IBS-Bangalore A REPORT

ON
“THE STUDY OF RESEARCH IN PORTFOLIO MANAGEMENT”
AT
FUTURE GENERALI LIFE INSURANCE CO. LTD
SANDEEP GUPTA
18BSP3618
A Report Submitted in Partial Fulfillment of the
PGPM Program of

FACULTY GUIDE:-PROF. SUNIL PILLAI

COMPANY GUIDE:-MR. IQBAL SINGH BANSAL
 AUTHORISATION

This is to certify that the Project Work titled “Research in Portfolio

Management” is a bonafide record of research work done by SANDEEP GUPTA
(18BSP3618) as a part of the completion of study at Future Generali Insurance
during his Internship program from 19th March 2019 to 24th May 2019 under the
guidance of Iqbal Singh Bansal (Senior Branch Manager). This is to certify that
this report is submitted as partial fulfillment of the requirements of MBA Program
of ICFAI Business School, Bangalore. This work has not been submitted earlier
for any other purpose, to the best of my belief.

Faculty Guide:- Company Guide:-

Prof.Sunil Pillai Iqbal Singh Bansal
(IBS Bangalore) (Senior Branch Manager)
 TABLE OF CONTENTS

PAGE NO.
CHAPTER EXECUTIVE SUMMARY
1 4

CHAPTER INTRODUCTION
2
2.1 Introduction to Project

2.1.2 Fundamental Analysis 5-17

2.13 Technical Analysis

CHAPTER INTRODUCTION TO INDUSTRY

17-19
3
CHAPTER INTRODUCTION TO COMPANY
19-24
4
CHAPTER OBJECTIVE OF THE
25
5 PROJECT
CHAPTER LIMITATION OF THE PROJECT
25
6
CHAPTER METHODOLOGY
26
7
CHAPTER CONCLUSION &
26-27
8 RECOMMENDATIONS
CHAPTER REFERENCES
27
9
 Chapter 1

EXECUTIVE SUMMARY

The project is associated with Future Generali Life Insurance

Co.Ltd. It’s an insurance firm.
Equity analysis is the systematic study of the performance of
Companies. i.e. Stock market with the help of fundamental and
technical analysis. The analysis helps as a decision tool before
investing.
This project is an answer to the questions, one has during investing
in shares. The project is an attempt to explain some basic concepts
that most investors take for granted but that’s a crucial knowledge
for a person just entering into the financial world.

The project report shall succeed in satisfying desire for knowledge

of the share market as well as in lending investor a helping hand as
they take their FIRST STEP into the world of investing. The
project is the study of investing in various sectors and analysing
their past trends using tools of fundamental and technical analysis.
The project uses the ratios to identify sectors which may give
higher returns to investors.

The main purpose of investment is return and liquidity, share

market is less preferred by investors due to lack of awareness. The
major findings of this study are that people are interested to invest
in stock market but they lack knowledge. The analysis and findings
 suggests stocks to be invested in future of public sector banks. The
study has considered Large companies for study and given
rankings on the basis of GRM (gross refining margin). The project
gives an overview of the sectors. The purpose of the project is to
identify the future scope and developments in the prescribed
sectors.

Chapter 2

INTRODUCTION

2.1 Introduction to Project

What is a Portfolio?

 A portfolio refers to a collection of investment tools such as Stocks,

Shares, Mutual Funds, Bonds, Cash, Commodity Market and so on
depending on the investor’s income, budget and convenient time frame.
Following are the two types of Portfolio:-

 Market Portfolio
 Zero Investment Portfolio

What is Portfolio Management?

The art of selecting the right investment policy for the individuals in terms of
minimum risk and maximum return is called as portfolio management.
 Types of Financial Investment:-

An individual can invest in any of the following:-

 Mutual Funds
 Fixed Deposits
 Bonds
 Stock
 Equities
 Real Estate (Residential/Commercial Property)
 Gold /Silver (Commodity)
 Precious stones

 So that they earns the maximum profits within the stipulated time frame.

 Portfolio management refers to managing money of an individual under the

expert guidance of portfolio managers.

 In a layman’s language, the art of managing an individual’s investment is

called as portfolio management.
Need for Portfolio Management:-

 Portfolio management presents the best investment plan to the individuals

as per their income, budget, age and ability to undertake risks.

 Portfolio Management Minimizes the risks involved in investing and also

increases the chance of making profits.

 Portfolio managers understand the client’s financial needs and suggest the
best and unique investment policy for them with minimum risks involved.

 Portfolio management enables the portfolio managers to provide

customized investment solutions to clients as per their needs and
requirements.
 Types of Portfolio Management:-

1. Active Portfolio Management

2. Passive Portfolio Management

3. Discretionary Portfolio Management

4. Non-Discretionary Portfolio Management

Portfolio Management further classified:-

 Active Portfolio Management:- As the name suggests, in an active

portfolio management service, the portfolio managers are actively involved
in buying and selling of securities to ensure maximum profits to individuals.
 Passive Portfolio Management:- In a passive portfolio management, the
portfolio manager deals with a fixed portfolio designed to match the current
market scenario.
 Discretionary Portfolio management services:- In Discretionary portfolio
management services, an individual authorizes a portfolio manager to take
care of his financial needs on his behalf. The individual issues money to the
portfolio manager who in turn takes care of all his investment needs, paper
work, documentation, filing and so on. In discretionary portfolio
 management, the portfolio manager has full rights to take decisions on his
client’s behalf.
 Non-Discretionary Portfolio management services:- In Non-discretionary
portfolio management services, the portfolio manager can merely advise the
client what is good and bad for him but the client reserves full right to take
his own decisions.

Phases of Portfolio Management:-

 Portfolio management is a process of many activities that aimed to

optimizing the investment.

 Five phases can be identified in the process:-

 Security Analysis
 Portfolio Analysis
 Portfolio Selection
 Portfolio Revision
 Portfolio Evaluation

 Each phase is essential and the success of each phase is depend on the
efficiency in carrying out each phase.

1.Security Analysis:-

 Security analysis is the initial phase of the portfolio management process.

 The basic approach for investing in securities is to sell the overpriced
securities and purchase under priced securities.
 The security analysis comprises of Fundamental analysis and Technical
analysis.

2.Portfolio Analysis:-

 A large number of portfolios can be created by using the securities from

desired set of securities obtained from initial phase of security analysis.
 It involves the mathematically calculation of return and risk of each
portfolio.

3.Portfolio Selection:-

 The portfolios that yield good returns at a level of risk are called as efficient
portfolios.
 The set of efficient portfolios is formed and from this set of efficient
portfolios, the optimal portfolio is chosen for investment.

4.Portfolio Revision:-

 Due to dynamic changes in the economy and financial markets, the attractive
securities may cease to provide profitable returns.

5.Portfolio Evaluation:-

 This phase involves the regular analysis and assessment of portfolio

performances in terms of risk and returns over a period of time.

Who is a Portfolio Manager ?

 An individual who understands the client’s financial needs and designs a

suitable investment plan as per his income and risk taking abilities is called a
portfolio manager. A portfolio manager is one who invests on behalf of the
client.

 A portfolio manager counsels the clients and advises him the best possible
investment plan which would guarantee maximum returns to the individual.
 A portfolio manager must understand the client’s financial goals and
objectives and offer a tailor made investment solution to him. No two clients
can have the same financial needs.

2.1.2 Fundamental Analysis:-

 Fundamental analysis is the cornerstone of investing. In fact, some would

say that you aren't really investing if you aren't performing fundamental
analysis. Because the subject is so broad, however, it's tough to know where
to start. There are an endless number of investment strategies that are very
different from each other, yet almost all use the fundamentals.

 The goal of this tutorial is to provide a foundation for understanding

fundamental analysis. It's geared primarily at new investors who don't
know a balance sheet from an income statement. While you may not
be a "stock-picker extraordinaire".

 The biggest part of fundamental analysis involves developing into the

financial statements. Also known as quantitative analysis, this
involves looking at revenue, expenses, assets, liabilities and all the
other financial aspects of a company. Fundamental analysts look at
this information to gain insight on a company's future performance.
But there is more than just number crunching when it comes to
analysing a company. This is where qualitative analysis comes in - the
breakdown of all the intangible, difficult-to-measure aspects of a
company.

 Fundamental analysis is performed on historical and present data, but with

the goal of making financial forecasts.

There are several possible objectives:-

 To conduct a company stock valuation and predict its probable price

evolution.
 To make a projection on its business performance,
  To evaluate its management and make internal business decisions,
 To calculate its credit risk.

Fundamental analysis includes:-

1) Economic analysis
2) Industry analysis
3) Company analysis
On the basis of this three analysis the intrinsic value of the shares are determined.
This is considered as the true value of the share. If the intrinsic value is higher
than the market price it is recommended to buy the share but if it is equal to
market price hold the share and if it is less than the market price sell the shares.

Fundamental Analysis Basically shows the 2 pick:-

1. Value pick:- When EPS is growing year-by-year, it shows company is
performing well in the market.
2. Growth pick:-
 When Peg value is less than 1:- It shows to Buy stock.
 When Peg value is more than 1:- It shows to Sell stock

2.1.3 Technical Analysis:-

 Technical Analysis is the forecasting of future

financial price movements based on an examination of
past price movements. Like weather forecasting,
technical analysis does not result in absolute
predictions about the future. Instead, technical
analysis can help investors anticipate what is “likely”
 to happen to prices over time. Technical analysis uses
a wide variety of charts that show price over time.
 Technical analysis is applicable to stocks, indices,
commodities, futures or any tradable instrument where
the price is influenced by the forces of supply and
demand. Price refers to any combination of the open,
high, low, or close for a given security over a specific
time frame. The time frame can be based on intraday
(1-minute, 5-minutes, 10-minutes, 15-minutes, 30-
minutes or hourly), daily, weekly or monthly price
data and last a few hours or many years. In addition,
some technical analysts include volume or open
interest figures with their study of price action. The
Psychology of Technical Analysis, Tony Plummer
paraphrases Oscar Wilde by stating,
 “A technical analyst knows the price of everything,
but the value of nothing”. Technicians, as technical
analysts are called, are only concerned with two
things.

1. Technical Analysis using (Technical Tools):-

Till date, I learned 4 study tool and different candle patterns.

Bollinger band:-
 Bollinger Bands are a technical trading tool created by John Bollinger
in the early 1980s. They arose from the need for adaptive trading
 bands and the observation that volatility was dynamic, not static as
was widely believed at the time. There are 3 band- upper band, simple
moving average, lower band. The upper and lower bands are typically
2 standard deviations +/- from a 20-day simple moving average, but
can be modified.
 It is a technical analysis tool defined by a set of lines plotted two
standard deviations (positively and negatively) away from a simple
moving average (SMA) of the security's price, but can be adjusted to
user preferences.

MACD (Moving Average Conversion/ Diversion):-

 Moving Average Convergence Divergence (MACD) is a trend-
following momentum indicator that shows the relationship between
two moving averages of a security’s price. The MACD is calculated
by subtracting the 26-period Exponential Moving Average (EMA)
from the 12-period EMA. The result of that calculation is the MACD
line. A nine-day EMA of the MACD, called the "signal line," is then
plotted on top of the MACD line, which can function as a trigger for
buy and sell signals. Traders may buy the security when the MACD
crosses above its signal line and sell - or short - the security when the
MACD crosses below the signal line. Moving Average Convergence
Divergence (MACD) indicators can be interpreted in several ways, but
the more common methods are crossovers, divergences, and rapid
rises/falls.

RSI (Relative Strength Index):-

  The relative strength index (RSI) is a momentum indicator that
measures the magnitude of recent price changes to evaluate
overbought or oversold conditions in the price of a stock or other
asset. The RSI is displayed as an oscillator (a line graph that moves
between two extremes) and can have a reading from 0 to 100. Usage
of RSI is that values of 70 or above indicate that a security is
becoming overbought or overvalued and may be primed for a trend
reversal or corrective pullback in price. An RSI reading of 30 or
below indicates an oversold or undervalued condition.

Average to Range:-
 The average true range (ATR) is a technical analysis indicator that measures
market volatility by decomposing the entire range of an asset price for that
period. The true range indicator is taken as the greatest of the following:
current high less the current low; the absolute value of the current high less
the previous close; and the absolute value of the current low less the
previous close. The average true range is then a moving average, generally
using 14 days, of the true ranges.
2. Technical Analysis using Candle Stick Patterns:-

CHART PATTERNS (LONG TERM):-

 Chart pattern analysis can be used to make short-term or

long-term forecasts. The data can be intraday, daily, weekly
or monthly and the patterns can be as short as one day or as
long as many years. Gaps and outside reversals may form in
one trading session, while broadening tops and dormant
bottoms may require many months to form.
 Below is a list of common chart patterns that can be useful in
Technical Analysis:-

 Rounding Bottom (Reversal)

 Cup with Handle
 Head and Shoulders Top (Reversal)

ROUNDING BOTTOM (REVERSAL:-

 The rounding bottom is a long-term reversal pattern that is

best suited for weekly charts. It is also referred to as a saucer
bottom, and represents a long consolidation period that turns
from a bearish bias to a bullish bias.
CUP WITH HANDLE:-

 The Cup with Handle is a bullish continuation pattern that

marks a consolidation period followed by a breakout. It was
developed by William O'Neil and introduced in his 1988
book, how to Make Money in Stocks. As its name implies,
there are two parts to the pattern: the cup and the handle. The
cup forms after an advance and looks like a bowl or
rounding bottom. As the cup is completed, a trading range
develops on the right hand side and the handle is formed. A
subsequent breakout from the handle's trading range signals
a continuation of the prior advance.
 HEAD AND SHOULDERS TOP (REVERSAL):-

 A Head and Shoulders reversal pattern forms after an

uptrend, and its completion marks a trend reversal. The
pattern contains three successive peaks with the middle peak
(head) being the highest and the two outside peaks
(shoulders) being low and roughly equal. The reaction lows
of each peak can be connected to form support, or a
neckline.

3. Introduction to Industry:-

The asset management industry serves as a critical link between providers and
seekers of investment capital around the world. The industry provides professional
investment services for a diverse client base with varying objectives and risk
tolerances. Asset managers have evolved with the global expansion of capital
markets and will likely continue to evolve as technological advancements and
demographic trends influence new innovations and opportunities.

 An asset management company (AMC) is a firm that invests pooled funds

from clients, putting the capital to work different investments including
stocks, bonds, real estate, master limited partnerships, and more. Along with
high-net-worth individual portfolios, AMCs manage hedge funds and
pension plans, and—to better serve smaller investors—create pooled
structures such as mutual funds, index funds, or exchange-traded funds,
which they can manage in a single centralized portfolio.
 As of January 2019, the Assets Under Management of the mutual fund
industry stood at Rs 23.37 trillion (US$ 323.91 billion).
 Leading AMCs in India:-
 HDFC AMC
 ICICI Prudential AMC
 SBI Fund Management Pvt Ltd
 Aditya Birla Sun Life AMC
 Reliance Nippon Life AMC

 Broking:-
Broking firms are those who provides services like Share trading, Commodity
trading, mutual fund etc. These firms have a business whose purpose is to act as
a liaison between buyers and sellers. Essentially, this company matches people
or businesses with products or services to sell with people or businesses who
are hoping to buy those things.

Indian stocks markets, Sensex and Nifty 50, rise 10-11 per cent in FY18. The
number of companies listed on the NSE rose from 135 in 1995 to 1,926 by the
end of January 2019.
Recommended Sectors for Portfolio Management:-

Britannia Industries Ltd.(Recently listed in Stock Exchange) – (FMCG)

ITC Ltd - (FMCG)

ICICI Bank - (Banking)

Axis Bank - (Banking)

RBL Bank – (Banking)

Bank Of Baroda (Recently merged with Vijaya&Dena bank) – (Banking)

Sun Pharma - (Pharma)

Apollo Tyres – (Auto)

Reliance Industries - (Oil&Gas )

SBI Gold ETF – (Finance)

Bharti Airtel – (Telecom)

PVR – (Media & Entertainment)

4. Introduction to Company:-

Future Generali is Insurance-based company where different types of

insurance plans are available. Company provides good returns and also
varieties for different purpose.
Company’s diversified business offerings:-

1. Personal insurance
2. Commercial insurance
3. Social/ Rural Insurance
The company is a joint venture between the Future Group and Assicurazioni
Generali. It commenced business in September 2007 and achieved break-
even in its 6th year of operation. Future and Generali group are leading
player in their respective area. So, building venture make this company
qualitatively and quantitatively strong. Future Generali India has been
serving the customers by leveraging upon its global Insurance expertise in
diverse classes of products of Generali Group and the Indian retail game
changers Future Group
 VISION MISSION VALUES
• To actively • To be the • Deliver on
protect and first choice the promise
enhance by delivering • Value our
people’s relevant and people
lives. accessible • Live the
insurance community
solutions.
• Be open

 Vision in brief:-
 Actively:- We play a proactive and leading role in improving people
lives through insurance.
 Protect:- We are dedicated towards managing and mitigating risks of
individuals and institutions.
 Enhance:- Generali is also committed to creating value.
 People:- We deeply care about our customer and our employee lives
and their future.
 Lives:- Ultimately, we have an impact on the quality of people lives-
wealth, safety, advice and service are instrumental in improving a
person chosen way of life in the long term.

 Mission in brief:-
  First choice:- Logical and natural action that acknowledges the best
offer in the market based on clear advantages and benefits.
 Delivering:-We ensure achievement striving towards better
performance.
 Relevant:- Anticipating or fulfilling a real life need or opportunity,
tailored to local and personal needs and habits, perceived as valuable.
 Accessible:-Simple and easy to find, understand and use; always
available, at a competitive value for money.
 Insurance solutions:- We aim to offer and tailor a combination of
protection, advice and service.

Company Info:-

Company’s Growth and Overview:

In insurance sector claim settlement ratio is one of the key factors to identify
company’s strength. Future Generali has one of the highest claim settlement
ratios which is 81%.
Claim Settlement Ratio = Total Claims Approved (paid to nominees) divided
by Total Claims Received by the Company. So, Claim Settlement Ratio (or
IRDA claim ratio) is the total number of death claims approved by an
insurance company, divided by the total no. of death claims received by the
insurance company. It is generally measured for a period of one financial
year. It is measured for all products of the company put together (not term
insurance plans alone).
Financial performance of company as per 2017-18 reports:-

Gross written premium- RS.1951cr

Claims paid- RS. 919cr
Asset under management- 2992cr
(Annual report 2017-18)

Above Factors Show:-

 Gross net written premium income (GNWPI) is the amount of an insurance

company’s premiums that are used to determine what portion of premiums is
owed to a reinsurer. Gross net written premium income is the base, which
the reinsurance premium rate is applied to, taking into account cancelations,
refunds, and premiums paid for reinsurance coverage.
 Assets under management (AUM) is the total market value of assets that an
investment company or financial institution manages on behalf of investors.
Swot analysis:-

STRENGHTS

• Known for its prudent investment management

• Wide range of policies
• International expertise and reputation of Generali group
• Aggressive Marketing
• Fastest services and diversified products

WEAKNESS

• Small branch base

• Low Marketing
• Insurance companies have a poor image when it comes
to payment of dues

OPPORTUNITIES

• Earning Urban Youth

• Cross selling through financial services such as banking
• Different investment solutions for varied purpose

THREATS

• Stringent Economic measures by Government and RBI

• Entry of new NBFCs in the sector
5. OBJECTIVES OF THE PROJECT:-

The objective of the Internship Project is to fill the gap between practical and
theoretical knowledge.

1. To learn how to analyze the financial data of companies to predict the financial
position of the companies.
2. To learn Technical and Fundamental analysis and how to effectively use it in
Trading.
3. To know how to compare and choose between different investment options.
4. To know how to compare between two securities and choose the best for
investment.
5. To learn about the Oil and Gas Industry and its companies.
6. To prepare a research report that would yield maximum returns for an investor.

6. LIMITATIONS OF THE PROJECT:-

Every research work suffers from certain limitations. The study which I have done
is also not free from all defects. The purpose of presenting the limitations is to help
the reader in forming opinion about the reliability and validity of the present result.
1. Data considered only for past few months.
2. There may be many variables which influences the result but this analysis
reveals only few variables.
3. Scientific research on the part of research is also required.
4. Accuracy level may be affected when data is subjected to weighing.
5. Time was the biggest constraint as these studies cannot be completed with the
accuracy in three months
7.METHODOLOGY:-

In order to learn and observe the practical applicability and feasibility of various
theories and concepts, the following sources are being used:-

Primary Sources:-
 Explanation of the methods and ratios of fundamental analysis theoretically.
 Explanation of the tools of technical analysis.

Secondary Sources:-
 Secondary sources include all the sources from where information was
gathered about the companies of oil and gas sector.
 Sharekhan for providing news on a regular basis, allowing trading through
its portal, application of tools of technical analysis and predicting the future
trend.
 Money control for providing the required financial data for performing
fundamental analysis.
 Economic Time

8.CONCLUSION:-

 Whereas volatility of such sector also becomes threat for

middle level traders because of all time price hikes.

 A Investor should check the P/E ratios of the company, then

only go forward.

 Investor should invest when sector wise, company is

performing well in the market.
Recommendation:-

 Before going to invest, an investor should have clear and adequate

knowledge of capital market.
 The investor should know the value of money at the time of investment.
 In case of companies, one should also have knowledge about the
companies position in the market.
 As per the analysis an investor should invest in many sectors, not stick
only to one sector.
 Investing in Different sectors provide Balance in the portfolio.

9. REFERENCES:-

 www.moneycontrol.com
 www.nseindia.com
 www.bseindia.com
 www.nseguide.com
 www.futuregenerali.in