1. ACTIVE PORTFOLIOMANAGEMENT
AND PORTFOLIOCONSTRUCTION–
IMPLEMENTING ANINVESTMENT
STRATEGY

3. Deals with the constructionand maintenance
of a collectionof investments.
Management
A properly constructed portfolio achieves a
given level of expected return withthe least
possible risk
Portfolio managers have a duty to create the
best possible collection of investments
for each customer’s unique
needs and circumstances

4. Formulate an investment strategy based
on the investment policy statement
Portfolio managers must understand
investor profile & the basic elements of
capital market theory
Portfolio Construction

5. Identify the profile
of
Investor Profile

7. SalesRsCr.Var(%)OP(RsCr)Var(%)PBDTRsCr.Var(%)NP(Rs)Var(%)SalesRs.CrVar(%)OP(RsCr)Var(%)PBDTRsCr.Var(%)NP(Rs)Var(%
AxisBank 10178.63 12 7542 14 2742.48 24 1842.3 18 38046.38 132 4921.4 10 6231.9 20 6226.6 20
ICICI Bank 341.34 19 246.97 20 39.21 15 39.08 15 1266.92 23 911.63 24 151.76 46 151.76 46
SBI Bank 42443.27 17 27692 19 4736.7 32 3040.7 -81 54903.72 141 3242.5 151 16174 14 10891 -23
M&M 10837.89 5 906.57 -29 920.76 -30 844.09 3 39963.36 -1 4721.2 0 5179.9 4 3712.9 15
TataMoters 8438.88 -23 -638.6 PL -812.9 -999 -751.9 -135 33906.97 -24 -911.2 PL 1584.4 -33 874.38 28
HindalcoInds. 8359.85 21 844.41 31 841.11 17 644.13 34 27573.06 6 2491.9 14 2904.7 24 1745.4 26
TataSteel 12041.92 13 4108.8 24 3697.08 11 2069.3 23 41271.24 81 2816.9 181 1784 19 6505.8 22
DLF 432.53 -47 184.57 -65 425.32 46 412.69 110 2385.94 11 1230.7 -11 1003.8 40 910.58 119
RelianceIndustries 95193 13 8331 6 9568 2 5631 13 90117 83 877 -3 4316 1 20174 2
NTPC 20938.08 27 4542.6 -5 4573.9 -10 3093.5 0 71602.63 9 17765 4 18047 -2 10975 -4
ONGC 20880.93 -2 9185.9 53 10557.7 46 4889 44 83155.88 0 36647 37 43360 35 22095 5
SUNPharma.Inds. 752.58 2 144.16 112 245.16 96 162.96 176 2658.08 9 416.75 -19 517.21 -28 300.84 -39
Lupin 2421.46 53 818.47 228 811.53 228 571.17 330 8777.18 23 2912.3 53 3306.7 75 2324.2 83
TCS 16893.91 34 5565 56 6246.38 56 4628.5 54 64672.93 34 21534 51 24460 48 18346 44
Infosys 11366 22 3394 29 4196 28 2883 25 44341 21 12533 14 15103 14 10194 13
QuarterEndedMarch2014Company
Name
TTMENDEDMarch2014

8. 31-Mar 16-Jun
471.26 10 811.1 200 132.1 1990/764 1460 1772 13.4
250.47 10 44.4 6.1 78/38 61 71 11.7
746.57 10 1584.3 300 145.9 2834/1453 1918 2579 17.7
307.94 5 272.7 280 60.3 1269/742 981 1201 19.9
643.72 2 59.5 100 2.7 464/263 398 431 158.7
206.46 1 180.6 100 8.5 174/83 142 161 19
971.21 10 629.6 100 67 579/195 394 525 7.8
356.32 2 93.4 100 5.1 243/120 177 210 41.1
3232.72 10 609.7 95 62.4 1143/765 930 1065 17.1
8245.46 10 104.1 58 13.3 169/111 120 153 11.5
4277.74 5 158.8 190 25.8 472/234 319 427 16.5
207.12 1 39.1 0 1.5 653/469 573 644 443.4
89.69 2 155.6 300 51.8 1022/742 936 972 18.8
195.87 1 224.93 200 93.7 2384/1382 2128 2269 24.2
287.12 5 733 1260 177.5 3874/2343 3279 3242 18.3
52 Week
High /Low
Price
P/E Ratio
Equity
Rs. Cr
03 EPS
Rs.
FV Rs B.V Rs Div(%)

9. It is base on the premisesthat future stock pricecan be
predictedbystudying the historicalprice movements.
The investors who requiredshort term benefits go for
technicalnot fundamental who is for longerprospect.
The differencechartsused in technicalanalysisare as
follows:
Technical
Analysis
Line chart
Barchart
Point & Figure Chart
Japanese Candle stick
Chart

10. ICICI BANK

12. Beta and Alpha of Different stocks
Stock Name Beta Alpha
BFSI
ICICI Bank 2.62 -0.021
SBI 2.23 -0.02
Axis Bank 3.08 -0.023
ENERGY
ONGC 2.23 -0.02
Reliance Industries 1.12 0.008
NTPC 1.61 -0.018
AUTO
Mahindera & Mahindra 0.375 0.019
Tata Moters 1.23 0.017
FMCG
Britannia Industries 0.73 0.024
Dabur 0.36 0.011
PHARMA
SUN Pharma 0.63 -0.034
Lupin Ltd. 0.58 0.024
IT & MEDIA
TCS -0.538 0.045
INFOSYS -0.627 0.038
Zee Entertainment 0.818 5E-04
METAL & REALTY
Tata Steel 1.25 0.026
Hiindalco 1.07 0.024
DLF Ltd. 3.67 -0.048
Motors

13. Expected Return of stocks on the
basis of CAPM Model
Return = Risk FreeRate (Beta*(MarketReturn – Risk Free
Rate
BFSI 9.45%
ICICI Bank 3.13%
SBI 2.77%
Axis Bank 3.55%
ENERGY 6.70%
ONGC 2.76%
Reliance Industries 1.75%
NTPC 2.19%
AUTO 2.89%
Mahindera & Mahindra 1.05%
Tata Moters 1.84%
FMCG 2.42%
Britannia Industries 1.38%
Dabur 1.04%
PHARMA 2.05%
SUN Pharma 1.29%
Lupin Ltd. 0.76%
IT & MEDIA 1.80%
TCS 0.21%
INFOSYS 0.13%
Zee Entertainment 1.46%
METAL & REALTY 7.64%
Tata Steel 1.86%
Hiindalco 1.69%
DLF Ltd. 4.09%

14. Analysis of stocks on thebasis
of Sharpe single Index pricing
Model
Regression Statistics
Multiple R 0.9621547
R Square 0.9257417
Adjusted R Square 0.918991
Standard Error 0.0358496
Observations 13
ANOVA Systematic RiskUnsystematic Risk
df SS MS F Significance F 0.11643448 0.00108747
Regression 1 0.176240839 0.1762 137.131675 1.49483E-07
Residual 11 0.014137137 0.0013
Total 12 0.190377976
Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Lower 95.0% Upper 95.0%
Intercept -0.009029 0.010156187 -0.889 0.3930305 -0.03138244 0.0133248 -0.03138244 0.013324795
X Variable 1 2.6241173 0.224085806 11.71 1.4948E-07 2.130907727 3.11732679 2.13090773 3.117326794
SUMMARY OUTPUT of ICICI BANK
Variable 1sqrt of
monthly variznce of stock
Residual / noof
observations

16. Fund Allocation on the basis of
Sharpe Portfolio Optimization
ModelAverage
Monthly
RETURN
Standaard
Deviation
Sharp
Ratio
AMR/SD
CNX Nifty 1.52% 4.33% 0.35
ICICI BANK 1.52% 11.64% 0.13
SBI 0.89% 11.71% 0.08
Axis Bank 1.59% 15.12% 0.11
ONGC
0.89% 11.71% 0.08
Reliance
Industries 2.31% 7.08% 0.33
NTPC 0.15% 11.19% 0.01
TCS 3.34% 7.05% 0.47
INFOSYS 2.43% 7.48% 0.32
Tata Steel 0.35% 14.27% 0.02
Hindalco 3.44% 10.79% 0.32
DLF Ltd. -0.71% 19.05% -0.04
Lupin Ltd. 2.21% 6.62% 0.33
Individual Assets

17. CNXNifty ICICI SBI Axis ONGC
Relian
ce
NTPC TCS
INFO
SYS
Tata
Steel
Hinda
lco
DLF
Ltd.
Lupin
Ltd.
CNXNifty
0.001879021 0.004833 0.00414 0.005868 0.00414 0.00205 0.002796 -0.001 -0.00124 0.002401 0.00191 0.006501 0.000155
ICICI BANK 0.004833236 0.013542 0.011587 0.016342 0.011587 0.00514 0.00683 -0.00367 -0.00447 0.008747 0.0062 0.016751 -0.00044
SBI 0.004139867 0.011587 0.013715 0.014496 0.013715 0.005439 0.008931 -0.00534 -0.00661 0.009384 0.0076 0.017666 -0.00184
Axis Bank 0.005868068 0.016342 0.014496 0.022857 0.014496 0.005112 0.008703 -0.00591 -0.0063 0.00899 0.00569 0.02094 0.000981
ONGC 0.004139867 0.011587 0.013715 0.014496 0.013715 0.005439 0.008931 -0.00534 -0.00661 0.009384 0.0076 0.017666 -0.00184
Reliance
Industries
0.002050216 0.00514 0.005439 0.005112 0.005439 0.005011 0.003768 -0.00036 -0.00183 0.00365 0.00395 0.009133 -0.00085
NTPC 0.002796207 0.00683 0.008931 0.008703 0.008931 0.003768 0.012529 -0.00377 -0.00426 0.008141 0.00704 0.015025 -0.00358
TCS -0.001004467 -0.00367 -0.00534 -0.00591 -0.00534 -0.00036 -0.00377 0.004977 0.0044 -0.00302 -0.00341 -0.00616 0.001456
INFOSYS -0.001235549 -0.00447 -0.00661 -0.0063 -0.00661 -0.00183 -0.00426 0.0044 0.005599 -0.00472 -0.00563 -0.00678 0.002211
TataSteel 0.002401376 0.008747 0.009384 0.00899 0.009384 0.00365 0.008141 -0.00302 -0.00472 0.020372 0.01111 0.015737 -0.00584
Hindalco 0.001906528 0.006199 0.007598 0.005685 0.007598 0.003949 0.007037 -0.00341 -0.00563 0.011107 0.01165 0.011519 -0.00471
DLF Ltd. 0.006500627 0.016751 0.017666 0.02094 0.017666 0.009133 0.015025 -0.00616 -0.00678 0.015737 0.01152 0.036275 -0.00405
LupinLtd. 0.000155159 -0.00044 -0.00184 0.000981 -0.00184 -0.00085 -0.00358 0.001456 0.002211 -0.00584 -0.00471 -0.00405 0.004383
CO- VARIANCE OFASSETS

18. Equal
Wt.
Max Ret
Min St
Dev
Max SR
Constraining Variables None atσ<= at µ = None
Value of Constraint N/A 4.33% 3.44%
CNX Nifty 7.69% -953.53% 75.37% 10.00%
ICICI BANK 7.69% -232.27% -111.16% 10.00%
SBI 7.69% 220.84% 26.62% 5.00%
Axis Bank 7.69% 494.10% 81.95% 10.00%
ONGC 7.69% 218.58% 26.62% 0.00%
Reliance
Industries
7.69% -9.70% 13.51% 1.00%
NTPC 7.69% -97.43% -29.09% 1.00%
TCS 7.69% 58.18% -16.11% 30.00%
INFOSYS 7.69% 772.79% 109.14% 15.00%
Tata Steel
7.69% -210.28% -16.10% 0.00%
Hindalco 7.69% 325.53% 41.51% 7.69%
DLF Ltd. 7.69% -81.48% -24.04% 5.00%
Lupin Ltd. 7.69% -405.33% -78.21% 5.31%
Σw 100.00% 100.00% 100.00% 100.00%
µ 1.53% 16.17% 3.44% 2.25%
σ 6.71% 4.33% 1.02% 3.94%
µ/σ 22.88% 372.96% 337.96% 56.98%
Portfolio weights
Portfolios

19. 1.Never buy on rumours or market gossip.
2.Before buying a security,it’s better to find out
everything one canabout the company, its
management andcompetitors, its earningand
possibilities for growth.
3. Find out the reversal, support &
resistance of stock
Recommendation’s
4. Avoid both fear and greed on the
stock market.
5. Pick upthe undervalued shares
6. Timingof purchase and sale is
also very important. “buy lowand

20. 7. Do not put allfunds in one or two
companies.
8. Avoid taking undue risks or beyond the
capacity of yournet worth.
9.Don't buytoo many different securities.
Better have only a fewinvestments that can
be watched. 10. Study your tax position to known
when you sellto greatest
advantages.
11. Always keep a good part of your
capital in a cash reserve. Never invest
all your funds.
12. Don't speculate unless it's full-

21. So its time to
rethink
Its time to reassess
Its time to rebuild
It’s time to be an investor again