BCom honours 4th sem investment and portfolio managementBCom honours 4th sem investment and portfolio management

1. INVESTMENT ANALYSIS &
PORTFOLIO MANAGEMENT

2. INVESTMENT
An investment is an asset or item acquired with the goal of generating income or appreciation.
Appreciation refers to an increase in the value of an asset over time. When an individual
purchases a good as an investment, the intent is not to consume the good but rather to use it in the
future to create wealth.
An investment always concerns the outlay of some resource today—time, effort, money, or an
asset—in hopes of a greater payoff in the future than what was originally put in. For example, an
investor may purchase a monetary asset now with the idea that the asset will provide income in
the future or will later be sold at a higher price for a profit.
Investment can refer to any mechanism used for generating future income. This includes the
purchase of bonds, stocks, or real estate property, among other examples. Additionally, purchasing
a property that can be used to produce goods can be considered an investment.

4. CHARACTERISTICS OF INVESTMENT
• Return
•Risk
•Liquidity
•Tax benefits
•Stability of returns
•Safety of principle
•Legality
•Capital Appreciation

5. TYPES OF INVESTMENT

7. INVESTMENT PROCESS
•Investment Objective
•Asset Allocation Assessment
•Portfolio Strategy creation
•Asset Selection
•Evaluation of portfolio performance

8. INVESTMENT AVENUES
The market value of all the shares owned by a company’s shareholders is known as
market capitalization. The worth of a company is determined by the stock market.
It is also defined as the market value of all outstanding shares. It is calculated by
multiplying the entire number of a company’s outstanding shares by the current market
price of one share, which is commonly referred to as ‘market cap’.
Market Capitalization = Total number of outstanding shares x Current market price
There are three types of market capitalizations:
Large-cap
Mid-cap
Small-cap

9. LARGE CAP
•Large-cap companies are companies that are big and well-established in the equity market. These
companies have reliable management and rank among the top 100 companies in the country.
•Large-cap companies have a market cap of Rs 20,000 crore or more.
•The stocks of large-cap companies tend to be less volatile, which means their prices remain
relatively stable even amid turbulence. This makes them relatively low-risk investment options
•The growth potential of large-cap stocks is lower than that of mid- and small-cap stocks. That
being said, large-cap stocks are a stable investment option, especially if you have a longer
investment horizon. This makes large-caps well suited to investors with low risk appetites.
•large-cap stocks tend to have higher liquidity as there is a high demand for large-cap shares in the
stock market. Thus, squaring off positions is easier when you purchase such shares.

10. MID CAP
•Mid-cap companies sit somewhere between large-cap and small-cap companies.
These companies are compact and rank among the top 100–250 companies in the
country.
•Meanwhile, the market cap of mid-cap companies is between Rs 5,000 crore
and less than Rs 20,000 crore.
•Mid-cap stocks are slightly more volatile than large-cap stocks and carry
somewhat more risk. If your risk appetite is moderate, you could look into mid-
caps, as these have a slightly higher potential for growth.
•Mid-cap companies have lower liquidity as the demand for their stocks is slightly
lower

11. SMALL CAP
•Small-cap companies are much smaller in size and have the
potential to grow rapidly.
•Small-cap companies have a market cap of below Rs 5,000
crore.
•Small-cap companies are highly volatile and their prices can
swing considerably, which increases the risk for investors.
•Small-cap companies have the least liquidity, which can
make squaring off positions more difficult.

14. PENNY STOCKS
Penny stocks are shares of small publicly traded
companies that are listed on stock exchanges
for less than ten cents. They are not widely
traded securities, and their potential gains are
usually determined by sharp spikes in market
volatility. Penny stocks can be risky to invest in
due to their lack of liquidity.

15. ADVANTAGES OF PENNY STOCKS
Funding for Small Companies
Penny stocks do provide some small businesses with a way to
access funding from the public. These companies may use this
platform as a starting block to move into a larger marketplace.
High Potential for Growth
Also, since they sell at such low prices, there is room for significant
upside. Some companies, such as Amazon (AMZN) originated as
penny stocks but later grew into sizable blue-chip companies.

16. DISADVANTAGES OF PENNY STOCKS
Lack of Information Available to the Public
When considering options for potential investments, it's important to
have enough information to make an informed decision. For some penny
stocks, information on corporate performance can be very difficult to find.
When this is the case, the information that is available about them may
not come from credible sources.
No Minimum Standards
Stocks on the OTCBB and pink sheets do not have to fulfill minimum
standard requirements to remain available for sale through OTC
exchanges.

17. Lack of History
Many of the companies considered to be penny stocks could be newly formed,
and some could be approaching bankruptcy. These companies will generally
have poor track records or no track record at all. As you can imagine, this lack of
historical information makes it difficult to determine a stock's potential.
Liquidity and Fraud
Stocks that trade infrequently do not have much liquidity. As a result, it is
possible that investors won't be able to sell the stock once it is acquired. The
investors might need to lower their price until it is considered attractive to
another buyer.