- variance approach.
While Markowitz Model requires n(n−1)/ 2 data inputs, the Sharpe’s Model requires only
(3n+2) data inputs, namely, the estimates of returns for each security, estimates for expected
return on market index and estimates of variance of return. This forms the
Sharpe Index Formula:
Optimal Portfolio Construction
A theory on how risk-averse investors can construct portfolios to optimize or maximize
expected return based on a given level of market risk, emphasizing that risk is an inherent
part of higher reward. Also called as “Portfolio Theory or Portfolio Management Theory”
According to the theory, it's possible to construct an "efficient frontier" of optimal
portfolios offering the maximum possible expected return for a given level of risk.
There are four basic steps involved in portfolio construction:
 Security valuation
Portfolio average return – Risk free rate of interest
=
Standard deviation of the portfolio return
p f
t
p
R – R
S =
σ

 Asset allocation
 Portfolio optimization
 Performance measurement
1.2. Statement of the Problem
The portfolio should not be constructed based on the brand identity, current
performance etc because that would not help investors in achieving the anticipated return.
The main aim of portfolio construction is diversification and to maintain perfect negative
correlation between the securities. Also, holding two or three stocks is always better than
holding one. The optimum portfolio gives the investors a better clarity to invest the right
proportion of money in the right stock and it helps the investors to get maximum returns with
minimal risk.
An investor considering investment in securities is faced with the problem of
choosing from among a large number of securities and how to allocate those funds over a
group of securities. The hurdle that exists is that the investor has a problem of deciding which
securities to hold and how much to invest in each of them. Though Markowitz Model enables
an investor to arrive at an optimal portfolio, the Single index model is helpful in avoiding the
difficulty of data input and time cost consideration.
At this point of time the Indian Economy is doing well. There are various sectors that
are growing at tremendous rate in India. And it is the perfect opportunity for the investors to
invest their money but before investing a proper analysis is to be made by the investor to get
better returns. For this purpose I have made an attempt to construct an Optimal Portfolio
which will help the investor to select the company which will give better return with minimal
risk. Therefore, the present study is entitled on, “Creating an Optimal Portfolio on BSE
Sensex using Sharpe’s Single Index Model- A Study of the 30 Stocks that are listed on BSE”.

1.3. Objectives of the Study
 To study the trends of Equity in the stock Market for selected companies.
 To get a practical knowledge as to the idea embedded in Sharpe’s index model
 To construct an optimal portfolio using Sharpe’s Single Index Model i.e. to find out
the type of scrips on S&P BSE SENSEX in which investment is to be made
 To find out the proportion to be invested in a particular selected scrip in the portfolio.
 To study the Beta factor of the 30 companies.
 To find out the script that gives the maximum reward to risk in comparison to other
script with respect to BSE SENSEX 30

2. Literature Review
Gopalakrishna, Muthu (2014)
In his research paper he explains the investment alternatives available for rational investor. A
comparison of traditional portfolio theory with that of modern portfolio theory is made in this
study. This study aims to test whether Sharpe single index model offers an appropriate
explanation of stock returns on IT stocks. The samples included in this study consists of 13
actively traded scripts listed in the National Stock Exchange Limited, Bombay (NSE).The
scripts in the sample are selected from NSE IT index. The secondary data for a period 2004-
2008 has been used for the study. By applying regression on the market return and excess
security return it is found that IT index has a phenomenal amount of sensitiveness over S&P
CNX Nifty. The study investigated that there are four aggressive stocks having beta
coefficient of more than one. It is recommended that among the sample companies all the
stocks are undervalued except one stock and thus the investors can pick these stocks to revise
their portfolio.
Kapil Sen and CA Disha Fattawat, (2014)
Studied Sharpe’s Single Index Model and its Application Portfolio Construction. The study
reveals that the construction of optimal portfolio investment by using Sharpe’s Single Index
Model is easier and more comfortable than by using Markowitz’s Mean-Variance Model.
According to the study the 30 sample companies of the BSE Sensex were selected and out
that only 8 Companies gave good return and were included in the Optimal Portfolio.
Dileep and Rao, Kesava (2013)
The study was mainly on the applicability and utility of the Single Index Model in the Indian
context and also evaluated the performance of the portfolio thus constructed in terms of its
rate of return. A sample of 30 companies belonging to various sectors was chosen for study
and the data required for this study was collected from secondary sources. It was found that
only four companies were included in portfolio construction. The study concluded that
William Sharpe’s Single Index Model will be sustainable and applicable to the Indian market

where investors can construct a portfolio for improving the expected returns on their
investment.
Mandal, Niranjan (2013)
The research mainly studied the Application of Sharpe’s Single Index Model considering the
daily prices of 21 securities for the period of ten years i.e. April 2001 to March 2011. In order
to determine the daily market return, the BSE Sensex was taken as the market performance
index. After formulating the cut-off rate, those securities whose Ci values greater than the
cut-off point were selected. Then to arrive at the optimal portfolio the proportion of
investment in each of the selected securities in the optimal portfolio was computed on the
basis of beta value, unsystematic risk, excess return to beta ratio and the cut off rate of the
security concerned. Different statistical tools and techniques charts and diagrams have been
used for the purpose of analysis and interpretation of data. From the samples of twenty one
securities an optimum portfolio was constructed using ten securities. From the study it is
observed that the Sharpe’s Single Index Model gives an easy mechanism for constructing an
optimal portfolio of stocks for a rational investor by analyzing the reason behind the inclusion
of securities in the portfolio with their respective weights.
Kumar, Arun and Manjunatha (2013)
The study presented an approach to the portfolio selection based on Sharpe’s Single Index
Model. The main objective of the study is to analyze the performance of securities based on
aggregate weighted average of EPS, Sales and net profit. The secondary data has been
collected from websites. Stocks covered in S&P CNX Nifty are taken out for analysis. The
yearly data for five years has been taken. The securities which top on aggregate weighted
average have been selected for the constructing portfolio. For analyzing the securities various
statistical tools like weighted average, simple average, standard deviation, regression
analysis, systematic and unsystematic risk are used. Out of the fifty companies in S&P CNX
Nifty only six securities were selected for the optimal portfolio construction. The percentage
of investment to be made in the selected securities has been calculated using Sharpe’s Single
Index Model. The study reveals that stock prices and market index move in the same
direction.

Sarker, Mokta Rani (2013)
Conducted a study to construct an optimal portfolio using Sharpe’s Single Index Model
considering no short sales. The study has been conducted on individual securities listed in
Dhaka Stock Exchange, where short sales are not allowed. The monthly closing prices of one
hundred and sixty four companies listed in Dhaka Stock Exchange and share price index for
the period of July 2007 to June 2012 have been considered in this study. This method
formulates a unique cut-off point, selects stocks having excess return to beta ratio surpassing
this cut-off point and determines the percentage of investment to be made in each of selected
stocks. The optimum portfolio consists of thirty three stocks selected out of one hundred and
sixty four stocks giving the return of 6.17%. From this empirical analysis to some extent, an
investor can forecast individual securities return through the market movement and can make
use of it.
Desai, Radhika and Surti, Manisha (2013)
Constructed an optimal portfolio using fifty companies which were listed on the NSE and the
time duration of the study is three years. Among the fifty companies only ten companies were
selected for the optimum portfolio. The proportion of investment made in each security has
been calculated using the Sharpe’s Single Index Model. The volatility of security has been
analysed. The research provides direction to investors regarding performance of securities.
Once the performance is analysed and optimum portfolio of securities is constructed, it
enables the investor to take appropriate decisions.
Varadharajan and Ganesh (2012)
Applied the SIM on equity portfolio of large caps companies of selected sectors in India. The
main aim of this study is to find out the optimum portfolio from the selected companies in
three major sectors like power sector, shipping sector and textile sector. From each sector six
companies have been selected and so a total of eighteen companies are selected as samples.
The companies with the largest market capitalization in each sector have been selected. Data
for five financial years were used for constructing the portfolio; i.e. from 1st April 2006 to

31st march 2011. All calculations have been done using MS Excel. From the analysis it was
found that only five companies were included in the portfolio constructed out of the eighteen
companies.
Andrade, Pratibha Jenifer (2012)
The study aimed at developing an optimal portfolio of equity of IT sector through Sharpe’s
Single Index Model. In this study, a sample of six top performing IT companies traded in
BSE has been chosen. The data related to the daily returns of the securities and the market
index has been collected through secondary sources. Data has been collected for a period of
three years i.e. 2009 to 2011. It was found that the optimal portfolio has been constructed
with five companies.
Debasish, Satya Swaroop and Khan, Jakki Samir (2012)
Selected a sample 14 stocks from the various manufacturing sectors like automobiles,
cement, paints, textiles oil& refineries and these are traded in the NSE. The daily data for all
the stocks for the period Jan 2003 to November 2012 has been considered. Percentage of
investment in each of selected stock is decided based on respective beta value, stock
movement variance unsystematic risk, and return on stock risk free return. Among the
fourteen selected companies an optimal portfolio using Sharpe’s Single Index Model
constituted only three stocks. The proportion of investment to be made was also calculated
using Single Index Model. Thus, the literature survey made for the present study showed that
there is enough scope for studying the utility of Sharpe's Single Index Model under the Indian
conditions especially considering the securities of companies traded through the BSE which
is one of the oldest stock exchange in the world and which is considered as one of the major
attractions to any investor, either individual or institutional.
Tripathy, Sasikanta (2011)
Applied the model on selected Indian banks’ scripts. The author assumed that there is a
positive relationship between the banked and individual stocks. Fifteen securities selected of
the banks comprised in BANKEX as a sample. The data is based on secondary source for the
period from 1st April 2011 to 31st march 2012. It was found that there is a linear relationship

between security returns and the common factor that there is no difference among the return
of all the banks from the ANOVA.
Saravanan and Natarajan (2012)
The research paper attempted to construct an optimal portfolio by using Sharpe’s Single
Index Model. For this purpose NSE Nifty Index has been considered. The daily data for all
the stocks and index for the period of April 2006 to December 2011 have been considered.
They formulated the cut-off point and selected stocks having excess of their expected return
over risk free rate of return surpassing this cut-off point. Percentage of investment in each of
selected stocks is then decided on the basis of respective weights assigned to each stock
depending on respective beta value, stock movement variance unsystematic risk, return on
stock and risk free return vis-à-vis the cut off rate of return. From the empirical analysis, it
was concluded that returns on either individual securities or on portfolio comprises of
securities of different companies listed in Nifty 50 stocks under various sectors are
asymmetrical and heterogeneous. The optimal portfolio consists of four stocks selected out of
50 short listed scrips, giving the return of 0.116. Further it helps to elicit that return on
securities of different portfolio is independent of the systematic risk prevailing in the market.
Varadharajan (2011)
Constructed an optimal equity portfolio with the help of Sharpe Index model. The study was
conducted with the financial data from April 2006 to March 2011. The sample size was
limited to 19. He took these companies from Banking and Information Technology. The
portfolio was constructed with the top 5 stocks that meet the criteria to be included in the
portfolio according to Sharpe Index Model. The portfolio predominantly consisted of stocks
from the banking sector, and one stock from IT sector.
Nateson and Rajesh (2010)
Constructed optimal portfolio using Sharpe’s Single Index Model consisting of eight stocks
from Nifty Nifty stocks six stocks selected from Nifty Junior. The respective portfolio beta’s
were calculated and capital allocation for each stock was also determined. Thus, the analysis
of the portfolio provides the rationale for forming an optimal portfolio of the securities
instead of buying only a single security. In the Indian scenario,

3. RESEARCH METHODOLOGY
This is a descriptive and exploratory study on the construction of portfolio of stocks. The data
taken for the study is secondary in nature. The data has been collected from the official
website of Bombay Stock Exchange (BSE). The study is conducted with the financial data for
the past one year from 1st
January 2014 to 31st
December 2014. The sample size of the study
is limited to daily stock price series of 30 selected stocks Sensex index. The sampling
technique adopted is purposive sampling.
3.1 RESEARCH DESIGN
The research design used to carry out this study is descriptive research because it deals with
statistical data and the main aim of the report is to describe the factors affecting the problem
mentioned. The present study is an analytical study. For this study, the secondary data was
drawn form official website of Bombay Stock Exchange (BSE) and other relevant sources.
The data regarding stock performance and profile are collected through “Exploratory
Research Design” particularly through the study of secondary sources and discussions with
experts in the field.
3.2 SAMPLE DESIGN
Sampling Technique
The purposive sampling technique has been employed to select the sample units for the study.
Such a selection is undertaken as the unit represents the sample in a better way and reflects
better relationship with the other variable of the study.
Sample Selection

To perform the research study, the researcher has selected only 30 companies, those make it
SENSEX index. The sample units have been taken from different sectors that makes
composition of BSE sensex.
3.3 DATA SOURCES
1. Primary Data
The primary data was collected for the purpose of understanding the organisation properly
company analysis through the discussion with my External Guide and it also include
discussion with investors.
2. Secondary data
Secondary data was collected for the study purpose. The data was collected from various
sources, which are as follows:
 Textbooks and journals- as stated under review of literature.
 Websites- moneycontrol.com, bseindia.com, economictimes.com, google.com
 News papers – Economic Times, Business Line.
 Stock Exchange – BSE And NSE
3.5 DATA ANALYSIS TOOLS
 Detailed Research Process
The data taken for the study is secondary in nature. For this purpose S&P BSE
SENSEX is taken as the market performance index. The data has been collected from the
official website of Bombay Stock Exchange (BSE), namely www.bseindia.com. The study is
conducted with the price data of 30 scrip’s of S&P BSE SENSEX for the past One year from
1st
January to 31st
December 2014. Since the values of the index and the market are of only
One year. Hence to get a average price I have taken the stock price at the start of the month
and at the end of the month and the average of both to arrive at a proper value and make

proper justice for the calculation. For determining daily return of S&P BSE SENSEX, the
returns of past One year from 1st
January to 31st
December 2014 are taken into consideration.
On the basis of computed return, variance of market index, variance of each security,
beta ( β ) value , systematic risk and unsystematic risk of each security is calculated. Ranking
of the stocks are done on the basis of their excess return to beta ratio from highest to lowest.
The cut off rate ( Ci ) for each security is also calculated. Those securities whose ‘Excess
Return-to-Beta Ratio’ is greater than the cut off rate are selected. Then to arrive at the
optimal portfolio, the proportion of investment in each of the selected securities in the
optimal portfolio is computed on the basis of beta value, unsystematic risk, and excess return
to beta ratio and cut-off rate of each of the securities concerned. Different Statistical and
financial tools and techniques, and charts have been used for the purpose of analysis and
interpretation of data.
DEFINATION OF CONCEPTS
 Stock market: The financial market for small, medium and long term securities.
 Market index: A stock index is a number that helps measure the levels of the market.
Stock index is a derivative asset because it derives its existence and value from
independent stocks issued by corporations
 Equity: The net worth of a firm consisting of paid up equity capital plus, reserves and
surplus.
 Portfolio: A combination of assets
 Types of investors:
1. Risk Averse: one who is not ready to take more risk.
2. Aggressive Investors: one who expects more returns and ready to bear high risk.
SHARPE’S SINGLE INDEX MODEL
Sharpe’s Model proposes that the relationship between each pair of securities can
indirectly be measured by comparing each security to a common factor ‘market performance
index’ that is shared amongst all the securities. This helps in reducing the burden of large
input requirements and difficult calculations required in Markowitz’s mean- variance
approach. While Markowitz Model requires n(n−1)/ 2 data inputs, the Sharpe’s Model

requires only (3n+2) data inputs, namely, the estimates of returns for each security, estimates
for expected return on market index and estimates of variance of return. This forms the
essence of Sharpe’s Model which has made financial analysts and researchers to consider it
superior to the Markowitz Model.
ASSUMPTIONS OF SIM
The Sharpe’s Single Index Model is based on the following assumptions:
1. The expectations of all investors are homogeneous in nature.
2. A uniform holding period is used in estimating risk and return for each security.
3. The price movements of a security is not only dependent upon the nature of thee other
securities. They are also dependent on the general business and economic conditions.
4. The indices, to which the returns of each security are correlated, are likely to be some
securities’ market proxy.
5. The random disturbance terms ‘ei’ has an expected value zero (0) and a finite
variance. It is not correlated with the return on market portfolio (Rm) as well as with
the error term (ei) for any other securities.
CONSTRUCTION OF AN OPTIMAL PORTFOLIO USING SIM
Casual observations of the stock prices over a period of time reveals that most of the
stock prices move with the market index. When the Sensex increases, stock prices also tend
to increase and vice-versa. This indicates that some underlying factors affect the market index
and this relationship could be used to estimate the return on stock. I have taken the stock
price at the start of the month and at the end of the month and the average of both to arrive at
a proper value and make proper justice for the calculation. Towards this purpose, the
following equation can be used:

• The rate of return of the BSE Sensex companies may be computed using monthly
closing points as under:
Where,
Pt= current year price
Po = previous year price.
• The rate of return of the BSE Sensex index may be computed using monthly closing
points as under:
Where,
Pt= current year price.
Po = previous year price.
Beta to evaluate the risk
Beta is a measure of the systematic risk of a security that cannot be avoided
through diversification. Beta is a relative measure of risk-the risk of an individual stock
relative to the market portfolio of all stocks. If the security's returns move more (less) than
the market's returns as the latter changes, the security's returns have more (less) volatility
(fluctuations in price) than those of the market. It is important to note that Beta measures a
security's volatility, or fluctuations in price, relative to a benchmark, the market portfolio of
all stocks.
A fund with a Beta very close to 1 means the fund's performance closely matches the index or
benchmark. A Beta greater than 1 indicates greater volatility than the overall market, and a
Beta less than 1 indicates less volatility than the benchmark.

β = Beta
n = Number of days or observations
x = Index Return
y = Security Return
• The variance of the index movement is computed as using:
• The variance of the Stock price movement is computed as using:
The variance of the security has two components namely, systematic risk or market
risk and unsystematic risk or unique risk. The variance explained by the index is referred to
systematic risk. The unexplained variance is called residual variance or unsystematic risk.
Systematic risk = βi 2
* Variance of market index.
= βi 2
* σ 2
m
Unsystematic risk = Total variance - Systematic risk
σ 2
ei = σ 2
i - systematic risk
Thus total risk = systematic risk + unsystematic risk

= βi2
* σ2
m + σ2
ei
Sharpe’s optimal portfolio:
Sharpe had provided a model for the selection of appropriate securities in a portfolio.
the selection of any stock is directly related to its excess return beta ratio (Ri-Rf) βi.
According to the equation the return of the stock can be divided into 2 components, the
return due to the market and the return independent of the market. βi indicates the
sensitiveness of the stock return to the changes in the market return. The single index model
is based on the assumption that stocks vary together because of the common movement in the
stock market and there are no effects beyond the market that accounts the stock co-
movement. The expected return, standard deviation and co-variance of the single index model
represents the joint movement of securities. The Risk free rate of the T Bill is 0.345
• The excess return to Beta is computed using following formula:
Ri - Rf
β
The excess return is the difference between the expected return on the stock and the
risk less rate of interest such as offered on government securities or Treasury bill. The excess
return to beta ratio measures the additional return on a security (excess of the risk less asset
return) per unit of systematic risk or non-diversifiable risk. This ratio provides a relationship
between potential risk and return.
Ranking of the stocks are done on the basis of their excess return to beta. Portfolio
managers would like to include stocks with higher ratios. The selection of stocks depends on
unique cut-off rate such as all stocks with higher ratios of (Ri-Rf)/ βi are included and the

stocks with lower rank are let off. The cut-off point is denoted by C *. The stocks ranked
above C* have high excess returns to beta than the cut-off point Ci and are included in the
optimal portfolio.
• Ci values for all the stocks according to the ranked order is computed using the
following formula:
• Xi and Zi are to be determined to know how much funds needs to be invested in each
security using the following formula:
Where,
Xi = Proportion of Investment
σ2 ei = Unsystematic Risk
β = Beta value of Individual security
Ri – Rf = Excess Return
C* = Cut Off Point

Methodology: Simple steps to be followed for calculation
Step 1: A brief profile of each of the 30 companies of sensex index is chosen.
Step 2: For a period of 1 years data of the each companies have been recorded.
Step 3: For applying Sharpe’s index model Ri, Rm, σ2ei, βi, σ2m, Rf values are
required. So all these data are collected and calculated for proceeding further.
Step 4: The cut-off point C* is calculated using the formula:
σ2
m∑(Ri-Rf)βi
Ci = . σ2
ei .
1+σ2
m∑βi2
σ2
ei
Step 5: After Ci for the companies are calculated the value got were put in a table and
then the interpretations were made.
Step 6: The Ci values go on increasing up to a certain point and then start decreasing.
the highest point is called cut-off point(C*).the securities which are above C*
point are chosen to the portfolio.
Step 7: Once the securities for portfolio are chosen, the proportion in which they
should be invested is to be determined. this can be done using a formula where
Xi denotes the proportion,
Where Zi is,

Step 8: Return on portfolio can be made known with the formula
Rp=∑Xi
Ri
Step 9: σp2 gives the risk associated with portfolio.
MERITS OF SHARPE’S SINGLE INDEX MODEL
The following are the merits of SIM:
a) The model is simple to understand and easy to apply.
b) If one has ‘n’ securities at his disposal, it requires only (3n+2) estimates but
Markowitz’s model requires n(n−1)/ 2 estimates.
c) It provides an estimate of security’s return as well as of the index value.
d) It greatly helps in obtaining the following inputs required for applying the
Markowitz’s model:
i. The expected return on each security
ii. The variance of return on each security
iii. The covariance of return between each pair of securities
e) This provides reason for either the ‘inclusion’ or the ‘exclusion’ of a security in while
constructing an optimal portfolio.
LIMITATIONS OF SIM
a) The Single Index Model proposed by William Sharpe does not consider uncertainty in
the market as time progresses; instead the model optimizes for a single point in time.
b) This model assumes that security prices move together only because of common co-
movement with the market. But there are influences beyond the general business and
market conditions, like industry-oriented factors that also influence movement of
securities together.

3.6 LIMITATIONS OF THE STUDY
1. The study has focused only on BSE Sensex index 30 companies and did not consider
other industries or companies for research purpose.
2. The study has not used any control group/s for comparison
3. The study has done restricted data analysis for last one year only (Jan 2014 to Dec
2014).
4. The study uses monthly prices instead of daily prices related to company’s stock
5. The portfolio construction is done using only one model and the researcher has not
considered application of other models as well as utility of fundamental and technical
analysis for in-depth investigations.

3. Company Profile
Company Name Anand Rathi
Ownership Indian Private Sector
Year of Establishment 1994
Founder Mr. Anand Rathi
Product Brokerage
Website http://www.rathionline.com
Exchange enabled NSE, BSE, MCX-SX, MCX 7 NCDEX
Coverage Area 21 States of India and also Dubai & London
Anand Rathi is a leading, growth focused full service investment bank. The firm
prides itself on providing bulge-bracket style investment banking services to small and mid-
sized enterprises in India through research - driven ideas backed by experienced, sector -
focused investment bankers; with ready access to global capital pools.
Anand Rathi (AR) has been a leading full service securities firm providing the entire
gamut of financial services. The firm, founded in 1994 by Mr. Anand Rathi, today has a pan
India presence as well as an international presence through offices in Dubai and Bangkok.
AR provides a breadth of financial and advisory services including wealth management,
investment banking, corporate advisory, brokerage & distribution of equities, commodities,
mutual funds and insurance, structured products all of which are supported by powerful
research teams.
The firm's philosophy is entirely client centric, with a clear focus on providing long
term value addition to clients, while maintaining the highest standards of excellence, ethics
and professionalism. The entire firm activities are divided across distinct client groups:

Individuals, Private Clients, Corporate and Institutions and was recently ranked by Asia
Money2006 poll amongst South Asia's top 5 wealth managers for the ultra-rich. In year 2007
Citigroup Venture Capital International joined the group as a financial partner.
Companies Philosophy on Wealth Management
Wealth Management needs to be far more holistic than just investment advisory. We believe
that separation of advisory from product manufacturing is critical to offering a conflict-free
and truly objective advice to our clients. We therefore offer only third-party products and do
not manufacture any in-house products. As an extension to this philosophy, we do not hold
any proprietary stake in the markets
• Equity Research – Anand Rathi’s highly rated 25 member equity research team
covers nearly 200 companies across 15 sub-sectors, providing a unique understanding
of sectors and companies, resulting in profitable investment opportunities.
• Investment Banking – Anand Rathi’s sector focused 30 member investments
banking team works exclusively with small and mid-sized companies, providing them
with high quality advice on capital raising, mergers and acquisitions and restructuring.
• Equity trading and distribution – Anand Rathi’s rich, 16 year history in equity
trading and distribution to global investor pools makes it uniquely positioned to offer
the entire spectrum of capital market services to small and mid-size companies
Products Services
• Equities I Bonds I Mutual Funds I
Derivatives
• Managed Investment Services /
PMS
• Commodities
• FX Trading
• Life Insurance
• Creation of a customized
financial strategy
• Diversification of assets based
on a formal process of asset
allocation
• Active tracking, monitoring and
review of portfolios

• General Insurance
• Alternative Assets
- Private Equity Funds
- Structured Products
- Real Estate Opportunities Fund
• Special Situation Opportunities
• Offshore Structures & Global
Investments
• Creation of private trusts
• Tax planning
• Estate planning
• Structuring of family wealth
• Anand Rathi is a leading underwriter of public offerings and private placements for
mid–market companies in India. Innovative financing solutions that support complex
corporate strategies and our long–standing client relationships differentiate us from
others.
• Anand Rathi’s post - listing IPO performance ranks amongst the top 3 in India for
mid-market IPOs. We strive to provide continued support to our IPO clients through
sustained and objective research coverage, equity sales and equity trading services.
• Our capital markets business seeks to leverage our operational expertise and world
class institutional and retail distribution platforms, to partner with existing owners and
management to maximize value at the time of a public or secondary market offering.
• Over the course of their careers, members of our senior team have raised over $20
billion in equity and debt capital for companies around the world.
4.1. Historical Background
Anand Rathi is a leading full service financial services providing firm covering the entire
bubble of investors. The firm, was established in the year 1994 by Mr. Anand Rathi and Mr.
Pradeep Gupta, till today Anand Rathi is spread across India and has a presence across 750
locations. The company offers a full suite of products to serve its clients business cycle, their
investment needs, geographic reach in an increasingly global market, which is dominated by
many of the existing competitors and deep expertise in the core middle market sectors helps
Anand Rathi perform better than its competitors.

Anand Rathi provides full services and also as a investment banker and offering a wide
range of financial services and wealth management solutions to institutions, corporations, high-
net worth individuals and families the firm has rapidly expanded its footprints to over 350
locations across India and international presence in Hong Kong, Dubai & London the group
today employs over 2500 professionals throughout India and its international offices.
The main firm’s philosophy is entirely client centric, with clear focus on providing long
term value addition to clients, while maintaining the highest standards of excellence, ethics and
professionalism. The entire firm activities are divided across distinct client groups: Individuals,
Private Clients, Corporate and Institutions. Anand Rathi has been named the best Domestic
Private Bank in India by Asiamoney in their Fifth Annual Private Banking Poll 2009. The firm
has emerged a winner across all key segments in Asiamoney’s largest of high net worth
individuals in India. In year 2007 Citigroup Venture Capital International joined the group as
financial partner.
AR Core Strengths
Breadth of Services
In line with its client-centric philosophy, the firm offers to its clients the entire spectrum of
financial services ranging from brokerage services in equities and commodities, distribution
of mutual funds, IPOs and insurance products, real estate, investment banking, merger and
acquisitions, corporate finance and corporate advisory. Clients deal with a relationship
manager who leverages and brings together the product specialists from across the firm to
create an optimum solution to the client needs.
Management Team
AR brings together a highly professional core management team that comprises of
individuals with extensive business as well as industry experience.
In-Depth Research
Their research expertise is at the core of the value proposition that they offer to their clients.
Research teams across the firm continuously track various markets and products. The aim is
however common - to go far deeper than others, to deliver incisive insights and ideas and be
accountable for results.

Institutional Equities:
The Institutional sales and trading team provides cutting edge market information and
investment advice to clients, coupled with excellent execution capabilities. A highly
experienced and reputed team of equity analysts supports the sales team. There is an
extensive focus on research on companies, sectors and macro-economy. The institutional
equity team tracks nearly 250 large and mid-sized companies to give clients an unparalleled
breadth of ideas.
They also provide Investment Advisory Services for institutional clients in India and overseas
for investment in the Indian equity markets.
Services:
AR is one of India's top mutual fund distribution houses. Their success lies in their
philosophy of providing consistently superior, independent and unbiased advice to our clients
backed by in-depth research. They firmly believe in the importance of selecting appropriate
asset allocations based on the client's risk profile.
They have a dedicated mutual fund research cell for mutual funds that consistently churns out
superior investment ideas, picking best performing funds across asset classes and providing
insights into performances of select funds.
SLOGAN: “behind every successful Investor”
The firms philosophy is entirely client centric, with a clear focus on providing long term
value addition to clients, while maintaining the highest standards of excellence, ethics and
professionalism.
4.2. Vision & Mission
Vision
“Providing integrated financial care driven by
the relationship of trust and confidence”

Mission
“To be India’s Multinational providing complete
financial solution across the globe”
4.3. Organizational Structure - Different Departments

Board of Directors
Their senior Management comprises a diverse talent pool that brings together rich experience
from across industry as well as financial services. There are various board of directors who
have been in this field for many year with great experience and also have been directors of
different organizations in the past.
Mr. Anand Rathi - Group Chairman & Founder
A Gold medallist in Chartered Accountant & former President of Bombay Stock Exchange.

A key executive of the Birla Group and the driving force behind the setting up of the Birla
Group’s Cement and financial Services business among others.
Held several Senior Management positions with one of India's largest industrial groups
And also a Key person in setting up of the Online trading system and the Central Depository
Services Ltd in India.
With over 40 Years of experience in the Industry
Mr. Pradeep Gupta - Vice Chairman
With over twenty years experience in the securities market. Co – Founder and key driver of
the Retail and Institutional Equities business of the group
Mr. Amit Rathi - Managing Director
A Rank holder Chartered Accountant and an MBA from Leonard N. Stern School of
Business, New York University joined the group in 1998. He was instrumental in establishing
the group’s private wealth management and investment banking businesses. Plus 11 years of
experience in Financial Services Calling him a ‘financial guru’, the Times of India group,
listed Amit in 2008 amongst the top 51 young Marwadis in India (under the age of 40).
4.4. Product /Service Profile

• Private Wealth management –
Affluent individuals need sophisticated advice and strategic guidance to capitalize on
opportunities to preserve, grow and transfer their wealth. In addition, a desire exists within
wealthy families to simplify the management of multigenerational needs and lessen the
profoundemotional impact of wealth on family members. AR offers the mostextensive platfor
m of customized servicing, individual strategies andproducts to help meet the requirements of
the affluent private investor. We provide comprehensive, integrated investment strategies to
address your wealth management needs. Working closely with specialists across firm PWM
offers an array of products & services, which includes AR's highly-rated research
Process
We realize the need to simplify the complexities of the investmentstrategies and we ac
hieve this by offering highly customized wealth management product - LaXmi TM (let your
Assets go the Xtra Mile TM).Our Personalized Relationship Managers along with the expert
team of analysts and advisors will assist you in analyzing all your investment needs and
advice you on specialized solutions created exclusively for you. We have a dedicated
research team who constantly screens the market for investment prospects. The team provides
support in fine-tuning the investment strategy & suggests how to capitalize on these
opportunities.
1) Wealth Management.
• Equities
– Stocks, PMS, Derivatives, Mutual Funds
• Fixed Income – Bonds, Mutual Funds
• Commodities & Precious Metals
• Life & General Insurance
• Real Estate Private Equity Fund
• Currencies
• Structured Products & Capital-Guaranteed Notes
• Alternative & Non-correlated investments

2) Investment Banking and Corporate Finance.
• Equity Capital Market
– IPO/Rights/Secondary issues
– Delisting & Open Offers
– Block Deals & Private Equity
– Management Buy-outs
• Advisory
– Business Sale/Disposal
– M&A / JVs / Strategic alliances
– Valuations
• Debt Advisory
– Rupee & Foreign Currency
– Debt Raising / Negotiation
– Debt Restructuring
– Creditor Settlement / OTS
3) Distribution and Brokerage:
• Equities
• Derivatives
• Commodities
• IPO’s
• Mutual Funds
• Life & Non-Life Insurance
• Depository Services
• Bonds
• Value-add services
– backed by independent research teams
– real-time support to clients.
Services to NRI’s

AR is the perfect gateway to the wealth of investment opportunities in India for Non-
Resident Indians. With our dedicated NRI desk in India and Relationship Managers in your
own country, you get the best of both worlds - real understanding of your investment needs as
well on-the-ground expertise. Why choose AR? Superior understanding of the Indian
economy & markets Ability to structure and manage your tax and regulatory compliances
Dedicated relationship team Unparalleled product range - Indian and Global
Acquisitionsmadebythecompany
ANZ Grind lays : $ 1.34 bn from August 2000.
Hong Kong Consumer Bank : $ 1.32 bn
Thailand Nakornthan Bank : $ 320 million
Indonesians Bank Per - Mata : $ 366 million from Oct. 2004.
Korea First Bank : $ 3.3 billion from Apr. 2005
Clients of Anand Rathi
Industrial groups:
Birla’s - Birla Sunlife, Grasim, Hindalco, Jindal, Indian Rayon, Indo Gulf, Transworks,
Vedanta- Balco, Hindustan Zinc, Sterlite, Vedanta, Tata’s- Tata Investments, TISCO, Tata
Motors, Trent, VSNL
Multinationals:
Bayer, Clariant, Color Chem, Datacraft, Godfrey Philips, Goodlass Nerolac, Nestle,Grindwell
Norton, HLL, Kuoni Travel, Quest International, Syngenta, Thomas Cook, Wartsila
Banks / FIs:
Andhra Bank, Bank of India, Bank Of Barodra, Bank of Maharashtra, Canara Bank, HDFC
Ltd, IDFC, GIC, LIC, PNB, United Bank
Corporates:
ACC, Berger, Boots Piramal, Century Textiles, Cosmo Films, CRISIL, Crompton Greaves,
Dabur, Datamatics, DCM, Deepak Fertilizers, DSL Software, East India Hotels, Emami, GE
Shipping, Globus, Godrej, Gokuldas Exports, Gujarat Ambuja, Gujarat Pipavav, HCL group
Private Clients:

Individuals / Families across India, Middle East and SE Asia (with minimum relationship size
of USD 1 million+ / Rs 5 crores each)
Priority Clients:
Individuals / Families with minimum relationship size of Rs 50 lacs
Competitors:
In this field of financial services there are a whole lot of companies and a few keep adding
every year. To remain at the top of this sector is no mean task and there are a lot of big
companies which provide stiff competition to Anand Rathi Securities in this regard. The list
of competitors would include:
• Motilal Oswal
• India Infoline
• Indiabulls
• Geojit
• Sharekhan
4.5. Area of Operation
Offices of ANANDRATHI are in 197 cities across 28 states & it has also branches in
Dubai & Bangkok with more than 4400 employees. It has daily turnover in excess of
Rs.4billion. It has 1,00,000+ clients nationwide. It is also leading distributor of IPO’s. In
India ANAND RATHI has its offices located in 21 States of the country
STATES: Andhra, Pradesh, Assam, Bihar, Chhattisgarh, Delhi, Goa, Gujrat, Haryana,
Jammu & Kashmir, Jharkhand, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Orissa,
Punjab, Rajasthan, Tamil Nadu, Uttar Pradesh, Uttaranchal, West Bengal.

4.6 Business Practices
Anand Rathi has a vast portfolio of services which it provides to its customers and to
meet up to the expectations of the customers there are people continuously working to
achieve success for the company there are various departments such as
FRONT OFFICE:
In front of office the following services are done.
• Account opening
• Holding enquiries
• Transfer of physical shares to Demat form
• Transfer of Demat shares to physical form
• Transformations of shares from Demat to trading account etc.
BACK OFFICE:
• Maintenance of all demit account with KYC Norms
• Giving intimation related to the due of AMC’s to heir account holders
• Sends quarterly information to the holders related to the holdings
MARKETING:
In this department where the Demat account is marketed, marketing executives seek for
prospective customers, they help in opening of an account and also these executives collect
AMCs and provide other door to door services.
Here all the records of investors are to be maintained and kept confidentially and identifies
the customer’s requirements and the department members try to fulfill their needs.
• TIN. Tax information network services, this is recently introduced by the RIS
department in this service, Anand Rathi Financial Services tries to give the services
regarding taxation like
• PAN opening
• TDS return(filling) quarterly, yearly

ADVISORY SERVICES:
This is the main function done by the department to give every financial advisory services to
investors for ex: portfolio management, equity tips, tax planning etc
ACCOUNTS:
• Maintaining the purchases/ stores departments
• Internal auditing
• Payments and receipts
TECHNOLOGY DEPARTMENT:
Anand Rathi has its own trading platform where in the customers can trade online
through their account. It provides the services from the Kuber ( Portfolio Tracker ) software
through which customers can trade online on their own and track their own investments and
there are employees who work for the smooth functioning of the software and also answering
the queries from the customer related to software
4.7. Current Status
Anand Rathi has 1527 terminals in India and has 320 sub brokers which work for Anand
Rathi till date they have 220 branches spread in India with 4566 emloyees working for Anand
Rathi
Aand Rathi performance compared with other players for the Year FY 2014 - 15
Sl.
No
Company Names Number of clients on BSE Total
Compaints
1. Sharekhan 1236919 18
2. Kotak Securities 887778 17
3. Reliance Securities 725358 12
4. Motilal Oswal 685228 29
5. SBI Securities 478473 18
6. Geojit 569125 5
7. Anand Rathi 333046 12

4.8. Future Plans
Growth is an every successful organization positive sign in the competitive world. In India
financial market is booming drastically and number of new investors is increasing. At present
India’s progress and growth measured on investment related option like equity shares, mutual
funds, commodities etc and stock market is a barometer of the economy
Anand Rathi is providing competitive services to clients and day by day their clients
spreading across India. For growth they are conducting education meeting and conference for
investors. As Investors Increases Company’s profit also increases.
Anand Rathi growth aspects are increasing of clients, motivating new investors providing
new D-mat a/c, providing multi investment option in one floor. Increasing in day’s total
transaction and also Anand Rathi company has a bright prospective and is very dynamic
because financial market is so young and energetic. It helps to company’s growth and creates
mark in the financial market.

4.9. Any Special Awards
Table 4.9 Milestones achieved by Anand Rathi
Year Achievements
1994 • Started activities in consulting and Institutional equity
sales with staff of 15
1995 • Set up a research desk and empanelled with major
institutional investors
1997 • Introduced investment banking businesses
• Retail brokerage services launched
1999 • Lead managed first IPO and executed first M & A deal
2001 • Initiated Wealth Management Services
2002 • Retail business expansion recommences with
ownership model
2003 • Wealth Management assets across Rs.1500 Corers.
• Insurance broking launched
• Launch of Wealth Management services in Dubai
• Retail Branch network exceeds 50
2004 • Commodities brokerage and real estate services
introduced
• Wealth Management assets cross Rs3000crores
• Institutional equities business re-launched and senior
research team put in place
• Retail Branch network expands across 100 locations
within India
2005 • Real Estate Private Equity Fund Launched
• Retail Branch network expands across 200 locations
within India
2006 • AR Middle East, WOS acquires membership of Dubai
Gold & Commodity Exchange (DGCX)
• Ranked amongst South Asia's top 5 wealth managers
for the ultra-rich by Asia Money 2006 poll
• Ranked 6th in FY2006 for All India Broker
Performance in equity distribution in the High

Networth Individuals (HNI) Category
• Ranked 9th in the Retail Category having more than
5% market share
• Completes its presence in all States across the country
with offices at 300+ locations within India
Source : Official Website of Anand Rathi
4.10. SWOT ANALYSIS
STRENGTHS:
• Broad Product Range
• Brand Image and equity
• Large client base
• Efficient and skilled man power
• Competent investment Advisers
WEAKNESSES:
• Limited focus on tier 2 cities
• Limited services for small investors
• Employee retention
OPPORTUNITIES:
• Access to untapped markets
• Emerging new technology (Mobile Apps)
• Growing economy & entry of new young investors
• SEBI regulations related to trade liberalization
THREATS:
• New product offerings & Price War from competitors
• New entrants & competition
5. Data Analysis

This part of the project brings out the data analysis and interpretation part relating to the
present study made for the construction of Optimal Portfolio using Sharpe’s Index Model.
The data required for this has been collected from secondary sources. 30 companies listed
under S & P BSE Sensex have been selected for the study. The chosen companies belong to
various sectors. They have been presented below Table 5.1
Table 5.1 Companies listed on the BSE Index
Sl. No. Company Security ( i ) Sector
1. Axis Bank Banking, Financial Services
2. Bajaj Auto Ltd Automotive
3. Bharat Heavy Electricals Ltd Electrical equipments
4. Bharti Airtel Ltd Telecommunication
5. Cipla Ltd Pharmaceuticals
6. Coal India Ltd Metals and Mining
7. Dr. Reddy’s Laboratories Ltd Pharmaceuticals
8. GAIL (India) Ltd Energy, Petrochemicals
9. HDFC Bank Ltd Banking, Financial Services
10. Hero MotoCorp Ltd Automotive
11. Hindalco Industries Ltd Metals
12. Hindustan Unilever Ltd Consumer Goods
13. Housing Development Finance
Corporation Ltd
Financial Services
14. ICICI Bank Ltd Banking, Financial Services
15. Infosys Ltd IT Service, IT consulting
16. ITC Ltd Conglomerate
17. Larsen & Tubro Ltd Conglomerate
18. Mahindra & Mahindra Automotive
19. Maruti Suzuki India Ltd Automotive
20. NTPC Ltd Electric Utility
21. Oil and Natural Gas Corporation Ltd Oil & Gas
22. Reliance Industries Ltd Conglomerate
23. Sesa Goa Ltd Mining
24. State Bank of India Banking, Financial Services
25. Sun Pharmaceutical Industries Ltd Pharmaceuticals
26. Tata Consultancy Services Ltd IT Service, IT consulting
27. Tata Motors Ltd Automotive
28. Tata Steel Ltd Steel
29. Tata Power Ltd Electric Utility
30. Wipro Ltd IT Service, IT consulting
*Source : Moneycontrol website

Table 5.1 represents the list of companies selected for the purpose of this study. The
historical stock prices pertaining to the above companies for the past One year 1st
January
2014 to 31st
December 2014 were collected from www.moneycontrol.com &
www.bseindia.com. Since the values of the index and the market are of only 1 year. Hence to
get a average price I have taken the High & Low prices of the stock at the start of the month
and at the end of the month and the average of both to arrive at a proper value and make
proper justice for the calculation. After getting the average closing prices of the individual
securities and market index are calculated.
Table 5.2 Mean Returns of the BSE 30 Companies listed on Sensex
Sl No. Company Security ( i ) Mean Return (Ri) in %
1 HDFC Bank Ltd 37.58
2 Bajaj Auto Ltd 28.28
3 Bharat Heavy Electrical Ltd 52.73
4 Bharati Airtel Ltd 7.66
5 Cipla Ltd 48.38
6 Coal India Ltd 34.26
7 Dr. Reddy's Laboratories Ltd 31.41
8 Gail India Ltd 30.30
9 Axis Bank 72.54
10 Hero Motocorp Ltd 42.00
11 Hindalco Industries Ltd 33.25
12 Hindustan Unilever Ltd 30.67
13 Housing Development Finance Corporation Ltd 36.93
14 ICICI Bank Ltd 52.52
15 Infosys Ltd 15.73
16 ITC Ltd 14.70
17 Larsen & Tubro Ltd 40.19
18 Mahindra & Mahindra Ltd 30.65
19 Maruti Suzuki India Ltd 68.71
20 NTPC Ltd 11.33
21 Oil and Natural Gas Corporation Ltd 21.08
22 Reliance Industries Ltd 2.90
23 Sesa Goa Ltd 16.82
24 State Bank of India 65.40
25 Sun Pharmaceutical Industries Ltd 40.21
26 Tata Consultancy Services Ltd 18.06
27 Tata Motors Ltd 31.49
28 Tata Power Company Ltd 2.65
29 Tata Steel Ltd 8.91
30 Wipro Ltd 1.34
31 BSE Sensex 26.83
*Source : Excel Calculation by Researcher

The above Table 5.2 gives the mean returns of the 30 companies selected for construction of
an optimal portfolio using Sharpe’s Single Index Model for a period of 1 year i.e. from
1st
January 2014 to 31st
December 2014. The returns of the 30 companies have been
calculated by taken the closing price of that stock at the beginning of the month and the
closing price at the end of the month for a period of 12 months the price has been calculated.
The same way the Index price has been calculated the formula to calculate the Returns
• Estimate of the return on stock. The formula used is
• Estimate of the return on Index. The formula used is
The table 5.2 reveals that Axis Bank has the highest return of 72.54 % and Wipro has
the lowest mean return of 1.34 %. In order to know the market risk faced by each security,
the beta values of selected companies have been computed and tabulated in the table 5.3.
 Company analysis
For a investor to invest in any company it is important that he understands properly
about the company as to in which sector does that company belong to and for this he will
have to a fundamental analysis. In fundamental analysis there can be various factors that play
to analyze a company it can be
1. The Net profit
2. Total Assets
3. Market Capitalisation
4. Current CEO or Chairman
These entire factors play an important role so I have given a brief introduction about the
30 listed BSE companies. And also plotted a chart showing the performance of the returns of
the company to the BSE Index for a period of 1 Year

1) Axis Bank
Table No. 5.3 Brief Introduction about the company
Traded as BSE : 532215
NSE : AXISBANK
Industry Banking, Financial Services
Founded 1994 (as UTI Bank )
Headquarters Mumbai, India
Revenue Rs. 38,046 Cr
Net Profit (After Tax) Rs. 6,218 Cr
Total Assets Rs. 3,83,245 Cr
CEO Mrs. Shikha Sharma
*Source : Company Website
Axis Bank formerly known as UTI Bank is the third largest private sector bank in
India. And is a Large Cap Company having a market capitalisation of Rs. 134996.19 Cr It
offers financial services to customer segments covering large and Mid Sized corporate,
MSME, Agriculture and Retail Business. Axis Bank has its headquarters in Mumbai,
Chart No. 1 Equity Performance of AXIS Bank from Jan 2014 to Dec 2014
Source: Researchers own analysis

2) Bajaj Auto Ltd
NSE : BAJAJ-AUTO
Industry Automotive
Founded 1930
Headquarters Pune, India
Revenue Rs. 20149.51 Cr
Net Profit (After Tax) Rs. 3243.32 Cr
Total Assets Rs. 9665.76 Cr
Chairman Mr. Rahul Bajaj
Bajaj Auto is a well known Indian company which manufactures Two –
wheelers and three wheelers it was founded by Jamnalal Bajaj in Rajastan in 1930’s.
Bajaj Auto is the world’s third largest manufacturer of motorcycles and the second
largest in India. It has a Market capitalisation of Rs. 58536.05 Cr
Chart No. 2 Equity Performance of Bajaj Auto Ltd from
Jan 2014 to Dec 2014

*Source: Researchers own analysis
3) Bharat Heavy Electrical Ltd
NSE : BHEL
Industry Electrical Equipment
Founded 1964
Headquarters New Delhi, India
Chairman Mr. B Prasad Rao
Bharat Heavy Electricals Limited owned by Government of India, is a power plant
equipment manufacturer and operates as an engineering and manufacturing company based
in New Delhi, India. Established in 1964, BHEL is India's largest engineering and
manufacturing company of its kind. The company has been earning profits continuously since
1971-72 and paying dividends uninterruptedly since 1976-77. And has a Market
Capitalisation of Rs. 63221.51 Cr

Chart No. 3 Equity Performance of BHEL Ltd from Jan 2014 to Dec 2014
4) Bharti Airtel Ltd
NSE : BHARTIARTL
Industry Telecommunication
Founded 1995
Total Assets Rs. 75250.70
Chairman Mr. Sunil Bharti Mittal
*Source: Company Website
Bharti Airtel Limited is an Indian multinational telecommunications Services
Company headquartered in New Delhi, India. It operates in 20 countries across South
Asia, Africa, and the Channel Islands. Airtel provides GSM, 3G and 4G LTE mobile

services, fixed line broadband and voice services depending upon the country of
operation. It is the largest cellular service provider in India, with 192.22 million
subscribers as of August 2013. Airtel is the largest mobile operator in South Asia and
the fourth largest in the world by subscriber base. It has a Market Capitalisation of
Rs.155558.82 Cr
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Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Chart No. 4 Equity Performance of Bharti Airtel Ltd from
Index Return
Stock Return
5) Cipla Ltd
NSE : CIPLA
Industry Pharmaceuticals
Founded 1935
Net Profit (After Tax) Rs.1388.34 Cr
CEO Mr. Y K Hamied

Cipla Limited is an Indian multinational pharmaceutical and biotechnology
company, headquartered in Mumbai, India, Belgium, &Surrey in the European
Union; and Miami, Florida, in the United States with manufacturing facilities in Goa,
Bengaluru, Baddi, Indore, Kurkumbh Patalganga, and Sikkim along with field
stations in Delhi, Pune, and Hyderabad. Cipla primarily develops medicines to
treat cardiovascular disease, arthritis, diabetes, weight control and depression as of
2014 the market capitalisation is Rs. 55833.85 Cr
Chart No. 5 Equity Performance of Cipla Ltd from Jan 2014 to Dec 2014
6) Coal India Ltd
NSE : COALINDIA
Industry Metals and Mining
Founded 1975
Headquarters Kolkata, India
Net Profit (After Tax) Rs. 15008.54
Chairman Mr. Suthartha Bhattacharya

Coal India Limited (CIL) is an Indian state-controlled coal mining company
head quartered in Kolkata, West Bengal, India. It is the largest coal producer company
in the world and contributes around 81% of the coal production in India. It produced
452 million tonnes of coal during FY 2012–13. As on 30 January 2015, Union
Government of India owns 79.65% of the shares in CIL and controls the operations of
CIL through Ministry of Coal. In April 2011, CIL was conferred the Maharatna status
by the Union Government of India. On 31 March 2013, its market capitalisation is
Rs. 230231.48 Cr making it India's 5th most valuable company by market value.
Chart No. 6 Equity Performance of Coal India Ltd from Jan 2014 to Dec 2014
7) Dr. Reddy’s Laboratories Ltd
NSE : DRREDDY
Industry Pharmaceuticals
Founded 1984

Headquarters Hyderabad, India
CEO Mr. G V Prasad
Dr. Reddy's Laboratories Ltd, is a pharmaceutical company based
in Hyderabad, Telangana, India. The company was founded by Anji Reddy, who
previously worked in the mentor institute, Indian Drugs and Pharmaceuticals Limited,
of Hyderabad, India. Dr. Reddy's manufactures and markets a wide range of
pharmaceuticals in India and overseas. The company has over 190 medications,
60active pharmaceutical ingredients (APIs) for drug manufacture, diagnostic kits,
critical care, and biotechnology products. The company also has six FDA approved
plants in India. The current Market capitalisation is Rs. 56462.99 Cr
Chart No. 7 Equity Performance of Dr. Reddy’s Laboratories Ltd
from Jan 2014 to Dec 2014
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15
20
25
30
Index Return
Stock Return
8) Gail ( India) Ltd

NSE : GAIL
Industry Energy, Petrochemicals
Founded 1984
Chairman Shri. B C Tripathi
GAIL (India) Limited is the largest state-owned natural gas processing and
distribution company in India, It is head quartered in New Delhi. It has following
business segments: Natural Gas, Liquid Hydrocarbon, Liquefied petroleum gas
Transmission, Petrochemical, City Gas Distribution, Exploration and Production,
GAILTEL and Electricity Generation. GAIL has been conferred with the
Maharatna status on 1 Feb 2013, by the Government of India. Only six other Public
Sector Enterprises (PSEs) enjoy this coveted status amongst all central CPSEs. GAIL
has been listed in the 131st position among India's Most Trusted brands according to
the Brand Trust Report 2014, a study conducted by Trust Research Advisory. It has
other subsidiaries such as BCPL and Gail Global Pte. The current market
capitalisation is Rs. 48360.70 Cr
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Chart No. 8 Equity Performance of Gail Ltd from Jan 2014 to
Dec 2014
Index Return
Stock Return
9) HDFC Bank Ltd

NSE : HDFCBANK
Founded 1994
MD Mr. Aditya Puri
HDFC Bank Limited is an Indian banking and financial services company headquartered
in Mumbai, Maharashtra. It is the fifth largest bank in India by assets, incorporated in 1994. It
is the largest private sector bank in India by market capitalization. The bank was promoted by
the Housing Development Finance Corporation, a premier housing finance company (set up
in 1977) of India. According to the Brand Trust Report 2014, HDFC was ranked 32nd among
India's most trusted brands. HDFC was ranked 45th on the list of top 50 Banks in the world
in terms of their market capitalization with Rs. 263419.93 Cr
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Chart No. 9 Equity Performance of HDFC Bank Ltd from
Index Return
Stock Return

10) Hero MotoCorp Ltd
NSE : HEROMOTOCO
Industry Automotive
Founded 1982
CEO Mr. Pawan Munjal
Hero Motocorp Ltd., formerly Hero Honda, is an Indian motorcycle and scooter
manufacturer based in New Delhi, India. The company is the largest two wheeler
manufacturer in the world. In India, it has a market share of about 46% share in 2-
wheeler category. The 2006 Forbes 200 Most Respected companies list has Hero
Honda Motors ranked at #108. Hero Honda started in 1984 as a joint venture between
Hero Cycles of India and Honda of Japan. In 2010, when Honda decided to move out
of the joint venture, Hero Group bought the shares held by Honda. Subsequently, in
August 2011 the company was renamed Hero MotoCorp with a new corporate
identity. The market capitalisation stands to Rs. 52510.82 Cr

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Chart No. 10 Equity Performance of Hero Motocorp Ltd from
Index Return
Stock Return
11) Hindalco Industries Ltd
NSE : HINDALCO
Industry Metals
Founded 1958
Net Profit (After Tax) Rs. 1413 Cr
Chairman Mr. Kumar Mangalam Birla
Hindalco Industries Ltd.is an aluminium manufacturing company and is a
subsidiary of the Aditya Birla Group. Its headquarters are at Mumbai, Maharashtra,
India. It is the Flagship company of the company in the metals business. It is listed in
the Forbes Global 2000 at 895th rank. Its market capitalisation is Rs 26206.30 Cr.
Hindalco is one of the world's largest aluminium rolling companies and one of the
biggest producers of primary aluminium in Asia.

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30
35
Chart No. 11 Equity Performance of Hindalco
Industries LtdfromJan2014 toDec 2014
Index Return
Stock Return
12) Hindustan Unilever Ltd
NSE : HINDUNILVR
Industry Consumer Goods
Founded 1932
CEO Mr. Harish Manwani
Hindustan Unilever Limited (HUL) is an Indian consumer goods company based
in Mumbai, Maharashtra. It is owned by Anglo-Dutch company Unilever which owns a 67%
controlling share in HUL.HUL's products include foods, beverages, cleaning agents and
personal care products. HUL was established as Lever Brothers and, in 1956, became known
as Hindustan Lever Limited, as a result of a merger between Lever Brothers, Hindustan
Vanaspati Mfg. Co. Ltd. and United Traders Ltd. It is headquartered in Mumbai, India and
employs over 16,500 workers. The company was renamed in June 2007 as "Hindustan
Unilever Limited".

Hindustan Unilever's distribution covers over 2 million retail outlets across India
directly and its products are available in over 6.4 million outlets in the country. As per
Nielsen market research data, two out of three Indians use HUL products. The market
capitalisation of HUL is Rs. 201685.28 Cr
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Chart No. 12 Equity Performance of
Hindustan Unilever Ltd from Jan 2014 to Dec
2014
Index Return
Stock Return
13) Housing Development Finance Corporation Ltd
NSE : HDFC
Industry Financial Services
Founded 1977
CEO Mr. Keki Mistry
Housing Development Finance Corporation Limited or HDFC is an
financial conglomerate based in Mumbai, India. It is a major player for housing finance in
India. It also has a presence in banking, life and general insurance, asset management,
venture capital and education loans. HDFC was promoted by the Industrial Credit and
Investment Corporation of India. Hasmukhbhai Parekh played a key role in the foundation
of this company.

In 2000, HDFC Asset Management company launched its mutual fund schemes. In
the same year, IRDA granted registration to HDFC Standard Life Insurance, as the first
private sector life insurance company in India. The market capitalisation is Rs.205464.98
Cr
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2
4
6
8
10
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Chart No. 13 Equity Performance of Housing Development
Finance Corporation Ltdfrom Jan 2014 to Dec 2014
Index Return
Stock Return
14) ICICI Bank Ltd
NSE : ICICIBANK
Founded 1994
CEO Mrs. Chanda Kochhar
ICICI Bank is an Indian multinational banking and financial services company
headquartered in Mumbai, Maharashtra, India. As of 2014 it is the second largest bank in
India in terms of assets and market capitalization which is Rs. 192297.23 Cr. The offers a

variety of delivery channels and specialized subsidiaries in the areas of investment
banking, life, non-life insurance, venture capital and asset management. The Bank has a
network of 3,845 branches and 12,012 ATMs in India, and has a presence in 19 countries.
ICICI Bank is one of the Big Four banks of India, along with State Bank of
India, Punjab National Bank and Bank of Baroda. The bank has subsidiaries in the United
Kingdom, Russia, and Canada; branches in United States, Singapore, Bahrain, Hong Kong,
Sri Lanka, Qatar and Dubai International Finance Centre; and representative offices in United
Arab Emirates, China, South Africa, Bangladesh, Thailand, Malaysia and Indonesia. The
company's UK subsidiary has also established branches in Belgium and Germany.
Chart No. 14 Equity Performance of ICICI Bank Ltd from Jan 2014 to Dec 2014
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Index Return
Stock Return
15) Infosys
NSE : INFY
Industry IT Services
Founded 1981
Headquarters Bangalore, India
Revenue Rs. 44341 Cr
Net Profit (After Tax) Rs. 10194 Cr
Total Assets Rs. 420922 Cr
CEO Mr. Vishal Sikka

Infosys Ltd (formerly Infosys Technologies Limited) is an Indian
multinational corporation that provides business consulting, information
technology, software engineering and outsourcing services. It is headquartered in
Bangalore, Karnataka. Infosys is the third-largest India-based IT services company by
2014 revenues. The market capitalisation of the company is Rs. 255827.88 Cr ,
making it India's sixth largest publicly traded company.
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Equity Performance of Infosys Ltdfrom
Jan 2014 toDec 2014
Index Return
Stock Return
16) ITC Ltd
NSE : ITC
Industry Conglomerate
Founded 1910
Headquarters Kolkata, India

CEO Mr. Y C Deveshwar
ITC Limited or ITC is an Indian conglomerate headquartered in Kolkata, West
Bengal. Its diversified business includes five segments: Fast Moving Consumer
Goods(FMCG), Hotels, Paperboards & Packaging, Agri Business & Information Technology.
Established in 1910 as the Imperial Tobacco Company of India Limited, the company was
renamed as the Indian Tobacco Company Limited in 1970 and further to I.T.C. Limited in
1974. The periods in the name were removed in September 2001 for the company to be
renamed as ITC Ltd. The company completed 100 years in 2010. And as of 2013 -14, the
market capitalisation of the company was Rs. 272595.92 Cr. It employs over 25,000 people at
more than 60 locations across India.
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Chart No. 16 Equity Performance of ITC Ltdfrom
Jan 2014 toDec 2014
Index Return
Stock Return
17) Larsen & Toubro Ltd
NSE : LT
Industry Conglomerate
Founded 1938

CEO Mr. K Venkataramanan
Larsen & Toubro Limited, also known as L&T, is an Indian
multinational conglomerate headquartered in Mumbai, Maharashtra, India. It was
founded by Danish engineers taking refuge in India, as well as an Indian financing
partner. The company has business interests in engineering, construction,
manufacturing goods, information technology, and financial services, and also has an
office in the Middle East and other parts of Asia.
L&T is India's largest engineering and construction company. Considered to be
the "bellwether of India's engineering & construction sector", L&T was recognized as
the Company of the Year in Economic Times 2010 awards. The market capitalisation
of the company is Rs. 159271.16 Cr
Chart No. 17 Equity Performance of Larsen & Tubro Ltd from
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5
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15
20
25
Index Return
Stock Return
18) Mahindra and Mahindra Ltd

NSE :
Industry Automotive
Founded 1945
MD Mr. Anand Mahindra
Mahindra & Mahindra Limited (M&M) is an Indian manufacturing corporation
manufacturing corporation headquartered in Mumbai, Maharashtra, India. It is one of the
largest vehicle manufacturers by production in India and the largest seller of tractors across
the world. It is a part of Mahindra Group, an Indian conglomerate.
It was ranked as the 10th most trusted brand in India, by The Brand Trust Report,
India Study 2014. It was ranked 21st in the list of top companies of India in Fortune India
500 in 2011.Its major competitors in the Indian market include Maruti Suzuki, Tata
Motors, Ashok Leyland, Toyota, Hyundai, Mercedes-Benz (Merc) and others. The market
capitalisation of the company is Rs. 76642.80 Cr.
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Chart No. 18 Equity Performance of Mahindra&
MahindraLtdfrom Jan 2014 toDec 2014
Index Return
Stock Return
19) Maruti Suzuki India Ltd

NSE : MARUTI
Industry Automotive
Founded 1981
Chairman Mr. R C Bhargava
Maruti Suzuki India Limited, commonly referred to as Maruti and formerly known
as Maruti Udyog Limited, is an automobile manufacturer in India. It is a subsidiary of
Japanese automobile and motorcycle manufacturer Suzuki. As of November 2012, it had a
market share of 37% of the Indian passenger car markets. Maruti Suzuki manufactures and
sells a complete range of cars from the entry level Maruti 800, Alto, to the hatchback Ritz
, Celerio, , A-Star, Swift, Wagon R, Zen and sedans DZire , Ciaz , Kizashi and SX4, in the 'C'
segment Eeco, Omni, Multi Purpose vehicle Suzuki Ertiga and Sports Utility vehicle Grand
Vitara. In February 2012, the company sold its ten millionth vehicles in India. The Market
capitalisation of the company stood at Rs. 110636.82 Cr.
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Chart No. 19 Equity Performance of Maruti Suzuki
IndiaLtdfrom Jan 2014 toDec 2014
Index Return
Stock Return
20) NTPC Ltd

NSE : NTPC
Industry Electric Utility
Founded 1975
Chairman Mr. Arun Roy Choudary
NTPC Limited(also known as National Thermal Power Corporation Limited) is an
Indian Central Public Sector Undertaking (CPSU) under the Ministry of Power, Government
of India, engaged in the business of generation of electricity and allied activities. It is a
company incorporated under the Companies Act 1956 and a "Government Company" within
the meaning of the act. NTPC's core business is generation and sale of electricity to state-
owned power distribution companies and State Electricity Boards in India. The company also
undertakes consultancy and turnkey projects also. The company has also ventured into oil and
gas exploration and coal mining activities. It is the largest power company in India with an
electric power generating capacity of 42,964 MW. Although the company has approx. 18% of
the total national capacity it contributes to over 27% of total power generation due to its focus
on operating its power plants at higher efficiency levels. The Market capitalisation of the
company stood at Rs. 129866.06 Cr.
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Chart No. 20 Equity Performance of NTPC Ltd from
Index Return
Stock Return

A Project on creating an Optimal Portfolio on BSE Sensex using Sharpe's Index Model at Anand Rathi Securities

A Project on creating an Optimal Portfolio on BSE Sensex using Sharpe's Index Model at Anand Rathi Securities

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