Optimal Portfolio Mix

Topics: Financial ratios, Modern portfolio theory, P/E ratio Pages: 44 (10596 words) Published: December 28, 2009
OPTIMUM PORTFOLIO:
An Empirical Analysis

Submitted By:
Neha Dhingra
Enroll No.-07BS2482
ICFAI Business School, Bangalore

OPTIMUM PORTFOLIO:
An Empirical Analysis

Submitted By:
Neha Dhingra
07BS2482

A report submitted in partial fulfillment of the Requirements of MBA Program of ICFAI Business School, Bangalore

Faculty Guide: Company Guide: Prof. Ashish Dash Ms. Rangapriya.S Faculty Financial Analyst ICFAI Business School Right Horizons Bangalore Bangalore Contents

ABSTRACT6

EXECUTIVE SUMMARY7

ACKNOWLEDGEMENTS11

CHAPTER 1: OVERVIEW12

MOTIVATION13

LITRATURE REVIEW14

OBJECTIVE19

SCOPE OF THE STUDY20

EMPIRICAL FRAMEWORK21

DATABASE23

TIME FRAME26

CHAPTER SCHEME26

CHAPTER TWO: SECTORAL ANALYSIS27

2.1 AUTOMOBILE SECTOR28

2.2 TELECOMMUNICATIONS30

2.3 BANKING SECTOR34

CHAPTER THREE: FUNDAMENTAL ANALYSIS38

COMPANY ANALYSIS40

CHAPTER FOUR: OPTIMAL PORTFOLIO CONSTRUCTION AND CORRELTION ANALYSIS63

OPTIMAL PORTFOLIO64

OBSERVED PORTFOLIO67

CHAPTER FIVE: CONCLUSION70

CONCLUSION71

REFERENCES:74

APPENDIX I: Company description76

APPENDIX II: Explains the financial ratios considered for the purpose of company analysis.79

List of Tables

|Table 1.1 |Reviews the literatures that have been studied for the purpose of this study. | |Table 1.2 |Lists various information available and unavailable in each of the databases used for the purpose of | | |this study. | |Table 1.3 |Displays the various stages and the dates of evaluations. | |Table 2.1 |Shows the respective shares of foreign as well as Public Sector Banks in terms of branches, staff, | | |deposits, advances and net profit | |Table 3.1 |Lists the values of the various ratios used for analyzing the fundamentals | |Table 4.1 |Lists the percentage allocation to each of these securities in the optimum portfolio. | |Table 4.2 |Lists the percentage allocation to each of these securities in portfolio of Reliance Growth mutual fund| | |as on 31st March 2008. |

List of Figures

|Figure 2.1 |Shows the categorization of various producers on the basis of products produced by them in | | |Automobiles Sector | |Figure 2.2 |Market Shares of Telecom Service Providers | |Figure 3.1 |Shows the various financial ratios that form the company fundamentals. | |Figure 4.1 |Portrays the allocation in the Optimal and Observed Portfolio to various sectors. |

ABSTRACT
This project explains how theory can serve as an instrument to analyze the fundamentals of thirty five companies before recommending them as an investment avenue. It discusses how to construct an optimal portfolio making use of modern portfolio theory and thereby concluding that their exists very less correlation between the observed portfolio of a mutual fund and an optimal portfolio thereby proving that this well performing fund do not use theories rather the...

References: • By Donald E. Fischer and Ronaki J.Jordan(1995).“Security Analysis and Portfolio Management” Chapter 9-12.
• Lingjie ma and Larry pohlman (2005), “Return Forecasts and Optimal Portfolio Construction: a Quantile Regression Approach” Url- http://www.fma.org/Chicago/Papers/equityQR2.pdf
Published Government Reports:
• Government Of India(2008), Economic Survey of India 2008, Ministry of Finance, New Delhi
Articles from Websites:
• TRAI (2008) “The Indian Telecom services Performance Indicator Report for the Quarter ending March 2008” accessed from www.trai.gov.in.
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