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KOTAK SECURITIES LTD.

TABLE OF CONTENTS

R K INSTITUTE OF MANAGEMENT Page 1

NO PARTICULAR PAGE NO.

CHAPTER-1. INTRODUCTION 2-5

CHAPTER-2 RESEAARCH DESIGN 6-15

CHAPTER-3 PROFILE OF THE COMPANY 16-31

CHAPTER-4 ANALYSIS AND INTERPRETATION OF

DATA

32-54

CHAPTER-5 SUMMARY OF FINDINGS CONCLUSION

AND RECOMMENDATOINS

55-59

BIBLIOGRAPHY 60

ANNEXURE 61-71


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CHAPTER I

INTRODUCTION

INDUSTRY PROFILE

What exactly is the finance and investment industry? It is a fairly broad ranginggroup

of institutions that provide various financial services. Examples of such institutions include

commercial banks, merchant (or investment) banks, insurance companies, brokerage firms,

asset managers, and an assortment of other institutions. Services provided range from money

management for private individuals to debt and equity underwriting for corporations to

issuance of insurance policies, and many other services. In todays global markets, this

industry is the engine of the global economy, enabling corporations and governments to grow

and expand.

The financial services industry includes firms that are engaged in activities such as

investing, lending, insurance, securities trading and securities issuance. This is not an

exhaustive list, but these companies can be characterized as being in one or more of the

following lines of business:

Banking

Insurance

Securities Brokerage

Investment Banking

Securities Trading

Investment Management (or Money Management)

Securities Analysis



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Financial Planning

Investment industry in India

Emerging strong even during the scariest phase of global financial meltdown, India

has become one of the favorite investment destinations for the foreign investors across the

globe. The investment scenario in India is getting better and better with each passing day due

to high confidence level of the investors. Today, India is considered the 4th biggest economyin the world. Its impressive GDP rate, especially in the field of purchasing power, has

catapulted it to second position among all the developing nations. According to forecasts,

Indian economy will grow to become 60% in size of the economy of US. It will also witness

macro-level stability in economic conditions.

Warren Buffett has always mentioned that investment in India should always be a

long-term story - as the industry has been growing from an emerging market to a developed

one. The next 11 years in India will surely give good returns. India's GDP growth would be

around 7% to 8% in 2011. The sustainable growth rate of India would however hover around

7%. Before becoming a mature economy, India has another 20 to 40 years to spare.

Current Investment Scenario in India

Globalization and Foreign Direct Investment form an integral part of all the developed

as well as developing economies. In fact, the growth of the underdeveloped economies is also

dependant on these key factors. These components equip any nation with new skills, newitems and provide smooth access to markets and technology. Today, every nation across the

globe is looking for foreign and overseas investors. Whether it's India or China, everyone

wants foreign investments. According to recent trends, India is only second to China in the

league of favorite investment destinations.

Global Investment Scenario

Along with India, the others who are participating in the race of investment among the



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are based; all major index providers like MSCI, FTSE, STOXX, S&P and Dow Jones use the

free-float methodology.

SENSEX Calculation Methodology

Since September 1, 2003,SENSEX is being calculated using the "Free-float Market

Capitalization" methodology, wherein, the level of index at any point of time reflects the

free-float market value of 30 component stocks relative to a base period. The market

capitalization of a company is determined by multiplying the price of its stock by the number

of shares issued by the company. This market capitalization is further multiplied by the free-

float factor to determine the free-float market capitalization.

The base period of SENSEX is 1978-79 and the base value is 100 index points. This

is often indicated by the notation 1978-79=100. The calculation of SENSEX involves

dividing the free-float market capitalization of 30 companies in the Index by a number called

the Index Divisor. The Divisor is the only link to the original base period value of the

SENSEX. It keeps the Index comparable over time and is the adjustment point for all Index

adjustments arising out of corporate actions, replacement of scrips etc. During market hours,

prices of the index scrips, at which latest trades are executed, are used by the trading systemto calculate SENSEX on a continuous basis.

CHAPTER-2

RESEARCH DESIGN

Statement of the problem

In today's financial marketplace, a well-maintained portfolio is vital to any investor's

success. As an individual investor, you need to know how to determine an asset allocation

that best conforms to your personal investment goals and strategies. In other words, yourportfolio should meet your future needs for capital and give you peace of mind.



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a) Firstly, the present study has been undertaken to construct an optimal portfolio using

Sharpes single index model.

b) Secondly, to find the proportion of investment in selected stocks.

Objectives

To study the stock market industry.

To study the company functions.

To study how Sensex is calculated.

To analyze the risk-return to beta ratio of all 30 scrips in Sensex.

To study the fundamentals of scrips listed in Sensex.

To suggest an optimal portfolio using Sharpes single index model.

Scope of the study

The study covers the period from Dec 1st 2009 to Dec 31th 2010.

The study covers companies that are listed in BSE.

The study covers specifically those companies that are traded in Sensex.

The study focuses on improving the knowledge of the investors.

Methodology

Research method

Exploratory research using Sharpes single index model was used for the study. The study

was conducted to construct an optimal portfolio.

Data sources

Mainly there are two sources of secondary data used for this study

a. Internal sources

b. External sources

a) Internal Sources: Internal records in the company are generally used as a starting point

in any marketing research. This includes information about the company background, its

history, market share etc. This type of information is usually maintained by the marketing

department of the company.



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b) External Sources: External sources include syndicated reports such as market share data

or industry analysis.

Sample frame

BSE Sensex

Sample unit

All 30 scrips of Sensex are selected for this study.

Data analysis technique

Sharpes Single Index Model

Operational definition of concepts

Portfolio construction based on Sharpes optimization

Every investor faces the dilemma, of which scrips to select for his portfolio to get adequate

return. Besides, the investor has to decide how much to invest in each scrip. Simple Sharpe

Portfolio optimisation model enables the investor to find a portfolio that best meets the goals,

objectives and risk tolerance of the investor. The method also stresses on portfolio

optimisation, which is an important component of the portfolio selection process. It helps to

select a set of scrips, which provides the highest rate of return for the lowest risk that the

investor is willing to take.

The steps for finding the stocks to be included in the optimal portfolio are:

1. Find out the excess return to beta ratio for each stock under consideration.

2. Rank them from the highest to the lowest.

3. Proceed to calculate Ci for all stocks according to the ranked order using the

following formula:

The formula for determining Ci



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+

=

2

2

2

2

2

1

)(

cj

jm

cj

i

m

i

RjRi

C

4. The cumulative values of Ci start declining after a particular Ci and that point is taken

as the cut-off point and that stock ratio is the cut-off ratio C.

Sharpes excess return to beta ratioIt is a single number that measures the desirability of any stock to be included in the optimal

portfolio. The excess return to beta ratio measures the additional return on a security (excess

of the riskless asset return) per unit of systematic risk or non-diversifiable risk.

Excess return to beta = (Ri RF) / iWhere: Ri = expected return on stock i

RF = return on riskless asset

bI = expected change in the rate of return on stock i associated with a 1% change in the

market return.

Stocks are ranked by excess return to beta (from the highest to the lowest). The higher the

excess return to beta ratio, the more is the desirability of the stock to be included in the

portfolio.

However, before selecting the stock it is necessary to determine the cut-off rate C*. Stocks

which have an excess return to beta greater than C* must be selected. After ranking the

security, in the following table cut off rate has been calculated. For the calculation of cut-off

rate we first calculate the Ci as if only the first ranked security is included in the portfolio.

Then we calculate Ci considering as if only the first and second ranked security is included in

the optimum portfolio, and so on.



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Determination of cut-off rate c*Cut-off rate of i stocks can be calculated using the simple formula

+

=

2

2

2

2

2

1

)(

cj

jm

cj

i

m

i

RjRi

C

Where: sm2 = variance in the market index

cj2 = unsystematic risk

Determination of optimal portfolioOnce the securities to be included in the portfolio are decided, the next step is to determine

the weight of each security to be included in the portfolio as follows -

Wi = Zi / Zj

where Zi = i/ ei2 [(Ri RF)/ I C*]

In the above formula the second expression determines the relative investment in each

security. The first determines the weight of each security in the portfolio so that they sum to

1. This ensures full investment.

SENSEX - Scrip Selection Criteria

The general guidelines for selection of constituents in SENSEX are as follows:



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1. Listed History: The scrip should have a listing history of at least 3 months at BSE.

Exception may be considered if full market capitalization of a newly listed company

ranks among top 10 in the list of BSE universe. In case, a company is listed on

account of merger/ demerger/ amalgamation, minimum listing history would not be

required.

2. Trading Frequency: The scrip should have been traded on each and every trading

day in the last three months at BSE. Exceptions can be made for extreme reasons like

scrip suspension etc.

3. Final Rank: The scrip should figure in the top 100 companies listed by final rank.

The final rank is arrived at by assigning 75% weightage to the rank on the basis of

three-month average full market capitalization and 25% weightage to the liquidity

rank based on three-month average daily turnover & three-month average impact cost.

4. Market Capitalization Weightage: The weightage of each scrip in SENSEX based

on three-month average free-float market capitalization should be at least 0.5% of the

Index.

5. Industry/Sector Representation: Scrip selection would generally take into account a

balanced representation of the listed companies in the universe of BSE.

6. Track Record: In the opinion of the BSE Index Committee, the company should

have an acceptable track record.

Understanding Free-float Methodology Concept

Free-float methodology refers to an index construction methodology that takes into

consideration only the free-float market capitalization of a company for the purpose of index

calculation and assigning weight to stocks in the index. Free-float market capitalization takes

into consideration only those shares issued by the company that are readily available for

trading in the market. It generally excludes promoters' holding, government holding, strategic



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holding and other locked-in shares that will not come to the market for trading in the normal

course. In other words, the market capitalization of each company in a free-float index is

reduced to the extent of its readily available shares in the market.

Subsequently all BSE indices with the exception of BSE-PSU index have adopted thefree-float methodology.

Major advantages of Free-float Methodology

A Free-float index reflects the market trends more rationally as it takes into

consideration only those shares that are available for trading in the market.

Free-float Methodology makes the index more broad-based by reducing the

concentration of top few companies in Index.

A Free-float index aids both active and passive investing styles. It aids active

managers by enabling them to benchmark their fund returns Vis-a -vis an investible

index. This enables an apple-to-apple comparison thereby facilitating better

evaluation of performance of active managers. Being a perfectly replicable portfolio

of stocks, a Free-float adjusted index is best suited for the passive managers as it

enables them to track the index with the least tracking error.

Free-float Methodology improves index flexibility in terms of including any stock

from the universe of listed stocks. This improves market coverage and sector

coverage of the index. For example, under a Full-market capitalization methodology,

companies with large market capitalization and low free-float cannot generally be

included in the Index because they tend to distort the index by having an undue

influence on the index movement. However, under the Free-float Methodology, since

only the free-float market capitalization of each company is considered for index

calculation, it becomes possible to include such closely-held companies in the index

while at the same time preventing their undue influence on the index movement.



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Globally, the Free-float Methodology of index construction is considered to be an

industry best practice and all major index providers like MSCI, FTSE, S&P and

STOXX have adopted the same. MSCI, a leading global index provider, shifted all its

indices to the Free-float Methodology in 2002. The MSCI India Standard Index,

which is followed by Foreign Institutional Investors (FIIs) to track Indian equities, is

also based on the Free-float Methodology. NASDAQ-100, the underlying index to the

famous Exchange Traded Fund (ETF)-QQQ is based on the Free-float Methodology.

Definition of Free-float

Shareholding of investors that would not, in the normal course come into the open market

for trading are treated as 'Controlling/ Strategic Holdings' and hence not included in free-

float. Specifically, the following categories of holding are generally excluded from the

definition of Free-float:

Shares held by founders/directors/ acquirers which has control element

Shares held by persons/ bodies with "Controlling Interest"

Shares held by Government as promoter/acquirer

Holdings through the FDI Route

Strategic stakes by private corporate bodies/ individuals

Equity held by associate/group companies (cross-holdings)

Equity held by Employee Welfare Trusts



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Locked-in shares and shares which would not be sold in the open market in normal

course.

The remaining shareholders fall under the Free-float category.

Determining Free-float Factors of Companies

BSE has designed a Free-float format, which is filled and submitted by all index

companies on a quarterly basis. (Format available on www.bseindia.com). BSE determines

the Free-float factor for each company based on the detailed information submitted by the

companies in the prescribed format. Free-float factor is a multiple with which the total market

capitalization of a company is adjusted to arrive at the Free-float market capitalization. Once

the Free-float of a company is determined, it is rounded-off to the higher multiple of 5 andeach company is categorized into one of the 20 bands given below. A Free-float factor of say

0.55 means that only 55% of the market capitalization of the company will be considered for

index calculation.

7. Limitations

The study was restricted only to the companies that are listed in BSE.

The study further limits the companies that are indexed only in Sensex.

The information collected was in nature of the secondary data; as a result the

recommendation and suggestions are acceptable only to a certain extent.

The study is based on the data collected for one year from mar 1st, 2009 to Feb. 28th,

1010.

http://www.bseindia.com/http://www.bseindia.com/


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CHAPTER-3

COMPANY PROFILE

Background and Inception of the Company

Kotak Securities Ltd. is one of the oldest and leading stock broking houses in India. Kotak

Securities Ltd. has also been the largest in IPO distribution. The company was established in

the year 1995 by Mr. Uday Kotak CEO of the company. Kotak Securities Ltd. 100 %

subsidiary of Kotak Mahindra Bank is one of the oldest and largest broking firms in the

Industry. The companys offerings include stock broking through the branch and Internet,Investments in IPO, Mutual funds and Portfolio management service. The company has a

full-fledged research division involved in Macro Economic studies, Sectorial research and

Company Specific Equity Research combined with a strong and well networked sales force

which helps deliver current and up to date market information & news.

Kotak Mahindra is one of India's leading financial conglomerates, offering complete financial

solutions that encompass every sphere of life. From commercial banking, to stock broking, to

mutual funds, to life insurance, to investment banking, the group caters to the financial Needs

Of individual and corporate.Kotaksecurities.com is one-stop investment destination, offering

investment opportunities in a host of financial instruments; with products like Easy Equity,

Easy Mutual Fund, Easy IPO, and Easy Derivatives. Furthermore, Offerings are customized

to suit customer investment profile; hence they can meet their investment objectives.

The group has a net worth of over Rs. 5,609 crore, employs around 17,100 people in its

various businesses and has a distribution network of branches, franchisees, representative

offices and satellite offices across 400 cities and towns in India and offices in New York,



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London, Dubai, Mauritius and Singapore. The Group services around 3.6 million customer

accounts.

Kotak Securities Limited has Rs. 3300 crore of Assets Under Management (AUM) as of 31st

March, 2010. The portfolio Management Service provides top class service, catering to the

high end of the market. Portfolio Management from Kotak Securities comes as an answer to

those who would like to grow exponentially on the crest of the stock market, with the backing

of an expert.

Key executives

a) Chairman - Uday Kotak.b) Director - S. A. Narayanc) Managing Director - D. Kannan

d) Executive Vice President - Trivikram Kamath

e) Company Secretary sandeepchordia

Nature of business carried

Kotak Securities, Ltd. offers stock broking services and distributes financial products in

India. The company primarily provides secondary market broking services in equity shares

and global depository receipts. It also offers portfolio management services to high net-worth

individuals and corporates. In addition, the company distributes a range of financial products,

including company fixed deposits, mutual funds, initial public offerings, secondary debt,

equity, and small savings schemes. Further, it provides Internet broking services and

depository services

Kotak securities is one of the leading broking houses in India that provides a wide range of

services nationwide to a substantial and diversified client base that includes retail clients,

high net worth individuals, corporates and financial institutions.

Kotak securities are a 100% subsidiary of Kotak Mahindra Bank and one of the oldest and

largest broking firms in the Industry. They have been the first and only NBFC to receive the

license to be converted into a bank. They have been the first in providing many products and

services which have now become industry standards.

The company also a depository participant with National Securities Depository Limited(NSDL) and Central Depository Services Limited (CDSL), providing dual benefit services

http://in.linkedin.com/pub/sandeep-chordia/20/358/941http://in.linkedin.com/pub/sandeep-chordia/20/358/941http://in.linkedin.com/pub/sandeep-chordia/20/358/941http://in.linkedin.com/pub/sandeep-chordia/20/358/941http://in.linkedin.com/pub/sandeep-chordia/20/358/941


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wherein the investors can avail the companys brokerage services for executing the

transactions and the depository services for settling them. The company process more than 4,

00,000 trades a day which is much higher even than some of the renowned international

brokers.

First to provide Margin Financing to the customers first to enable investing in IPOs and

Mutual Funds on the phone Providing SMS alerts before execution of depository transactions

Launching of Mobile application to track portfolio. AutoInvest - A systematic investing plan

in Equities and Mutual fund Provision of margin against securities automatically against

shares in your Demat account.

Vision, Mission and Quality policy

Vision statement

To build Kotak securities as the global Indian financial service brand.

Mission statement

To be most preferred employer in financial services.

The most trusted financial service company.

Value creation rather than size alone will be business driver.

Quality policy

Some of best people are with Kotak securities for over a decade and have

demonstrated ability, nurture and grow business.

The culture at Kotak is one of professional entrepreneurship.

Product profileThe company offers varied services like:



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1. Easy equity and derivatives.

2. Easy derivatives,

3. Easy IPO.

4. Easy Mutual Fund.

5. Easy insurance.

6. Portfolio management services.

Easy equity and derivatives.

Investing in equity & derivatives was never so easy. As the Best share broker in India

Kotaks products and services are focused at making investments in equity &

derivatives as simple as writing a cheque.

Easy Derivatives Trading

If you are not averse of taking risks, derivatives Derivatives - A financial contract between

two

or more parties and it is derived from the

future value of an underlying asset. can prove to be a good investment option. Kotak

Securities have strived to make trading in futures & options simpler. Their derivatives

seminars educate new entrants in the stock options & futures trading market to be more

equipped with knowledge and techniques. Once customers have the knowledge of trading inderivative instruments their daily derivative reports will provide them with strategies that

may yield good returns.

http://www.kotaksecurities.com/whatweoffer/www.kotaksecurities.com/aboutus/index.htmlhttp://www.kotaksecurities.com/whatweoffer/easyderivatives.htmlhttp://www.kotaksecurities.com/university/Futures.htmlhttp://www.kotaksecurities.com/whatweoffer/www.kotaksecurities.com/aboutus/index.htmlhttp://www.kotaksecurities.com/whatweoffer/easyderivatives.htmlhttp://www.kotaksecurities.com/university/Futures.html


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Easy IPO

Investing in IPOs is not complex anymore, Kotak Securities has made buying IPOs very

simple. All have to do is make one phone call, and that's all. No IPO application forms, no

queues, simply pick the phone or log on to www.kotaksecurities.com and place an IPO orderwithin seconds. Kotak securities also provide with information on IPO News , Forthcoming

IPOs in India and a lots more. To start investing in IPOs, all need to do is open an online

trading account. Choose from their wide range of accounts that suits investment needs.

Easy Mutual Fund

Customers can now invest in over 3000 different mutual fund schemes (in the Indian stock

market) online or through your phone. And to make this choice of choosing between which

Scheme to invest in,Kotak securities offer exclusive mutual fund research.

Investment in mutual fund can be made simply by going online and logging on to

www.kotaksecurities.com or just making aphone call . No paperwork no queues. Simply

pick the phone or log on to www.kotaksecurities.com and place order.

Easy Insurance

Life with its various challenges gives you opportunities to tackle them too. One of them is

getting insurance. Kotak Securities offer a host of insurance options to help to stay protected

and financially secure. Clientscan choose from various plans based on their needs and make

an informed financial decision for them and their loved ones.

Portfolio Management services

http://www.kotaksecurities.com/callandtrade/callntrade.htmlhttp://www.contentlinks.asiancerc.com/kotaknew/ipo/IPONews.asphttp://www.contentlinks.asiancerc.com/kotaknew/ipo/ForthComingIssues.asphttp://www.contentlinks.asiancerc.com/kotaknew/ipo/ForthComingIssues.asphttp://www.kotaksecurities.com/whatweoffer/trinityaccoun.htmlhttp://www.kotaksecurities.com/whatweoffer/trinityaccoun.htmlhttp://www.kotaksecurities.com/http://www.kotaksecurities.com/http://www.kotaksecurities.com/callandtrade/callntrade.htmlhttp://www.kotaksecurities.com/http://www.kotaksecurities.com/callandtrade/callntrade.htmlhttp://www.contentlinks.asiancerc.com/kotaknew/ipo/IPONews.asphttp://www.contentlinks.asiancerc.com/kotaknew/ipo/ForthComingIssues.asphttp://www.contentlinks.asiancerc.com/kotaknew/ipo/ForthComingIssues.asphttp://www.kotaksecurities.com/whatweoffer/trinityaccoun.htmlhttp://www.kotaksecurities.com/whatweoffer/trinityaccoun.htmlhttp://www.kotaksecurities.com/http://www.kotaksecurities.com/http://www.kotaksecurities.com/callandtrade/callntrade.htmlhttp://www.kotaksecurities.com/


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Kotak Securities is one of Indias oldest portfolio management companies with over a decade

of experience. It is also one of the largest, with Assets Under Management of over Rs. 3300

Crore. Kotak Portfolio Management comes as an answer to those who would like to grow

exponentially on the crest ofstock market, with backing of an expert. Kotak, measure success

through the success of its clients. Whatever be their requirement, they will tailor their stock

market portfolio to their specific investment need.

At the very base of a financially sound portfolio lies the identification of one's investment

objective. Kotak securities help you identify your investment objectives and also outline

important requirements like liquidity, capital appreciation, current income, time span and

fiscal implications and then suggest an appropriate scheme.

Area of operation

Kotak securities process more than 400000 trades a day which is much higher even than

some of the renowned international brokers. Kotak securities network spans over 400

cities with 1113 outlets. The group has a net worth of over Rs. 5,609 crore, employs

around 17,100 people in its various businesses and has a distribution network of branches,

franchisees, representative offices and satellite offices across 400 cities and towns in India

and offices in New York, London, Dubai, Mauritius and Singapore. The Group services

around 3.6 million customer accounts.

Ownership pattern

Category

Code

Category of

Shareholder

Number

of

shareholders

Total

Numb

er of

Share

s

Number of shares

held in dematerialized

form

(A) Shareholding of

premotor and premotor

group [2]

http://www.kotaksecurities.com/http://www.kotaksecurities.com/


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(1) Indian

(a) Individuals/ Hindu

Undivided Family

13 308,8

96,20

8

842,886

(b) Central Government/

State Government(s)

(c) Bodies Corporate 1 26,89

7,060

(d) Financial Institutions/

Banks

(e) Any Other (specify)

Sub-Total (A)(1) 14 335,793,26

8

842,886

(2) Foreign

(a) Individuals (Non-

Resident Individuals/

Foreign

Individuals)

(b) Bodies Corporate

(c) Institutions

(d) Any Other (specify)

Sub-Total (A)(2)

Total Shareholding ofPromoter and

Promoter

Group (A)= (A)(1)+

(A)(2)

14 335,793,26

8

842,886

(B) Public shareholding

[3]

(1) Institutions



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(a) Mutual Funds/ UTI 129 25,14

3,666

25,124,666

(b) Financial Institutions/

Banks

41 20,53

4,647

20,534,647

(c) Central Government/

State Government(s)

(d)

(e) Venture Capital Funds

(e) Insurance

Companies

(f) Foreign Institutional

Investors

328 183,5

55,34

3

183,510,643

(g) Foreign Venture

Capital Investors

(h) Any Other (specify)

Sub-Total (B)(1) 498 229,2

33,65

6

229,153,156

(2) Non- Institutional

(a) Bodies Corporate 1,523 870,2

81

28,785,841

(b) Individuals

i. Individual

shareholders holding

nominal share

Capital up to Rs. 1

lakh.

77,389 37,72

2,399

31,237,517

ii. Individual

shareholders holding

nominal share

Capital in excess of

Rs. 1 lakh.

291 57,93

0,004

57,396,474



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(c) Any Other (specify)

Non Resident Indians 2499 4,476,

567

3,234,189

Overseas Bodies

Corporate

2 4,358,

680

4,358,480

Foreign Bank 1 32,80

0,000

32,800,000

Foreign Bodies 1 76,12

4

76124

Trust 5 104,7

07

104,707

HUF 1,358 1,250,804

1,250,804

Clearing Members 309 771,9

52

771,952

Sub-Total (B)(2) 83,405 168,3

61,51

8

160,025,088

Total Public

Shareholding (B)= (B)(1)+(B)(2)

83,902 397,5

95,174

389,178,244

TOTAL (A)+(B) 83,917 733,3

88,44

2

390,021,130

(C) Shares held by

custodians and against

which depository

receipts has been

issued

(a) Bank of New York

Depository

1 18,26

2

18,262

GRAND TOTAL (A)

+(B)+(C

83,918 733,4

06,70

4

390,039,392



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Competitors information

Kotak Securities is not the only firm carrying on the business of stock broking. There aremany competitors in this industry,the profile of the major ones are given below:

Karvy Stock Broking Ltd

Karvy was established as Karvy and company by five chartered accountants during the

year 1979-80, and then its work was confined to audit and taxation only. Later on it

diversified into financial and accounting services. Karvy became a known name during the

year 1985-86 when it forayed into capital market as registrar.

Religare Securities

Religare is a global financial services group with a presence across Asia, Africa, Middle

East, Europe and the Americas. In India, Religares largest market, the group offers a wide

array of products and services ranging from insurance, asset management, broking and

lending solutions to investment banking and wealth management. The group has also

pioneered the concept of investments in alternative asset classes such as arts and films

.With 10,000 plus employees across multiple geographies, Religare serves over a million

clients, including corporates and institutions, high net worth families and individuals, and

retail investors.

Religare Enterprises Limited is part of a family of companies that fall under the broader

Religare brand, which includes other global businesses such as diagnostics, aviation and

travel, wellness retail, and IT products and solutions. A diversified financial services group

Religare Enterprises Limited (REL) offers a comprehensive suite of customer-focused

financial products and services targeted at retail investors, high net worth individuals and

corporate and institutional clients.

REL, along with its joint venture partners, offers a range of products and services in India,

including asset management, life insurance, wealth management, equity and commodity

broking, investment banking, lending services, private equity and venture capital. Religare

has also ventured into the alternative investments sphere through its holistic arts initiative

and film fund.

Religare Securities Limited (RSL), a 100% subsidiary of Religare Enterprises Limited is a



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leading equity and securities firm in India. The company currently handles sizeable

volumes traded on NSE and in the realm of online trading and investments; it currently

holds a reasonable share of the market.

Reliance Securities Ltd

Reliance Securities Limited is a Reliance Capital company and part of the Reliance Anil

Dhirubhai Ambani Group. Reliance Money is a brand owned by Reliance Capital

Limited. Reliance Securities with the permission of Reliance Capital Limited uses the

Reliance Money brand to market its various services.

Reliance Securities endeavors to change the way investors transact in equities markets and

avails services. It provides customers with access to Equity, Derivatives, Portfolio

Management Services, Investment Banking, Mutual Funds and IPOs. It also offers secured

online share trading platform and investment activities in secure, cost effective and

convenient manner. To enable wider participation, it also provides the convenience of

trading offline through variety of means, including Call & Trade, Branch dealing Desk and

its network of affiliates.

Reliance Money through its pan India presence with 6,233 outlets has more than 3.5

million customers. Reliance Capital is one of India's leading and fastest growing private

sector financial services companies, and ranks among the top 3 private sector financial

services and banking groups, in terms of net worth.

The list of other competitors is given below.

India infoline

Way 2 wealth securities.

Motilal oswal securities ltd.

Share khan.

Hdfc securities.

ICICI direct

India bulls financial services

\



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Infrastructural facilities

Kotak securities have its Head Office located in Mumbai and have 400 Branch Offices

spread over various cities in India. The main server at the Head Office in is connected by

VSAT to NSE and BSE. And all the Branch Offices are connected by the branch network,

VPN, VSAT and the internet.

Kotak securities are well equipped with latest in terms of information technology and all

the branches are inter-connected with state of the art networking technology. Internet

based client-trading services in Equities and Derivatives Segment is also available. Other

infrastructure includes a large network of trading terminals connected by VSATs all across

the country.

Kotak securities backbone is based on VSAT technology, Leased Line as well as

broadband Internet which gives a client maximum benefit for trading and watching their

online positions. Their groups of professionals ensure to provide the best available services

for Trading, Depository and Commodity Exchange.

At Kotak securities branches around in India they have computers, Telephones and a fast

broadband internet service as their basic necessity. They have a very comfortable and

spacious office to work with very good infrastructure provided to both the front desk as

well as the back office executives. For trading they use the ODIN and NOW software and

also have their own separate Accounting software for retrieving all the data and

information about their clients. While for Portfolio Management Service and Mutual Fund,

there is different software.

All in all, the company provides their employees and the clients with a good infrastructure

facility which keeps them happy, healthy and satisfied at all the times.

Future growth and prospectus

Since the inception of the company, Kotak securities has always been growing and

strengthening its services.

Now Kotak securities will selectively partner with entities in different countries for

distribution and complement them with their fund management expertise. Kotak securities

did an AUD 75 million fund for Australia and are looking at a shariah-complement fund



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for UAE.

Kotak securities continued to be Indias leading stock broking firm and do around 10

percent of Indias avg daily volumes up from 9.5 last year. Expected to reach 12.5 in 2011.

Kotak securities also planning to use its outlets as a channel to sell third-party products

such as mutual fund and life insurance. Kotak securities continued to focus on building

research because they think it will be a key differentiator over a period of time.

According to Kotak securities the alternate asset businesses can be linked to acorns today

but have potential to be tomorrows oaks. Kotak securities focus will be to launch new

products in the year ahead and provide value to its investors and investee companies.

Work flow model

Places the Order

Executes the Order.


THE CLIENT

THE DEALER

SELLBUY


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Functional analysis

1. Finance departmentImportance of a finance department cannot be over-emphasized. It is, indeed, the key to

successfulbusiness operations. Without proper administration of finance, no business

enterprise can reach itsfull potentials for growth and success. The finance department

looks after overall financialactivities in the organization. Maintaining accounts, preparing

budgets, finding new avenues ofraising capital and investing opportunities, and ensuring

proper financial health of the organization,are some of the responsibilities of this

department.

Organization chart for finance department


The client makes the payment

either directly via his Demat A/c

or pays by cheque to the dealer.

The dealer takes the delivery of

the shares to be sold from the

client.

The A/cs Back Office transfers

the amount to the sellers

broker.

The dealer receives the amount of

the shares sold from the buyers

broker.

The dealer receives

the delivery in the

name of the client

from the sellers

broker.

Simultaneously,

the dealer then

makes the

delivery of the

shares to the

The A/cs back

office deposits

the amount in

the sellers

Demat A/c

Transaction is settled.


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The finance department comprises of two primary teams accounts and corporate

investments. Theaccounts team is further divided into two sub-groups one maintains

corporate accounts for thebroking house and the other maintains general accounts of the

clients and the business associates.

Accounts process flow



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2. Business development/marketing department

The main function of the Business development department, as the name suggests, is to

develop the business of the broking house and increase its client base. No doubt, it is one

of the most important departments for the firm as it a strong business development team

directly translates into revenues for the firm. The function of this department does not is

not just to acquire new clients but to also maintain good relationship with existing clients

and encourage them to do more business with the firm.



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Organization chart for business development department

The business development department comprises of three divisions, namely marketing,sales and leads management. Although they are three distinct divisions, their work is

highly inter-related and hence their work process is cannot be separate from each other.

CHAPTER -4

ANALYSIS AND INTERPRETAION OF DATA

Analysis, observations and inference

Beta ( )Beta describes the relationship between the stock return and the market index

return. This can be positive or negative. If beta is one, one percent changes in

the market index return causes exactly one percent change in the stock return. It

indicates that the stock moves in random with the market. If the portfolio is

efficient, the beta measures the systematic risk effectively.

= n XY- X Y

n X2

- (

X)

2



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Returns (Ri)

Ri is the expected return on security i.

Unsystematic risk (USR)

The variance not explained by the index is called unsystematic risk.

Unsystematic risk = total variance- systematic risk

Return on a riskless asset (Rf)

Rf is the minimum return an investor gets when he invests in an risk less asset.

Table showing results of Sensex 30 scrips

CompanyBeta

ValuesReturns (1 year) in

percentage USR

Rf(1 yr.)percentag

eACC LTD. 0.66 23.96 4.095065 7.59BHARTI AIRTEL LTD. 0.77 20.29 5.807232 7.59BHEL 0.79 -1.73 2.44036 7.59DLF LIMITED 1.56 -12.61 8.6903 7.59GRASIM INDUSTRIES LTD 0.59 -5.0 3.897234 7.59HDFC 1.05 24.74 3.329408 7.59HDFC BANK LTD 0.86 29.15 1.860129 7.59HERO HONDA MOTORS LTD. 0.50 14.67 3.5332 7.59

HINDALCO INDUSTRIES LTD 1.83 49.26 7.287084 7.59HINDUSTAN UNILEVER LTD. 0.49 4.79 3.027923 7.59ICICI BANK LTD. 1.47 32.32 3.737549 7.59INFOSYS TECHNOLOGIES LTD. 0.79 27.92 2.85144 7.59ITC LTD. 0.66 32.66 3.530759 7.59

JAIPRAKASH ASSOCIATES LTD 1.58 -26.64 6.69124 7.59LARSEN & TOUBRO LTD. 0.96 20.80 2.52 7.59MAHINDRA & MAHINDRA LTD 1.18 49.05 5.817164 7.59MARUTI SUZUKI INDIA LIMITED 0.69 -8.83 4.048448 7.59NTPC LTD. 0.61 -12.16 2.286144 7.59ONGC CORPN 0.63 4.10 3.365793 7.59RELIANCE COMMN 1.11 -23.20 6.539063 7.59RELIANCE INDUSTRIES LTD. 1.11 -7.15 2.193436 7.59



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RELIANCE INFRA 1.12 -19.42 5.426031 7.59STATE BANK OF India 1.09 33.78 2.95885 7.59STERLITE INDUSTRIES. 1.61 -24.58 6.261575 7.59SUN PHARMA 0.43 44.80 4.43556 7.59

TATA MOTORS LTD. 1.52 87.18 10.06936 7.59

TATA POWER CO. LTD. 0.71 -4.35 3.162456 7.59TATA STEEL LIMITED. 1.56 1.53 7.834368 7.59TCS 0.82 56.68 3.972672 7.59WIPRO LTD. 0.94 11.36 3.860712 7.59

Sensex 1 15.33 0

Inference

There are 30 scrips listed in Sensex.The beta, expected return (Ri), Riskless return (Rf) and

unsystematic risk of one year is calculated for all the 30 scrips in Sensex.

Brief introduction to 30 scrips in Sensex

Acc

ACC (ACC Limited) is India's foremost manufacturer of cement and concrete. ACC's

operations are spread throughout the country with 16 modern cement factories, more than 40

Ready mix concrete plants, 20 sales offices, and several zonal offices. It has a workforce of

about 10,000 persons and a countrywide distribution network of over 9,000 dealers.

Bharti Airtel

Bharti Airtel is one of Asias leading providers of telecommunication services with presence

in all the 22 licensed jurisdictions (also known as Telecom Circles) in India, and in Srilanka.

Bharti Airtel served an aggregate of 113,439,670 customers as of September 30, 2009; of

whom 110,511,416 subscribe to our GSM services and 2,928,254 use Bharti Airtel Telemedia

Services either for voice and/or broadband access delivered through DSL.

Bharath Heavy Electricals Limited

BHEL is the largest engineering and manufacturing enterprise in India in the energy-

related/infrastructure sector, today. BHEL was established more than 40 years ago. The



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company has been earning profits continuously since 1971-72 and paying dividends since

1976-77.

BHEL manufactures over 180 products under 30 major product groups and caters to core

sectors of the Indian Economy viz., Power Generation & Transmission, Industry,Transportation, Telecommunication, Renewable Energy, etc. The wide network of BHEL's

14 manufacturing divisions, four Power Sector regional centers, over 100 project sites, eight

service centers and 18

Regional offices, enables the Company to promptly serve its customers and provide them

with suitable products, systems and services -- efficiently and at competitive prices. The high

level of

Quality& reliability of its products is due to the emphasis on design, engineering and

manufacturing to international standards by acquiring and adapting some of the best

technologies from leading companies in the world, together with technologies developed in

its own R&D centers.

Grasim

Grasim Industries Limited, a flagship company of the Aditya Birla Group, ranks among

India's largest private sector companies, with consolidated net turnover of Rs.184 billion and

a consolidated net profit of Rs.27.6 billion (FY2010).Starting as a textiles manufacturer in

1948, today Grasim's businesses comprise viscose staple fiber (VSF), cement, chemicals and

textiles. Its core businesses are VSF and cement, which contribute to over 90 per cent of its

revenues and operating profits.

The Aditya Birla Group is the worlds largest producer of VSF, commanding a 23 per cent

global market share. Grasim, with an aggregate capacity of 333,975 tpa has a global market

share of 12 per cent. It is also the second largest producer of caustic soda (which is used in

the production of VSF) in India.

In cement, Grasim along with its subsidiary UltraTech Cement Ltd. has a capacity of 45.7

million tpa as on 30 June 2009 and is a leading cement player in India. In July 2004, Grasim

acquired a majority stake and management control in UltraTech Cement Limited. One of the

largest of its kind in the cement sector, this acquisition catapulted the Aditya Birla Group to

the top of the league in India



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HDFC

Housing Development Finance Corporation Limited (HDFC) provides housing finance.

HDFC's distribution network spans 283 outlets, which include 66 offices of the wholly

owned distribution company, HDFC Sales Private Limited (HSPL).

In addition, HDFC covers over 2,400 locations through outreach programs.

For the fiscal year ended 31 March 2009, Housing Development Finance Corporation's

revenues increased 33% to RS117.06B. Net income decreased 15% to RS23.05B. Revenues

reflect an increase in income from Housing business and higher contribution from Asset

management segment. Net income was offset by an increase in interest & other charges,

higher staff cost and increased provision for depreciation expense.

Hero Honda Motors Limited

The Company's principal activity is to manufacture and market two wheelers and spare parts.

It has two manufacturing facilities at Dharuhera and Gurgaon in Haryana and its third plant is

at Haridwar. During the fiscal year ended 31-Mar-2019, it launched eight models: Passion

Pro (100 cubic capacity-4 Stroke), CBZ-Extreme (150 cubic capacity - 4 Stroke), Pleasure

New Aesthetics, Splendor NXG (Self Start), CD Deluxe (Self Start), Glamour FI, Glamour

(Carb.) and HUNK Special Edition. The models offered by the Company include CD Dawn,

CD Deluxe, Pleasure, Splendor Plus, Splendor NXG, Passion PRO, Passion Plus, Super

Splendor, Glamour, Glamour PGM-FI, Achiever, CBZ X-TREME, Karizma and Hunk.

During fiscal 2010, the Company exported 98,194 two-wheelers.

Hindalco

Hindalco Industries Limited is an India-based company. The Company has three operating

segments: Aluminum, Copper and Others. Aluminum comprises of Alumina, Aluminum

Metal and Aluminum Metal products. Copper comprises of continuous Cast Copper Rods,

Copper Cathodes, Sulphuric Acid, DAP & Complexes, Gold and Silver. Other segment

comprises of Caustic, Cellular Services and Others. Its products include Aluminum ingots,

aluminum rolled products, aluminum redraw rods, copper cathodes and continuous cast



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copper rods. The Companys subsidiaries include Novelis Belgique SA, Novelis Benelux

NV, Novelis do Brazil Ltda., Novelis No. 1 Limited Partnership and Novelis PAE SAS.

For the fiscal year ended 31 March 20010, Hindalco Industries Limited's revenues increased

to RS61044 crore. Net income is RS 3925.47 crore. Revenues reflect higher revenue fromAluminum segments. Net income was offset by an increase in consumption of raw materials,

higher employee costs, an increase in power and fuel expenses, higher depreciation, and an

increase in interest expenses and increased other expenditure.

Hindustan Unilever Limited

Hindustan Unilever Limited (HUL) is India's largest fast moving consumer goods

company, with leadership in Home & Personal Care Products and Foods & Beverages. HUL's

brands, spread across 20 distinct consumer categories, touch the lives of two out of three

Indians. They endow the company with a scale of combined volumes of about 4 million tones

and sales of Rs.10, 000crore. The mission that inspires HUL's 36,000 employees, including

about 1,350 managers, is to "add vitality to life". With 35 Power Brands, HUL meets every

day needs for nutrition, hygiene, and personal care with brands that help people feel good,

look good and get more out of life. It is a mission HUL shares with its parent company,Unilever, which holds 51.55% of the equity. A Fortune 500 transnational, Unilever sells

Foods and Home and Personal Care brands in about 100 countries worldwide.

Industrial Credit and Investment Corporation of India Limited

ICICI Bank is India's second-largest bank with total assets of Rs. 3,634 billion (US$ 81

billion) at December 31, 2010 and profit after tax Rs. 40.25 billion (US$ 648.8 million) for

the nine months ended December 31, 2009. The Bank has a network of 2528 branches and

about 5808 ATMs in India and presence in 18 countries. ICICI Bank offers a wide range of

banking products and financial services to corporate and retail customers through a variety of

delivery channels and through its specialized subsidiaries and affiliates in the areas of

investment banking, life and non-life insurance, venture capital and asset management.



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The Bank currently 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. Our UK subsidiary has established branches

inBelgium and Germany.

ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and the National

Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on

the New York Stock Exchange (NYSE).

Infosys

Infosys Technologies Limited (Infosys) is a global technology services firm that defines

designs and delivers information technology (IT)-enabled business solutions to its clients.The Company provides end-to-end business solutions that leverage technology for its clients,

including technical consulting, design, development, product engineering, maintenance,

systems integration, package-enabled consulting, and implementation and infrastructure

management services. Infosys also provides software products to the banking industry.

Infosys BPO is a majority owned subsidiary. Through Infosys BPO, it provides business

process management services, such as offsite customer relationship management, finance and

accounting, and administration and sales order processing. On April 1, 2008, Infosys

Australia acquired Mainstream Software Pty Limited (MSPL). On March 5, 2009, the

Company incorporated a wholly owned subsidiary, Infosys Technologies (Sweden) AB.

For the nine months ended 31 December 2010, Infosys Technologies Limited's revenues

increased to 21,140 crore rupees.. Net income increased to 7,424 crore rupees. Revenues

reflect an increase in revenues from the Financial Services segment, higher income from

Manufacturing segment and a rise in income from Retail segment. Net income also reflect an

a significant fall in telephone expenses and lower professional expenses.

Jai Prakash associates limited

JaiPrakash Associates Limited is a diversified infrastructural industrial conglomerate in

India. The Company is engaged in the business of heavy civil engineering construction,

expressways, cement, and real estate and hospitality. It is engaged in the business of

integrated engineering construction and operates at the locations of its clients and uses



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electric energy for implementation of various projects undertaken by it. The Company is also

engaged in the business of manufacture and marketing of cement and owns five star hotels at

New Delhi, Mussoorie and Agra and a Golf Course with associated recreational and

residential facilities at Greater Noida as part of its real estate business. As of March 31, 2010,

the Company had seventeen subsidiaries, which include Jaiprakash Hydro Power Limited,

Jaiprakash Power Ventures Limited, Jaypee Infratech Limited, Jaypee Power grid Limited

and Himalayan Expressway Limited. On May 15, 2008, the Company acquired Bina Power

Supply Company.

For the fiscal year ended 31 March 2010, Jaiprakash Associates Ltd.'s revenues increased

to6525.55 crore rupees. Net income decreased to 1393.78 crores rupees. Revenues reflect an

increase in cement sales and higher hotel revenue. Net income was offset by an increase in

power expenses, higher personnel expenses, rise in selling expenses and an increase in other

expenses. Jaiprakash Associates Limited is a well-diversified infrastructural industry.

Larsen & Toubro Limited

Larsen & Toubro Limited (L&T) is India's largest engineering and construction

conglomerate with additional interests in electrical, electronics and IT. A strong customer-

focus approach and constant quest for top-class quality have enabled L&T to attain and

sustain leadership over 6 decades.EPC project business constitutes a critical part of the L&T's

engineering core. L&T has integrated its strengths in basic and detailed engineering, process

technology, project management, procurement, fabrication and erection, construction and

commissioning, to offer single point responsibility under stringent delivery schedules.

Strategic alliances with world leaders enable L&T to access technical know-how and execute

process intensive, large scale turnkey projects to maintain its leadership position.

L&T's international presence is on the rise, with a global spread of over 30 offices and joint

ventures with world leaders. Its large technology base and pool of experienced personnel

enable it to offer integrated services in world markets.

L&T enjoys a brand image in India and several countries offshore. With factories and offices

located all over the country and abroad, L&T operations are supplemented by a

comprehensive distribution network and nationwide ramifications for customer service

and delight!

Maruti Suzuki



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Maruti Suzuki India Ltd. The Group's principal activity is to manufacture, purchase and sale

of Motor Vehicles and Spare parts. The Group is a subsidiary of Suzuki Motor Corporation.

The other activities of the Group comprises of facilitation of Pre-Owned Car Sales, Fleet

Management and Car Financing. The Group also provides services like framing of

customized car policies, economical leasing of cars, maintenance management, registration

and insurance management, emergency assistance and accident management. The product

range includes ten basic models with more than 50 variants. The Groups operations are in

1200 towns and cities with 2628 workshops and also exports cars to other countries.

Mahindra and Mahindra

The Company was Incorporated and converted into Public Limited in 1955 at Mumbai. The

Company Manufacture Jeep type vehicles, petrol industrial engines, industrial process control

instruments and flow meters. Trading in steel and manufacture of professional grade

electronic components. Jeeps are manufactured under a license and an agreement with

Willys Motors Inc., Toledo, Ohio, U.S.A., for whom the Company also acts as exclusive

distributors for the whole of India for their entire range of vehicles including utility vans,

cargo/personnel carriers and pick-up trucks.

NTPC

NTPC Limited is the largest thermal power generating company of India. And it's a public

sector company; it was incorporated in the year 1975 to accelerate power development in the

country as a wholly owned company of the Government of India. At present, Government of

India holds 89.5% of the total equity shares of the company and the balance 10.5% is held by

FIIs, Domestic Banks, Public and others. Within a span of 30 years, NTPC has emerged as a

truly national power company, with power generating facilities in all the major regions of the

country . Based on 1998 data, carried out by Datamonitor UK, NTPC is the 6th largest in

terms of thermal power generation and the second most efficient in terms of capacity

utilization amongst the thermal utilities in the world.

Reliance communications



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Late Dhirubhai Ambani dreamt of a digital India an India where the common man

would have access to affordable means of information and communication. Dhirubhai, who

single-handedly built Indias largest private sector company virtually from scratch, had stated

as early as 1999: Make the tools of information and communication available to people at an

affordable cost. They will overcome the handicaps of illiteracy and lack of mobility.

Make the tools of information and communication available to people at an affordable

cost. They will overcome the handicaps of illiteracy and lack of mobility. Reliance

Communications has a reliable, high-capacity, integrated and convergent (voice, data and

video) digital network.

Today, Reliance Communications is revolutionizing the way India communicates and

networks, truly bringing about a new way of life.

Reliance infrastructure limited

Reliance Infrastructure Ltd is not only Indias largest private sector enterprise in power

utility but also the largest private sector player in many other infrastructure sectors of India.

In the power sector we are involved in generation, transmission, distribution and trading of

electricity and constructing power plants as EPC partners. In the infrastructure space the

company is focused on roads, urban infrastructure which includes MRTS, Sealink and

Airports, Specialty Real Estate which includes business districts, trade towers, convention

centre and SEZ which includes IT &ITES SEZ and non IT SEZ as well as free trade

zones.

Power Utility

Reliance Infrastructure distributes more than 28 billion units of electricity to cover 25

million consumers across different parts of the country including Mumbai and Delhi in an

area that spans over 1, 24,300 sq. kms. We also generate 941 MW of electricity, from our

power stations located in Maharashtra, Andhra Pradesh, Kerala, Karnataka and Goa.

STATE BANK OF INDIA

State Bank of India is an India-based commercial bank. In addition to banking, through its

various subsidiaries, it also provides a whole range of financial services, which include life



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insurance, merchant banking, mutual funds, security trading, pension fund management and

primary dealership in the money market. It operates in four business segments: Treasury,

Corporate/ Wholesale Banking, Retail Banking and Other Banking Business. The Treasury

segment includes the entire investment portfolio and trading in foreign exchange contracts

and derivative contracts. The Corporate/ Wholesale Banking segment comprises the lending

activities of Corporate Accounts Group, Mid Corporate Accounts Group and Stressed Assets

Management Group.

The Retail Banking segment consists of branches in National Banking Group, which

primarily includes

Personal banking activities, including lending activities to corporate customers having

banking relations with branches in the National Banking Group.

For the nine months ended 31 December 2010, State Bank of India's interest income rose

11% to RS746.07B. Net interest income after loan loss provision rose 14% to RS207.2B. Net

income rose 20% to RS91.14B. Net interest income reflects an increase in interest income on

advances and lower provision for contingencies. Net income also reflects the absence of

exceptional items. State Bank of India is an India-based commercial bank.

Sterlite

Sterlite Industries India Limited (SIIL) is the principal subsidiary of Vedanta Resources plc, a

diversified and integrated FTSE 100 metals and mining company, with principal operations

located in India and Australia. Sterlites principal operating companies comprise Hindustan

Zinc Limited (HZL) for its fully integrated zinc and lead operations; Sterlite Industries India

Limited (Sterlite) and Copper Mines of Tasmania Pty Limited (CMT) for its copper

operations in India/Australia; and Bharat Aluminum Company (BALCO), for its aluminum

and alumina operations and Sterlite Energy for its commercial power generation business.

Sterlite is India's largest non-ferrous metals and mining company and is one of the fastest

growing private sector companies. Sterlite is listed on BSE, NSE and NYSE. It was the first

Indian Metals & Mining Company to list on the New York Stock Exchange.

Sun Pharma



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Sun Pharma makes specialty pharmaceuticals and active pharmaceutical ingredients. their

brands are prescribed in chronic therapy areas like cardiology, psychiatry, neurology,

gastroenterology, diabetology and respiratory. We have the same drive for growth that

marked our early days. Sun Pharma came into existence as a startup with just 5 products in

1983. In the time since, we have crossed several milestones to emerge as a leading pharma

company in India, a rank that we have now been at for more than 5 years. (IMS-ORG Retail

Store Audit, March 2006).

We have reached leadership in each of the therapy areas that we operate in, and are rated

among the leading companies by key customers. Strengthening market share and keeping this

customer focus remains a high priority area for the company.

Tata Motors

Tata Motors is India's most reliable, dynamic and futuristic automobile manufacturer. With

more than 130 models spanning a wide range of Commercial Vehicles, Passenger Cars and

Multi-Utility Vehicles, Tata Motors provides the wheels for India's growth. True to the

tradition of the Tata Group, Tata Motors is committed in letter and spirit to Corporate Social

Responsibility. It is a signatory to the United Nations Global Compact, and is engaged in

community and social initiatives on labor and environment standards in compliance with the

principles of the Global Compact. In accordance with this, it plays an active role in

community development, serving rural communities around its manufacturing locations.

Tata Power

Recognized as Indias largest private sector power utility, with a reputation fortrustworthiness, built up over nearly nine decades, Tata Power surges ahead into yet another

year with plans of sustained growth, greater value to consumer and reliable power supply.

Led by a powerful vision, Tata Power pioneered the generation of electricity in India. It has

now successfully served the Mumbai consumers for over ninety years and has spread its

footprints across the nation. Today, it is the countrys largest private player in the sector.

Apart from Mumbai and Delhi, the company has generation capacities in Jojobera, Jharkhand

and Karnataka.

Tata Steel



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The Tata Steel Group has always believed that mutual benefit of countries, corporations and

communities is the most effective route to growth. Tata Steel has not limited its operations

and businesses within India but has built an imposing presence around the globe as well.

With the acquisition of Corus in 2007 leading to commencement of Tata Steel's European

operations, the Company today, is among the top ten steel producers in the world with an

existing annual crude steel production capacity of around 30 million tons per annum and

employee strength of above 80,000 across five continents.

The Group recorded a turnover of Rs.147, 329Crores (US$ 28,962 million) in 2009- 2010.

The Company has always had significant impact on the economic

Development in India and now seeks to strengthen its position of pre-eminence in

international domain by continuing to lead by example of responsibility and trust.

Tata Steels overseas ventures and investments in global companies have helped the

Company create a manufacturing and marketing network in Europe, South East Asia and the

Pacific-rim countries. The Groups South East Asian operations comprise Tata Steel

Thailand, in which it has 67.1% equity and Nat Steel Holdings, which is one of the largest

steel producers in the Asia Pacific with presence across seven countries.

Tata Consultancy Services

Tata Consultancy Services started in 1968. Mr.F.C Kohli who is presently the Deputy

Chairman was entrusted with the job of steering TCS. The early days marked TCS

responsibility in managing the punch card operations of Tesco. The company, which was into

management consultancy from day one, soon felt the need to provide solutions to its clients

as well.TCS was the first Indian company to make forays into the US market with clients

ranging from IBM,American Express, Sega etc. TCS is presently the top software services

firm in Asia.

During the Y2K buildup, TCS had setup a Y2Kfactory in Chennai as a short-term strategy.

Now, with E-business being the buzzword, the factory is developing solutions for the dotcom

industries. Today, about 90 percent of TCS' revenue comes from consulting, while the rest

from products. TCS has great training facilities. In addition to training around 5 percent of

the revenue is spent upon its R&D centers like the Tata Research Design and Development

Centre at Pune, along with a host of other centers at Mumbai and Hyderabad. It benchmarked

its quality standing, invested heavily in software engineering practices and built intellectualproperty-in terms of patents, code and branded products. At the same time, it expanded its



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relationships with technology partners and organizations, increased linkages with academic

institutions and incubated technologies and ideas of people within TCS and outside. TCS has

already patented 12 E-Commerce solution product packages and has filed six more

applications for patent licenses.

Wipro

Wipro Technologies is the No.1 provider of integrated business, technology and process

solutions on a global delivery platform. Wipro Technologies is a global services provider

delivering technology-driven business solutions that meet the strategic objectives of our

clients. Wipro has

40+ Centers of Excellence that create solutions around specific needs of industries. Wipro

delivers unmatched business value to customers through a combination of process excellence,

quality frameworks and service delivery innovation. Wipro is the World's first CMMi Level 5

certified software services company and the first outside USA to receive the IEEE Software

Process Award. Wipros complete range of IT Services addresses the needs of both

technology and business requirements to help organizations leverage leading-edge

technologies for business improvement. Wipro takes charge of the IT needs of the entire

enterprise. The gamut of services extends from Enterprise Application Services (CRM, ERP,

e-Procurement and SCM), to e-Business solutions. Wipros enterprise solutions have served

and continue to serve clients from a range of industries including Energy and Utilities,

Finance, Telecom, and Media and Entertainment.

Sharpes excess return to beta ratio



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It is a single number that measures the desirability of any stock to be included in the

optimal portfolio. The excess return to beta ratio measures the additional return on a security

(excess of the riskless asset return) per unit of systematic risk or non-diversifiable risk.

Excess return to beta = (Ri RF) / iWhere: Ri = expected return on stock i

RF = return on riskless asset

I = expected change in the rate of return on stock i associated with a 1% change in the

market return.

Stocks are ranked by excess return to beta (from the highest to the lowest). The higher

the excess return to beta ratio, the more is the desirability of the stock to be included in the

portfolio.

Table showing ranking of stocks according to excess return to beta

Company (Ri-Rf)/betaSUN PHARMA 121.8372

TATA CONSULTANCY SERVICES LIMITED 59.8658

TATA MOTORS LTD. 52.3618

ITC LTD. 37.9848

MAHINDRA & MAHINDRA LTD 35.1355

INFOSYS TECHNOLOGIES LTD. 25.7341

HDFC BANK LTD 25.0697

ACC LTD. 24.8030

STATE BANK OF INDIA 24.0275



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HINDALCO INDUSTRIES LTD 22.7704

ICICI BANK LTD. 16.8231

BHARTI AIRTEL LTD. 16.4935

HOUSING DEVELOPMENT FIN. CORPN. LTD 16.3333

HERO HONDA MOTORS LTD. 14.1600

LARSEN & TOUBRO LTD 13.7604

WIPRO LTD. 04.0106

TATA STEEL LIMITED. -3.8846

ONGC CORPN -05.5396

HINDUSTAN UNILEVER LTD. -06.3265

BHARAT HEAVY ELECTRICALS LTD. -11.8734

DLF LIMITED -12.9487

RELIANCE INDUSTRIES LTD. -13.2792TATA POWER CO. LTD. -17.0704

STERLITE INDUSTRIES. -19.9813

GRASIM INDUSTRIES LTD -21.3389

JAIPRAKASH ASSOCIATES LIMITED -21.6645

MARUTI SUZUKI INDIA LIMITED -23.7971

RELIANCE INFRASTRUCTURE LTD -24.1160

RELIANCE COMMUNICATIONS LTD. -27.7387

NTPC LTD. -32.3770

Inference

The 30 scrips are ranked and arranged from descending order based on excess return to beta

ratio.

1) SUN PHARMA

2) TATA CONSULTANCY SERVICES LIMITED3) TATA MOTORS LTD.

4) ITC LTD.

5) MAHINDRA & MAHINDRA LTD

6) INFOSYS TECHNOLOGIES LTD.

7) HDFC BANK LTD

8) ACC LTD.

9) STATE BANK OF INDIA

10) HINDALCO INDUSTRIES LTD



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11) ICICI BANK LTD.

12) BHARTI AIRTEL LTD.

13) HOUSING DEVELOPMENT FIN. CORPN. LTD

14) HERO HONDA MOTORS LTD.

15) LARSEN & TOUBRO LTD

16) WIPRO LTD.

17) TATA STEEL LIMITED.

18) ONGC CORPN

19) HINDUSTAN UNILEVER LTD.

20) BHARAT HEAVY ELECTRICALS LTD.

21) DLF LIMITED

22) RELIANCE INDUSTRIES LTD.

23) TATA POWER CO. LTD.

24) STERLITE INDUSTRIES.

25) GRASIM INDUSTRIES LTD

26) JAIPRAKASH ASSOCIATES LIMITED

27) MARUTI SUZUKI INDIA LIMITED

28) RELIANCE INFRASTRUCTURE LTD

29) RELIANCE COMMUNICATIONS LTD.

30) NTPC LTD.



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Table showing calculations of Ci


COMPANY NAME

SUN PHARMA

TCS

TATA MOTORS LTD.

ITC LTD.

MAHINDRA & MAHINDRA

INFOSYS .

HDFC BANK

ACC LTD.

SBI

HINDALCO

ICICI BANK

BHARTI AIRTEL

HDFC LTD

HERO HONDA

L&T TD

WIPRO

TATA STEEL

ONGC CORPN

HUL LTD.

BHEL.

DLF

RELIANCE IND.

TATA POWER

STERLITE

GRASIM

JP ASSOCIATES

MARUTI SUZUKI

RELIANCE INFRA

RELIANCE COMM.

NTPC LTD.


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Inference


Ri-Rf)*B/usr Ri-Rf)*B/usr B2/usr B2/usr

3.607278453.6072784

50.0416858

30.0416858

310.1326764

513.739954

90.1692563

590.2109421

8912.0143484

825.754303

370.2294485

450.4403907

344.68630116

130.440604

530.1233729

070.5637636

418.41007748

838.850682

020.2393606

230.8031242

645.63248744

544.483169

470.2188718

681.0219961

329.96791082

854.451080

30.3976068

331.4196029

65

2.6383464

57.089426

7

0.1063719

38

1.5259749

039.64803893

466.737465

630.4015411

391.9275160

4210.4645561

977.202021

820.4595665

432.3870825

859.72645442

286.928476

240.5781596

442.9652422

29

1.6839347988.612411

030.1020968

343.0673390

63

5.4086191994.021030

220.3311399

53.3984790

13

1.001924601 95.02295483 0.070757387 3.46923645.03238095

2100.05533

580.3657142

863.8349506

860.91791358

7100.97324

940.2288697

014.0638203

87-

1.206683168

99.7665662

0.310631311

4.374451697

-0.65324872

999.113317

470.1179216

94.4923733

88

-0.45311588

298.660201

590.0792952

794.5716686

67-

3.017095838

95.64310575

0.255740956

4.827409623

-3.62611187

292.016993

880.2800363

625.1074459

86-

3.61829567

9

88.398698

2

0.5617214

27

5.6691674

13-

2.68063808 85.718060 0.1594014 5.8285688


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The above table shows the data required for calculating optimal portfolio such as:

(Ri-Rf)* /usr

sum(Ri-Rf)*/ usr

2/usr

2/usr, are calculated for all 30 scrips in Sensex.

Table determining Ci

Company Ci

SUN PHARMA 3.5296

TCS 11.5350

TATA MOTORS LTD. 18.1298

ITC LTD. 19.7158MAHINDRA & MAHINDRA 21.7850

INFOSYS 22.2175

HDFC BANK LTD 22.6894

ACC LTD. 22.7798

STATE BANK OF INDAI 22.9515

HINDALCO 22.9275

ICICI BANK LTD. 22.0322

BHARTI AIRTEL LTD. 21.6309HOUSING DEVELOPMENT

FIN. CORPN. LTD 21.4724HERO HONDA MOTORS 21.3517

LARSEN & TOUBRO LTD 20.7794

WIPRO LTD. 20.0184

TATA STEEL LIMITED. 18.6316

ONGC CORPN 18.1111

HINDUSTAN UNILEVER 17.7708BHARAT HEAVYELECTRICALS LTD. 16.4684

DLF LIMITED 15.1153RELIANCE INDUSTRIES

LTD. 13.2949TATA POWER CO. LTD. 12.5893



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STERLITE INDUSTRIES. 10.7225

GRASIM INDUSTRIES LTD 10.3309JAIPRAKASH ASSOCIATESLIMITED 08.7776MARUTI SUZUKI INDIA

LIMITED 08.2866RELIANCEINFRASTRUCTURE LTD 07.3542RELIANCECOMMUNICATIONS LTD. 06.5501

NTPC LTD. 05.7944

Inference

The above table shows the calculations of Ci using the sharpes single index model

formula:

+

=

2

2

2

2

2

1

)(

cj

j

m

cj

i

m

i

RjRi

C

The stocks ranked above C* have high excess returns to beta ratio than the cut-off Ci and all

the stocks ranked below C* have low excess returns to beta. Here, the cut-off rate is 22.9515.

Hence, the first NINE securities are selected.

The securities which come under optimal portfolio are:

1) SUN PHARMA

2) TATA CONSULTANCY SERVICES LIMITED

3) TATA MOTORS LTD.



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4) ITC LTD.

5) MAHINDRA & MAHINDRA LTD

6) INFOSYS TECHNOLOGIES LTD.

7) HDFC BANK LTD

8) ACC LTD.

9) STATE BANK OF INDIA

CHAPTER-5

SUMMARY OF FINDINGS CONCLUSIONS AND

RECOMMENDATIONS

FINDINGS

The excess return to beta ratio of all 30 scrips in Sensex was calculated, out of which

14 companies having negative returns are negative.

Scrips like icici bank ltd, Bharti Airtel ltd, Housing Development Fin. Corps. Ltd,

Hero Honda Motors Ltd, Larsen & Toubro ltd moved along with the market in equal



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proportion.

Scrips like DLF, Hindalco, ICICI Bank, J.P Associates, L&T, Reliance Infrastructure,

Reliance Communications, SBI, Sterlite industries and Tata Steel has a very high risk.

Scrips like BHEL, Wipro, TCS, RNRL,ONGC, NTPC, Maruti Suzuki, Infosys,

HUL,HDFC, HDFC Bank, Grasim, Tata Power, ACC, Bharti Airtel, Sun Pharma,

ITC, Hero Honda has low risk.

Out of 30 scrips in Sensex, it is only 9 scrips, which form an optimal

portfolio,namely:

Sun pharma

Tata consultancy services limited

Tata motors ltd.

ITC ltd.

Mahindra & Mahindra ltd

Infosys technologies ltd.

HDFC bank ltd

ACC ltd.

State bank of India.



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SUGGESTIONS

People who are willing to take high risk for high returns can invest in these scrips:Hindalco, ICICI Bank, L&T, Bharti Airtel, HDFC ,

Risk averse people can invest on these scrips: Wipro, TCS, ONGC, Infosys, HUL,

HDFC, HDFC Bank, Grasim, ACC, Sun Pharma, ITC, Hero Honda.

Investors are suggested to make their investment decision based on Sharpes single

index model as it helps in building an optimal portfolio.

Investors are suggested to invest in scrips which form an optimal portfolio.

Investors are suggested to avoid investing on scrips which gives negative return.

Finally, it is suggested to start ones investment early with an optimal portfolio as it

helps in wealth creation by means of capital appreciation.



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RECOMMENDATION

Investors are recommended to think before they invest, as wrong investment decisionswould land them empty handed.

Investors are recommended to diversify their portfolio in order to diversify their risk.

Investors are recommended to look at the previous performance of scrips, before

investing on them.

From this study, Investors are recommended not to invest in these scrips, .as they are

giving negative returns.

Tata steel limited. ONGC corps

Hindustan unilever ltd.

Bharat heavy electrical ltd.

DLF limited

Reliance industries ltd.

Tata power co. Ltd.

Sterlite industries.

Grasim industries ltd

Jaiprakash associates limited

Maruti Suzuki India limited

Reliance infrastructure ltd

Reliance communications ltd.

NTPC Ltd



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CONCLUSION

Stock market is a volatile industry which is affected by anything and everything. For

e.g.; change in RBI rates, M and A of companies, terrorist attacks, festivals, IPL

matches, etc. All these micro and macro-economic factors affect stock market.

Hence, investment in stock industry itself is a risky decision but yet it is the most

attractive investment options among investors because of its high returns.

It is always recommended to all investors to make use of any portfolio model to

construct their portfolio as it helps in getting an optimal return with minimum risk.

From this study, scrips like Sun pharma

Tata consultancy services limited

Tata motors ltd.

ITC ltd.

Mahindra & Mahindra ltd

Infosys technologies ltd.

HDFC bank ltd

ACC ltd.

State bank of India.

form an optimal portfolio, hence investment in these scrips will fetch optimal returns.

BIBLIOGRAPHY



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BOOKS :

1. Punithavathy pandyan, security analysis and portfolio management (1st ed; newdelhi:vikas publishing house,2009)

2. V.Raghunathan, prabina rajib, syock exchanges, investments and derivatives-2006edition bharath law house publication.

3. K.shaker, bharats guide to investor servicing, 2001 edition, bharath law housepublication

4. annual reports of KOTAK SECURITIES.

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