SUMMER PROJECT REPORT ON

Portfolio Management Services

In Partial Fulfilment of Award of

Post Graduate Diploma in Management (Finance)

By

Swarnima Jaiswal

Roll No. 03

Under the guidance of

Ms. Farida Shabbir Rasiwala

PGDM (Finance)

Entrepreneurship and Management Processes International

New Delhi – 74

July 2021

ENTREPRENEURSHIP AND MANAGEMENT PROCESSES

INTERNATIONAL

NEW DELHI

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Certificate from Institute faculty member

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Certificate from the Organization

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 Table of Content

S.No. Topic Page No.

Acknowledge 5

Synopsis 6
Chapter 1 Introduction 7-23
About The Company 7-12

Industry Overview 13-16

Introduction Of the Study 17-23

Chapter 2 Literature Review 24-25

Chapter 3 Methodology 26-28

Chapter 4 Findings And Analysis 29-88

Analysis Of Work Done So Far 29-45

Portfolio Management Services 46-51

Fundamental Analysis 52-53

Security Analysis 54-55

Technical Analysis 56-68

Analysis And Interpretation 69-88

Chapter 5 Conclusions And Recommendations 89-90

Chapter 6 Bibliography 91

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 ACKNOWLEDGEMENT
I would like to extend my sincere obligation towards all the personages who have helped me in this
endeavour. Without their active assistance, guidance, cooperation and encouragement; I would not
have advanced in this project.

I am inexpressibly indebted to Mr. B Sanjeev Kumar (Organization Guide) for the industrious
guidance, help and encouragement to accomplish this assignment.

I am extremely thankful and pay my gratitude to Ms. Farida Shabbir Rasiwala (Faculty Guide)
for his valuable counsel and support on completion of this project in it is presently.

I extend my gratitude to SMC Global Securities Ltd. for giving me this opportunity to work as
an intern and get associated with it.

I also acknowledge with a deep sense of approbation, my gratitude towards my parents and members
of my family, who have always supported me morally, emotionally and economically.

At finally yet importantly gratitude is extended to all my friends who directly or indirectly helped
me to complete this project report.

Any omission is this brief acknowledgement does not mean lack of gratitude.

Thanking You
Swarnima Jaiswal

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 Synopsis
The project “Portfolio management” is helping me a lot to gain an insight about the various
investments’ options. An individual can invest in variety of investment avenues such as
equity, derivatives, commodity like gold, silver etc., Portfolio management services, mutual
funds etc. In order to ensure an enviable portfolio, one can approach portfolio manager to
gain from his professional knowledge if one does not have much knowledge about the factors
that are successful investment.

The BOLT system (Bombay On-line Trading) has been introduced in the Bombay stock
exchange. Now all trading activities on BSE are being traded through BOLT. Similarly, NSE
operates on the 'National Exchange for Automated Trading' (NEAT) system, a fully
automated screen-based trading system. The brokers and their agents conduct trading under
the BOLT system and NEAT system from their Trading Work Stations. SMC has come up
with ODIN (Open Dealer Integrated Network) which helps them to perform trading activities
of both the NSE and BSE.

I am also doing survey on investment to find which age group are likely to invest much and
their investment pattern which security they prefer, reason for investment, how much they are
they know about securities, income level, how much portion of income they invest.

I have done some findings with the help of fundamental analysis and it has helped me to
understand the overall health of an organization i.e., the SMC Global Securities Ltd. as well
as to evaluate the financial performance and business value. By using some of the ratios it has
given me an idea of the financial performance of the company.

This project has not only led me to understand about the Portfolio Management Services but
also about some insights about the company like its financial performance, technically how
good this company sounds, various investment avenues, people's perception towards
investment, predicting and forecasting its future prices in the market etc.

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Chapter: 1

INTRODUCTION TO THE COMPANY

ABOUT THE COMPANY

Established in 1990, SMC is one of the leading and well-diversified financial services
companies in India. It currently serves 19 lakhs unique clients while having a work force of
3000+ employees.
With its presence in 500+ cities and has offices in dubai, it also Has a large network of 2500+
large , sub and small brokers.
It offers services and brokerage across –
• Products and Services
• Equities, Derivatives, Commodities and Currency Trading
• Wealth Management
• Distribution of IPOs, Mutual Funds & Fixed Income Products
• Depository Services
• Clearing Services
• Real Estate Advisory
• Forex Advisory
• NRI Investment
• NBFC Financing
• Alternate Investment Fund (AIF)
• Research Services
• Investment Banking
• Insurance Broking
• Mortgage Advisory
• FPI Investment
• NPS Services

Company has won “Business Excellence Award - Skoch Corporate Excellence Awards 2019,
Premier Depository Participant in Gold Category - CDSL Awards 2019, Fastest Growing
MFI North in Best Star MF Online - BSE Star MF Awards 2019" and many more.
SMC supports Web based, software based and mobile App based trading Platforms. Their
trading platforms are good in terms of speed, convenience and risk management.
Web based
The web based trading platform by SMC mostly suited to Retail investors for online trading
and does not require any software installation. The main features are:

o Trade on different exchanges on a single platform

o Online transfer of funds through multiple banks
o Online Back office to track your investments

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 o Online IPO & Mutual Fund
o Technical SMS alerts facility
o Latest news, market information and research reports on mail.
web-based trading platform with live streaming quotes, This account is ideal for Active
traders who transact frequently during day's trading session to capitalize on intra-day price
movements.
Software based trading
The software-based trading platform for active traders with features like Real time streaming
quotes, intraday charting, Different Exchanges on a single screen, Fully Customizable Market
Watch, Track Multiple Stocks on single screen, Hot Key Functions, Online transfer of funds
through multiple Banks, Online IPO & Mutual Fund.
SMC mobitrade: It is the app based user friendly interface for trading across Equity and
Commodity. It provides real time access to market information like Security Info, Contract
info and Best Five. SMC mobitrade is available in two modes, Lite which is refresh based
and Streaming which provides streaming quotes. SMC mobitrade is available on BSE, MCX
Commodity & NCDEX and not on NSE.
SMC TabTrade : This is the app designed for I-pads and Android phones for trading in NSE
Cash, NSE F&O, BSE Cash, BSE F&O, MCX, NCDEX & NSE Currency. The feature
remains same as SMC Mobitrade.

PAST OF SMC

The journey of SMC began, with incorporation of SMC Global Securities Limited in 1994 &
entered into the arena of Stock Exchange. This privilege gave the consistent momentum to the
expansion & diversification of the SMC Group.

❖ 1994 SMC Global Securities Limited was incorporated.

❖ 1995 SMC has started business of equity brokerage and got membership of the
National Stock Exchange of India Limited. Also started Arbitrage operations.
❖ 1196 SMC moved towards providing trading platform for equities to their clients after
procurement of membership of the National Stock Exchange of India Limited in the
capital market segment.
❖ 2000 SMC ventured into depository services with CDSL registration and in 2009 it
also got registered with NSDL.
❖ 2003 SMC started providing trading platforms to clients for trading in commodities
through MCX, NCDEX and ICEX. It also has international presence through its
wholly owned subsidiary, SMC Comex International DMCC, which is a member of
Dubai Gold and Commodity Exchange (DGCX)

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 ❖ 2006 SMC entered into the distribution of life and general insurance products through
its subsidiary SMC Insurance Brokers Pvt. Ltd., a licensed insurance broker by IRDA.
❖ 2007 Started providing NRI services, Institutional trading and advisory services.
❖ 2008 SMC went digital by providing facility to trade online in equities, derivatives
and commodities. NBFC Started providing margin funding and IPO financing to
clients
❖ 2010 Launched corporate hedging desk.
❖ 2014 Started providing broking services for real estate, mortgage and loan advisory.
❖ 2016 Started acting as a stock broker and clearing member on derivative segment of
India International Exchange
❖ 2017 SMC INSURANCE POS Enrolled a new distribution partner ‘POS’ approved
by IRDA for selling general insurance and life insurance products.
❖ 2018 INDIAKALOAN.COM Started online marketplace for instant customized rate
quotes on loans
❖ SMC GOLD DESK Introduced ultimate service experience for exclusive clients.
❖ 2019 STOXKART Established business of retail discount broking, currencies and
commodities trading, mutual funds and bonds which empowers traders & investors by
sharing its market expertise, new-age technology, zero brokerage advantages and
excellent trading platform.

PRESENT OF SMC

❖ Over the span of time SMC has earned appreciable reputation and Brand
recognition through its client service focused model.
❖ Presently, SMC is one of the leading financial services companies providing Broking,
Distribution of mutual funds & IPOs, Insurance Broking, depository services, equity
research services, Financing, Real Estate & Wealth Advisory, Commodity Broking,
NRI & FPI services, Investment Banking and Alternative Investment fund with nearly
over 550+ cities across India and UAE.
❖ The company provides these services through on–line and off–line distribution
channel. The Company leads with the team of more than 4100+ enthusiastic
workforce who are efficient, determined and passionate to take the company at new
heights.

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 ❖ SMC has been recognized across various categories with its innovative use of digital
technology-enabled capabilities, best-in-class products and services to highlight
financial industry initiatives that have been taken in last one decade.

FUTURE OF SMC

❖ SMC has earned trust that cements “One Transaction Lifetime Relationship,” the
belief that centers on managing, growing and protecting the investment of clients for
generations.
❖ For the coming years, SMC will continue shifting the focus from the underlying
architecture that supports operations to new capabilities that will drive more
engagement and long-term customers’ growth.
❖ SMC has been able to remain responsive, resilient and focused on achieving our
objectives and have been ambit clear on our future road-maps to be accomplished.
Our growth has therefore remained certain, profitable and sustainable every year, we
achieved new milestones and surpassed benchmarks that we set for ourselves.
❖ SMC MISSION – ‘We aspire to be a global organization having dominant position in
financial & investment services through a customer centric approach.’
❖ SMC VISION - To help people make the right investment, the right way.

OBJECTIVES

VISION:

Aspire to be a global organization having dominant position in financial and investment

services through customer centric approach.

MISSION:

To help people make the right investment, the right way.

VALUES:

• Integrity- Being ethical builds trust.

• Relationship- One transaction, lifetime relationship.
• Innovation- Being ahead. With research and technology.
• Trustworthy- Keeping our promise. Every time.

PRODUCTS AND SERVICES PROVIDED BY THE COMPANY:

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 • Brokerage and Clearing Services
• Equities & Derivatives
• Currency & Commodities
• Institutional Broking
• Depository
• MF and IPOs
• NBFC
• Real Estate
• Insurance
• Online Trading
• NRI & FPI
• Wealth Management and Investment Banking
• Research

SWOT ANALYSIS
SWOT analysis is a structured planning method used to evaluate the Strengths, Weaknesses,
Opportunities, and Threats involved in a project or in a business venture. A SWOT analysis
can be carried out for a product, place, industry or person. It involves specifying the objective
of the business venture or project and identifying the internal and external factors that are
favourable and unfavourable in achieving that objective.

Setting the objective should be done after the SWOT analysis has been performed. This
would allow achievable goals or objectives to be set for the organization.

SWOT ANALYSIS CHART OF SMC GLOBAL SECURITIES LTD

S -STRENGTHS W-WEAKNESSES

-High profitability and revenue -Future productivity

-High growth rate -Growing competition means limited
-Domestic market market share growth
-Advertising
O-OPPORTUNITIES T-THREATS

-New markets -Increasing costs

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 -Growing demand -Financial capacity
-New acquisitions -Rising cost of raw materials
-Global markets -Technological problems
-Growing economy -Fluctuation of foreign currency rate
-Growth rates and profitability

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 INDUSTRY OVERVIEW
INDIAN STOCK MARKET-

The stock market is a place where you can trade company stocks, other assets, and
derivatives. Stock exchanges are businesses or mutual organisations that specialise in the
trading of stocks and securities. In the stock markets that operate in a specific country, all
kinds of firm stocks are enrolled. The following are some of India's stock exchanges: -

a. National Stock Exchange

b. Mumbai (Bombay) Stock Exchange

c. Calcutta Stock Exchange

d. Delhi Stock Exchange

e. Madras Stock Exchange

f. Bangalore Stock Exchange

HISTORY-

The Indian stock market is one of Asia's oldest. Its origins may be traced back approximately
200 years. The earliest records of security transactions in India are sparse and difficult to
find.

Bombay was the centre of business for corporate stocks and shares in banks and cotton
presses by the 1830s. Despite the fact that the trading list was expanded in 1839, banks and
merchants only acknowledged a half-dozen brokers between 1840 and 1850.

The 1850's witnessed a rapid development of commercial enterprise and brokerage business
attracted many men into the field and by 1860 the number of brokers increased to 60.

In 1860-61 the American Civil War broke out and cotton supply from United States of
Europe was stopped; thus, the 'Share Mania' in India begun. The Number of brokers
increased to about 200 to 250. However, at the end of the American Civil War, in 1865, a
disastrous slump began (for example, Bank of Bombay Share which had touched Rs 2850
could only be sold at Rs. 87). At the end of the American Civil War, the brokers who thrived

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out of Civil War in 1874, found a place in a street (now appropriately called as Dalal Street)
where they would conveniently assemble and transact business.

In 1887, they formally established in Bombay, the "Native Share and Stock Brokers'
Association" (which is alternatively known as “The Stock Exchange"). In 1895, the Stock
Exchange acquired a premise in the same street and it was Inaugurated in 1899. Thus, the
Stock Exchange at Bombay was consolidated. A new phase in the Indian stock markets began
in the 1970s, Foreign Exchange Regulation Act (FERA) that led to divestment of foreign
equity by the Multinational companies, which created a surge in retail investing. A new set of
economic and financial sector reforms that began in the early 1990s gave further impetus to
the growth of the stock markets in India. Towards this end, several measures were taken to
streamline the processes and systems including setting up an efficient market infrastructure to
enable Indian finance to grow and further mature.

An INTERNET- based stock trading was still in its fancy in INDIA and had the
potential to really benefit the, investor with its ability to offer greater Speed and
Transparency, at a much lower cost.

The traditional trading system is where investors have to contact their brokers for accessing
the real time data. And that's the reason why common people were completely out of the
picture in the traditional trading system.

Now things have completely changed. Internet has changed the whole scenario - just
click the Mouse button and you are done.

STRUCTURE-
Size of the markets:

The Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) are the two
national stock exchanges in India today. Each has completely electronic trading systems, with
approximately 9400 broking firms participating. There are 29 of them, with foreign brokers
accounting for 29 of them. On the various markets, there are approximately 9600 businesses
listed, with a total market capitalization of around $125.5 billion. Any market that has
achieved this level of expansion has a sizeable market.

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Demand for highly efficient settlement procedures. In India 99.9% of the trades, according to
the National Securities Depository, are settled in dematerialized form in a T+2 rolling
settlement environments. In addition, trades are guaranteed by the National Clearing
Corporation of India Ltd (NSCCL) and Bank of India Shareholding Ltd (BOISL), Clearing
Corporation houses of NSE and BSE respectively.

The main functions of the Clearing Corporation are to work out: -

(a) What counter parties owe and
(b) What counter parties are due to receive on the settlement date?

Furthermore, each exchange has a Settlement Guarantee Fund to deal with any unforeseeable
circumstances, as well as a 0.003 percent trade failure rate. The exchanges' Clearing
Corporation assumes each member's counter-party risk and ensures settlement with a fine-
tuned risk management system and an innovative online position monitoring approach. It also
secures the financial settlement of trades on the agreed-upon day and time, despite members'
failure to supply the needed monies and/or securities via a settlement.
REFORMS IN INDIAN STOCK MARKET-

➢ SEBI (Securities and Exchange Board of India)- The Securities and Exchange
Board of India, which is controlled by the Indian government, regulates the securities
and commodity markets in the country. In the year 1992, it was established. The
Securities and Exchange Board of India (SEBI) was established to safeguard the
interests of investors.
➢ Screen Based trading- Previously, there was an open outcry system. It is a way of
communication between experts on the trading floor of a stock exchange or futures
exchange. It entails yelling and hand signs to communicate information, particularly
about buy and sell orders.
Trading has grown a lot easier for investors in recent years. Screen-based trading has
emerged, in which trading activities are carried out entirely online and in an
automated manner. On November 3, 1994, this was first introduced.
➢ Reduction of trading cycle- Trading is the process of purchasing a company's stock.
An investor decides whether or not to invest in a company based on its past success
and future prospects. The trading cycle is the method by which shares in the Indian
stock market are resolved.

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 Previously, settlement of trading activities, such as purchasing and selling securities,
was done in 14-30 days, and it was completed on another day, referred to as T+5,
T+3, and so on.
Since 2003, there has been a statutory consistent trading cycle, which means that
trading and settlement must be completed in two days, i.e., T+2 days.
➢ Demutualisation- Demutualisation is the process of transforming a stock exchange's
legal structure from mutual to business company, and following demutualisation, the
exchange's ownership, management, and trading rights are separated from one
another. This facilitates the completion of trading activities.
➢ Dematerialisation- - Dematerialisation is a process through which physical
securities such as share certificates and other documents are converted into electronic
format and held in a DEMAT Account.
1. We can conveniently manage our shares and transactions from anywhere.
2. Stamp duty is not levied on our electronic securities.
3. Holding charges levied are nominal.
4. Risks involved with physical securities such as theft, loss, forgery or
damage are eliminated.
➢ Clearing Corporations- A clearing corporation is a company that works with a stock
exchange to manage transaction confirmation, settlement, and delivery. The term
"clearing house" or "clearing firm" is also used.
It is one of the organisations that is crucial in this procedure. Other key entities that
support or participate in the clearing process include depositories, clearing banks,
clearing members, and custodians. Transaction recording, trade confirmation,
determination of obligation, and pay-in and pay-out of money and securities are all
important aspects of clearing and settlement.
For example, if two investors agree to carry out a financial transaction, clearing
corporation acts as a facilitator taking the offsetting position to each of them (buyer to
the seller and seller to the buyer). Clearing house ensures proper transfer ownership of
shares and the money involved from buyer to the beneficiary. It participates at every
stage ensuring confirmation, settlement and delivery of the transaction.

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 Introduction of the study

UNDERSTANDING OF THE SIP PROCESS OVERVIEW OF THE

PORTFOLIO MANAGEMENT SERVICES

Portfolio Management Services (PMS), service offered by the Portfolio Manager, is

an investment portfolio in stocks, fixed income, debt, cash, structured products and
other individual securities, managed by a professional money manager that can
potentially be tailored to meet specific investment objectives. When we invest in
PMS, we own individual securities unlike a mutual fund investor, who owns units of
the fund. We have the freedom and flexibility to tailor our portfolio to address
personal preferences and financial goals. Although portfolio managers may oversee
hundreds of portfolios, our account may be unique.

Discretionary:
Under these services, the choice as well as the timings of the investment decisions rest solely
with the Portfolio Manager.

Non-Discretionary:
Under these services, the portfolio manager only suggests the investment ideas. The choice
as well as the timings of the investment decisions rest solely with the Investor. However the
execution of trade is done by the portfolio manager.

Advisory:
Under these services, the portfolio manager only suggests the investment ideas. The choice as
well as the execution of the investment decisions rest solely with the Investor. In India
majority of Portfolio Managers offer Discretionary Services.

PORTFOLIO-

Portfolio is a collection of assets that an individual has invested in. A portfolio is comprised
of different asset classes which include:
➢ Market related instruments such as equity, mutual fund units, derivatives etc.
➢ Debt instruments like debentures, bonds etc.

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 ➢ Fixed income instruments such as bank deposits, Public Provident Fund (PPF), Pension
Funds (PF), insurance, annuity plans etc.
➢ Physical assets like gold, silver, real estate, cash.
➢ Alternative investments avenues such as Real Estate Investment Trusts (REIT).

The goal is to get the maximum return from the best investment provided. Some of PMS
provided are:
➢ Motilal Oswal PMS
➢ ICICI PMS
➢ Kotak PMS
➢ Porinju Veliyath Equity Intelligence PMS
➢ Motilal PMS
➢ Birla Sunlife PMS and ASK India Select PMS

TYPES OF PORTFOLIO MANAGEMENT

Active Portfolio Management:

Its financial past performances are backed by financial ratios. Reducing risk is one of the main
responsibilities of the portfolio manager, for this he always selects a diversified portfolio in case he
doesn’t get a return from one sector than he can nullify that loss from another. In the end, it all comes
down to manager skill in identifying valuable stock.

Passive Portfolio Management:

It is the opposite of active portfolio management, people who follow this theory believe in the
efficient market hypothesis. This describes that the true potential of the stock will be reflected in its
fundamentals. Therefore, the passive manager prefers to go for stocks which are good in long-term
rather than good short-term turnover by using index funds. The point of selecting this is to get return
as well as paying all the fees relating with the trading. Maintaining a good yield rate is the primary
objective of the manager in this management service.

Discretionary Portfolio Management:

In this, a client is in full discretion with the manager, who takes all the decision regarding his
investment to his own knowledge of the market. While the demand of the client is predetermined,

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ways of doing that is decided by the manager under a defined time-frame. After the payment of funds
to the manager, his job is done and the manager handles the rest.

Non-Discretionary Portfolio Management:

The non-discretionary manager is an advisor to the client; he advises the client all the ways to
approach in the market, what are the advantages and disadvantage for the investment that they want to
put in. It is up to the client to make his own choices, once he finalizes his decision than only manager
performs the operations on his behalf. This process gives more authority to the investor.

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 BENEFITS OF PORTFOLIO MANAGEMENT
SERVICES-
1. Providing customized product-
➢ Developing an on-demand portfolio for the client
2. Higher flexibility
➢ An investment which can hold itself in dynamic environment
3. Higher returns and Less risk-
➢ Optimizing the return on the investment made and reducing risk to the lowest
point and taking precautions for the same
4. Transparent holdings-
➢ All the operations carried out are transparent in nature, chance of fraudulent is
minimal.
➢ Managing the liquidity
➢ Helps in maintaining day-to-day funds for the business, increases the cash flow
and standing of the business in the market.
5. Diversification of investment-
➢ Investment are made in different sectors to certain profits and reducing risk as
well so that if one sector doesn’t perform than other will be able nullify its loss
and make profits for the business.

RISK ASSOCIATED WITH PMS-

Market risk:

➢ This is the risk associated with movements in financial markets and thereby leading to
losses.

Inflation risk:

➢ This is the probable risk that might arise due to decrease in worth of portfolio in future.

Performance risk:

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➢ The estimates about performance in terms of returns of chosen stocks might turn out to be
incorrect.

PORTFOLIO MANAGER-

1. Portfolio manager is basically a personal stock portfolio management system that

enables the traders to track the sold and bought stocks along with any related
dividends by investing minimal time and effort. Traders can maintain a complete
stock trading diary without need to update a spreadsheet continually. This
information is of utmost importance for improving the trading strategy.

2. Traders can view the performance of their portfolio anytime throughout the year.
Traders can have the knowledge of their current status of their portfolio by
analyzing the statistics on open trades as well as historical trades.

3. With portfolio managers, traders can generate easy to use reports without any
hassle and paperwork. It also allows them to make savings by avoiding the
accountant fees.

ADVANTAGES OF PORTFOLIO MANAGER-

• Easy to use wizards that allows quick and simplified data entry
• Auto or manual stock price Updates
• Management of multiple Portfolios
• Tracking of all the stock transactions and related dividends
• Enables the traders to sell shares for gaining maximum tax benefits
• Facility of optional accounts that allows the traders to track total used funds and
available funds.
• Incorporates the information regarding the trading plan like disaster stops
• Generates quick and easily available reports.
• Ensures data security as the portfolio is stored on individual’s PC only.

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OBJECTIVES –

The investment objective of this portfolio is to endeavour to generate capital appreciation by

investing in equity or equity related instruments for moderate to assertive risk profiles with an
intermediate to long term horizon.

FACTS ABOUT PORTFOLIO-

• There are many investment vehicles in a portfolio.

• Building a portfolio involves making wide range of decisions regarding buying or selling of
stocks, bonds, or other financial instruments. Also, one needs to make decision regarding the
quantity and timing of the buy and sell.

• Portfolio Management is goal-driven and target oriented.

• There are inherent risks involved in the managing a portfolio.

The basics and ideas of Investment Portfolio Management are also applied to portfolio
management in other industry sectors.

Application Portfolio Management:

It involves management of complete group or subset of software applications in a portfolio.

These applications are considered as investments as they involve development (or
acquisition) costs and maintenance costs.

The decisions regarding making investments in modifying the existing application or

purchasing new software applications make up an important part of application portfolio
management.

Product Portfolio Management:

The product portfolio management involves grouping of major products that are developed
and sold by businesses into (logical) portfolios. These products are organized according to
major line-of-business or business segment.

The management team actively manages the product portfolios by taking decisions regarding
the development of new products, modifying existing products or discontinues any other
products. The addition of new products helps in diversifying the investments and investment
risks.

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Project Portfolio Management:

It is also referred as an initiative portfolio management where initiative portfolio involves a

defined beginning and end; precise and limited collection of desired results or work products;
and management team for executing the initiative and utilizing the resources.

A number of initiatives that supports a product, product line or business segment, are grouped
into a portfolio by managers.

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 Chapter Two: Literature Review
Ananth N Madhavan (2003) once a fairly esoteric subject, risk analysis and measurement
have become a critical function for both portfolio managers and traders. Yet accurate
measurement and analysis of risk presents many practical challenges, including the choice of
risk model, portfolio optimization pitfalls, horizon mismatches, and out-of-sample testing.

Peter Brooke (2009) suggested that the easiest way to build a very diverse portfolio is via
investment funds. The choice of funds is now enormous and nearly every asset class is covered
by them. This means it is very easy and inexpensive to put several funds together and have a
very broad spread. There are now some very good ‘multi asset’ funds which provide exposure
to all of these different classes in one professionally managed place. These multi asset
managers may also be able to access some funds which are still not available to the retail
investor, such as private equity. Peter Brooke is a financial planner to the English-speaking
expatriate community.

Anita Bhoir, (2011) Portfolio construction& services offered by banks and brokerages to face
heat ; MUMBAI : Regulators may put an end to discretionary portfolio management services
offered by banks and brokerages after a series of frauds, including high-profile ones at City
and Standard Chartered, said a person familiar with the thinking. RBI, SEBI and a sub-
committee of the Financial Stability and Development Council are working on the proposed
guidelines for portfolio management, said the person requesting anonymity. “RBI is likely to
ask banks to stop discretionary portfolio management,” said the person.

RaghavanR. S, (2011) -Core and satellite portfolio construction& evaluation a popular

investment method; the seznsex has not been in the pink of health for a week now. The steep
fall in the global indices and teetering economies have been weighing on the Indian quity
market, which, in turn, has dented the value of equity portfolios. It’s in times like these that the
benefits of the core and satellite strategy towards investing become obvious. How it works the
core and satellite portfolio management is a popular form of investment strategy with money
managers and their clients.

ET Bureau, (2011), How to pick a portfolio construction; evaluation scheme; Equity portfolio
management schemes (PMS) are today quite attractive from the perspective of high net worth
individuals (HNIs) or ultra HNIs.

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Cooper et al., (2001) defined PPM as “the art and science of applying a set of knowledge, skills,
tools, and techniques to a collection of projects in order to meet or exceed the need and
expectations of an organisation’s investment strategy.” McDonough and Spital (2003) stated
that PPM is the “day to day management of the portfolio including the policies, practices,
procedures, tools and actions that managers take to manage resources, make allocation
decisions and ensure that the portfolio is balanced in such a way to ensure successful portfolio-
wide new product performance.”

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 Chapter 3: Research Methodology
Research is a logical and systematic search for new and useful information on a particular topic.
Research methodology is way to systematically solve the research problem. Research, in
common terms refer to a search for knowledge. Research methodology consists of different
steps that are generally adopted by a researcher to study the research problem along with the
logic behind them. Research methods are the various procedures, schemes and algorithms used
in research. All the methods used by a researcher during a research study are termed as research
methods. They are essentially planned, scientific and value-neutral. They include theoretical
procedures, experimental studies, numerical schemes, statistical approaches, etc. Research
methods help us collect samples, data and find a solution to a problem. Particularly, scientific
research methods call for explanations based on collected facts, measurements and
observations and not on reasoning alone. They accept only those explanations which can be
verified by experiment.

RESEARCH DESIGN

“A Research design is the arrangement of conditions for collection and analysis of data in a
manner that aims to combine relevance to the research purpose with economy in procedure”.
The Research design followed to study the Descriptive design.

OBJECTIVES OF THE STUDY

Each research study has a distinct goal in mind. It's as though you're discovering the answer to
a question using scientific methods. But the major goal of our investigation is to uncover the
truth that has been buried and has yet to be uncovered.

The objectives of this project titled ‘Portfolio Management Services’.

• To know the concept of Portfolio Management.

• To learn about the various insurance firms' scheme, as well as new IPOs and Mutual
Funds.
• To gain knowledge about stock brokers and the stock market.
• To investigate SMC Global's competitive position in the competitive market.
• To investigate SMC Global's efficacy and efficiency in comparison to its competitors.
• The purpose of this study is to determine whether or not people are pleased with SMC
Global Services & Management System.

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 • To investigate the challenges people have when trading in SMC Global. To investigate
the need for improvement in the current trading system.

SCOPE OF THE STUDY

Portfolio Management Services research is beneficial in the following areas:

• Investors have specific needs in today's complex financial world, which are derived
from their risk appetite and financial aspirations. Regardless, every investor strives to
maximise his investment returns while avoiding financial loss. Portfolio Management
Services (PMS) recognise this and professionally manage investments in order to attain
certain investment objectives while also alleviating investors of the day-to-day
inconveniences that investing entails.
• It provides expert management of an investor's equity investment with the goal of
delivering a steady return while keeping risk in mind.
• Determine which stock is the most important in each portfolio.
• To keep an eye out for new potential consumers that are willing to put money into PMS.
• To determine the efficacy of SMC Global Securities’ PMS services in the current
situation.
• It also includes the scenario of a fund manager's investment philosophy.

RESEARCH DESISGN OF THE STUDY

This report is based on both primary and secondary data, with primary data collecting
taking precedence because it is an overhearing component in attitude studies. One of the
most essential applications of research methodology is that it aids in the identification of
the problem, the collection and analysis of the relevant data, and the provision of an
alternative solution to the problem. It also aids in the collection of crucial information
required by senior management in order to assist them in making better decisions, both day-
to-day and critical ones.

Investors' perceptions of SMC Global's Portfolio Management Services are examined in

this study. For the purpose of the survey, 100 consumers were chosen at random and their
opinions were sought on a variety of topics.

The methodology adopted includes

Questionnaire

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 Random sample survey of customers
Discussions with the concerned

SOURCES OF DATA

Primary data: Questionnaire

Secondary data: Published materials of SMC Global. Such as periodicals, journals,

newspapers, and website.

Sampling

Since SMC Global has many segments, I selected Portfolio Management Services (PMS)
segment as per my profile to do market research. 100% coverage was difficult within the
limited period of time. Hence sampling survey method was adopted for the purpose of the
study.

Sampling size

A sample of 21 was chosen for the purpose of the study. Sample consisted of Investor as based
on their Income and Profession as well as Educational Background.

Sampling Methods

Probability sampling requires complete knowledge about all sampling units in the universe.
Due to time constraint non-probability sampling was chosen for the study.

Sampling Procedure

From large number of customers & non consumers sample lot were randomly picked up by
me.

Field Study

Directly approached respondents by the following strategies

• Google Feedback Form

• Clients References

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 Chapter 4: FINDINGS AND ANALYSIS

ANALYSIS OF WORK DONE SO FAR

• EQUITY
• DERIVATIVES
• PORTFOLIO MANAGEMENT SERVICES

• EQUITY- The securities market has two interdependent and inseparable segments:
- Primary market

- Secondary market

1) Primary Market:

Primary market provides an opportunity to the issuers of securities, both Government and
corporations, to raise resources to meet their requirements of investment. Securities, in the form of
equity or debt, can be issued in domestic/international markets at face value, discount or premium.
The primary market issuance is done either through public issues or private placement. Under
Companies Act, 1956, an issue is referred as public if it results in allotment of securities to 50
investors or more. However, when the issuer makes an issue of securities to a select group of persons
not exceeding 49 and which is neither a rights issue nor a public issue it is called a private placement.

2) Secondary Market:

Secondary market refers to a market where securities are traded after being offered to the public in the
primary market or listed on the Stock Exchange.

Secondary market comprises of equity, derivatives and the debt markets. The secondary market is
operated through two mediums, namely, the Over-the-Counter (OTC) market and the Exchange
Traded market. OTC markets are informal markets where trades are negotiated.

Key Indicators of Securities Market:

1) Index:
An Index is used to give information about the price movements of products in the financial,
commodities or any other markets. Stock market indices are meant to capture the overall
behaviour of the equity markets. The stock market index is created by selecting a group of

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stocks that are representative of the whole market or a specified sector or segment of the
market. The blue-chip index of NSE is S&P CNX Nifty.

2) Market Capitalisation:
Market capitalization is defined as value of all listed shares on the country’s exchanges. It is
computed on a daily basis. Market capitalization of a particular company on a particular day
can be computed as product of the number of shares outstanding and the closing price of the
share. Here the number of outstanding shares refers to the issue size of the stock.

Market Capitalization = Closing price of share * Number of outstanding shares

3) Electronic trading:
Electronic trading eliminates the need for physical trading floors. Brokers can trade from
their offices, using fully automated screen-based processes. Their workstations are connected
to a Stock Exchange's central computer via satellite using Very Small Aperture Terminus
(VSATs). The orders placed by brokers reach the Exchange's central computer and are
matched electronically.

4) Exchanges in India:
The Stock Exchange, Mumbai (BSE) and the National Stock Exchange (NSE) are the
country's two leading Exchanges. There are 20 other regional Exchanges, connected via the
Inter-Connected Stock Exchange (ICSE). The BSE and NSE allow nationwide trading via
their VSAT systems.

5) Execute an order:
Select a broker of your choice and enter into a broker-client agreement and fill in the client
registration form. Place your order with your broker preferably in writing. Get a trade
confirmation slip on the day the trade is executed and ask for the contract note at the end of
the trade date.

6) Need a broker:
As per SEBI (Securities and Exchange Board of India.) regulations, only registered members
can operate in the stock market. One can trade by executing a deal only through a registered
broker of a recognized Stock Exchange or through a SEBI-registered sub-broker.

7) Contract note:
A contract note describes the rate, date, time at which the trade was transacted and the
brokerage rate. A contract note issued in the prescribed format establishes a legally

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enforceable relationship between the client and the member in respect of trades stated in the
contract note. These are made in duplicate and the member and the client both keep a copy
each. A client should receive the contract note within 24 hours of the executed trade.
Corporate Benefits/Action.

8) Stock Split:
A Split is book entry wherein the face value of the share is altered to create a greater number
of shares outstanding without calling for fresh capital or altering the share capital account.
For example, if a company announces a two-way split, it means that a share of the face value
of Rs 10 is split into two shares of face value of Rs 5 each and a person holding one share
now holds two shares.

9) Buy Back:
As the name suggests, it is a process by which a company can buy back its shares from
shareholders. A company may buy back its shares in various ways: from existing
shareholders on a proportionate basis; through a tender offer from open market; through a
book-building process; from the Stock Exchange; or from odd lot holders. A company cannot
buy back through negotiated deals on or off the Stock Exchange, through spot transactions or
through any private arrangement.

10) Settlement cycle:

The accounting period for the securities traded on the Exchange. On the NSE, the cycle
begins on Wednesday and ends on the following Tuesday, and on the BSE the cycle
commences on Monday and ends on Friday. At the end of this period, the obligations of each
broker are calculated and the brokers settle their respective obligations as per the rules,
byelaws and regulations of the Clearing Corporation. If a transaction is entered on the first
day of the settlement, the same will be settled on the eighth working day excluding the day of
transaction. However, if the same is done on the last day of the settlement, it will be settled
on the fourth working day excluding the day of transaction.

11) Rolling settlement:

The rolling settlement ensures that each day's trade is settled by keeping a fixed gap of a
specified number of working days between a trade and its settlement. At present, this gap is
five working days after the trading day. The waiting period is uniform for all trades. In a
Rolling Settlement, all trades outstanding at end of the day have to be settled, which means
that the buyer has to make payments for securities purchased and seller has to deliver the

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securities sold. In India, we have adopted the T+5 settlement cycle, which means that a
transaction entered into on Day 1 has to be settled on the Day 1 + 5 working days, when
funds pay in or securities pay out takes place.

DEPOSITORY RECEIPTS-

A depositary receipt (DR) is a negotiable certificate issued by a bank representing shares in a foreign
company traded on a local stock exchange. The depositary receipt gives investors the opportunity to
hold shares in the equity of foreign countries and gives them an alternative to trading on an
international market. There are two types of Depository Receipts in the stock market-

1). American Depository Receipts (ADR)- ADR is a negotiable instrument issued by a US bank,
representing non-US company stock, trading in the US stock exchange. Foreign companies can trade
in US stock market. It is issued in United States domestic capital market. ADR’s are easily
transferable, without any stamp duty. The transfer of ADR automatically transfers the number of
shares underlying.

2). Global Depository Receipts (GDR)- GDR is a negotiable instrument issued by the international
depository bank, representing foreign company's stock trading globally. Foreign companies can trade
in any country's stock market other than the US stock market. It is issued in European capital market.
Prior approval of Ministry of Finance and FIPB (Foreign Investment Promotion Board) is taken by the
company planning for the issue of GDR.

- Similarly, a foreign company can access Indian securities market for raising funds through issue of
Indian Depository Receipts (IDRs). An IDR is an instrument denominated in Indian Rupees in the
form of a depository receipt created by a Domestic Depository (custodian of securities registered with
the Securities and Exchange Board of India) against the underlying equity of issuing company to
enable foreign companies to raise funds from the Indian securities markets.

- Participatory notes also called P-Notes are offshore derivative instruments with Indian shares as
underlying assets. These instruments are used for making investments in the stock markets. However,
they are not used within the country. They are used outside India for making investments in shares
listed in the Indian stock market. That is why they are also called offshore derivative instruments.

Participatory notes are issued by brokers and FIIs registered with SEBI. The investment is made on
behalf of these foreign investors by the already registered brokers in India.

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DEPOSITORY

The organization responsible to maintain investor's securities in the electronic form is called the
depository. In other words, a depository can therefore be conceived of as a "Bank" for securities. In
India there are two such organizations viz. NSDL and CDSL. The depository concept is similar to the
Banking system with the exception that banks handle funds whereas a depository handles securities of
the investors. An investor wishing to utilize the services offered by a depository has to open an
account with the depository through Depository Participant.

1). NSDL(NATIONAL SECURITIES DEPOSITORY LIMITED):

National Securities Depository Limited (NSDL) is a financial organization created to hold securities
such as bonds, shares etc. in the form of physical or non-physical certificates i.e. in dematerialized
format. These securities are held in depository accounts such as funds held in bank accounts. It
facilitates prompt transfer of securities as ownership is transferred simply through book entries. This
is usually done electronically thus eliminating the extra time that was taken in following the
traditional practice where physical certificates had to be exchanged after a trade was completed.

2). CDSL(CENTRAL DEPOSITORY SERVICES LIMITED):

Central Depository Services Limited (CDSL) is a depository service that works for the Bombay Stock
Exchange (BSE) and is promoted by the State Bank of India (SBI), Bank of India, Bank of Baroda,
HDFC Bank, Standard Chartered Bank, Axis Bank and the Union Bank of India. The primary
function of this depository is to hold securities either in certificated or uncertificated (dematerialized)
form, and it helps enable the book-entry transfer of securities up to 500 shares in physical form.
However, most traders have now adapted to the electronic format for trading in securities. CDSL's
primary focus is to provide safe, useful, reliable and secure depository services. CDSL began its
operations from February 1999 onwards after obtaining prior clearance from market watchdog
Securities and Exchange Board of India (SEBI).

WAYS OF TRADING

1). Intraday Trading: Intraday trading involves buying and selling of stocks within the same trading
day. Here stocks are purchased, not with an intention to invest, but for the purpose of earning profits
by harnessing the movement of stock indices. Thus, the fluctuations in the prices of the stocks are
harnessed to earn profits from the trading of stocks.
An online trading account is used for the purpose of intraday trading. While doing intraday trading,
we need to specify that the orders are specific to intraday trading. As the orders are squared off before
the end of the trading day, it is also called as Intraday Trading.

Advantages of intraday trading-

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• Brokerage amount is less which is 0.01%
• More leverage

Disadvantages of intraday trading-

• Riskier because the shares are being sold or bought on the same day itself.

2). Delivery Trading: Delivery based trading means buying shares and holding them for certain
period of time is called delivery-based trading. The shares you bought will be in your demat account.
Once you take delivery of shares you can hold them as long as we want.

Advantages of delivery trading-

• Price appreciation can be possible in case the market goes up.
• Dividend and bonus would be achieved.

Disadvantages of intraday trading-

• More brokerage amount needs to be paid i.e., 0.30%
• More risky
• Have to pay the full amount as the settlement are not meant to be done on the same day itself.

BROKERAGE STRUCTURE ON THE BASIS OF INTRADAY AND DELIVERY

TRADING

SMC Global Transaction Charges 2021

Segment Transaction Fee

Equity Delivery 0.0035%

Equity Intraday 0.0035%

Equity Futures 0.0029%

Equity Options 0.065% (on premium)

Currency Futures 0.0029%

Currency Options 0.065% (on premium)

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Segment Transaction Fee

Commodity 0.0030%

SMC Global Tax on Trading

Tax SMC Global Rates

Securities Transaction • Equity Delivery: 0.1% on both Buy and Sell

Tax (STT) • Equity Intraday: 0.025% on the Sell Side

• Equity Futures: 0.01% on Sell Side

• Equity Options: 0.05% on Sell Side (on Premium)

• Commodity Futures: 0.01% on sell side (Non-Agri)

• Commodity Options: 0.05% on sell side

• Currency F&O: No STT

• On Exercise transaction: 0.125%

• Right to entitlement: 0.05% on sell side

Exchange Transaction Refer table above

Charges

GST 18% on (Brokerage + Transaction Charge + SEBI Fee)

SEBI Charges 0.00005% (₹5/Crore)

Stamp Duty (On buy side only) Delivery: 0.015%, Intraday: 0.003%, Equity Futures:
0.002%, Equity Options: 0.003%, and Currency F&O: 0.0001%.

Commodity Futures: 0.002%, Commodity Options: 0.003% (MCX)

CIRCUIT BREAKERS

The Exchange has implemented index-based market-wide circuit breakers in compulsory rolling
settlement with effect from July 02, 2001. In addition to the circuit breakers, price bands are also
applicable on individual securities.

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Index-based Market-wide Circuit Breakers: The index-based market-wide circuit breaker
system applies at 3 stages of the index movement, either way viz. at 10%, 15% and 20%.
These circuit breakers when triggered bring about a coordinated trading halt in all equity and
equity derivative markets nationwide. The market-wide circuit breakers are triggered by
movement of either the BSE Sensex or the S&P CNX Nifty, whichever is breached earlier.

(a) In case of a 10% movement of either of these indices, there would be a one-hour
market halt if the movement takes place before 1:00 p.m. In case the movement takes place at
or after 1:00 p.m. but before 2:30 p.m. there would be trading halt for ½ hour. In case
movement takes place at or after 2:30 p.m. there will be no trading halt at the 10% level and
market shall continue trading.

(b) In case of a 15% movement of either index, there would be a two-hour halt if the
movement takes place before 1 p.m. If the 15% trigger is reached on or after 1:00 p.m., but
before 2:00 p.m., there shall be a one-hour halt. If the 15% trigger is reached on or after 2:00
p.m. the trading shall halt for remainder of the day.

(c) In case of a 20% movement of the index, trading shall be halted for the remainder of the
day.

DERIVATIVES-
Derivative is a contract or a product whose value is derived from value of some other asset
known as underlying. Derivatives are based on wide range of underlying assets. These
include:

• Metals such as Gold, Silver, Aluminium, Copper, Zinc, Nickel, Tin, Lead etc.

• Energy resources such as Oil (crude oil, products, cracks), Coal, Electricity, Natural Gas
etc.

• Agri-commodities such as wheat, Sugar, Coffee, Cotton, Pulses etc, and

• Financial assets such as Shares, Bonds and Foreign Exchange.

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PRODUCTS IN DERIVATIVES MARKET-

• FORWARDS:

It is a contractual agreement between two parties to buy/sell an underlying asset at a certain

future date for a particular price that is pre-decided on the date of contract. Both the
contracting parties are committed and are obliged to honour the transaction irrespective of
price of the underlying asset at the time of delivery. Since forwards are negotiated between
two parties, the terms and conditions of contracts are customized. These are Over-the-counter
(OTC) contracts.

• FUTURES:

A futures contract is similar to a forward, except that the deal is made through an organized
and regulated exchange rather than being negotiated directly between two parties. Indeed, we
may say futures are exchange traded forward contracts.

• OPTIONS:

An Option is a contract that gives the right, but not an obligation, to buy or sell the
underlying on or before a stated date and at a stated price. While buyer of option pays the
premium and buys the right, writer/seller of option receives the premium with obligation to
sell/ buy the underlying asset, if the buyer exercises his right.

• SWAPS:

A swap is an agreement made between two parties to exchange cash flows in the future
according to a prearranged formula. Swaps are, broadly speaking, series of forward contracts.
Swaps help market participants manage risk associated with volatile interest rates, currency
exchange rates and commodity prices.

MARKET PARTICIPANTS-

• HEDGERS:

They face risk associated with the prices of underlying assets and use derivatives to reduce
their risk. Corporations, investing institutions and banks all use derivative products to hedge
or reduce their exposures to market variables such as interest rates, share values, bond prices,
currency exchange rates and commodity prices.

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• SPECULATORS OR TRADERS:

They try to predict the future movements in prices of underlying assets and based on the
view, take positions in derivative contracts.

• ARBITAGEURS:

Arbitrage is a deal that produces profit by exploiting a price difference in a product in two
different markets. Arbitrage originates when a trader purchases an asset cheaply in one
location and simultaneously arranges to sell it at a higher price in another location. Such
opportunities are unlikely to persist for very long, since arbitrageurs would rush in to these
transactions, thus closing the price gap at different locations.

RISKS FACED BY THE DERIVATIVES PARTICIPANTS

1). COUNTERPARTY RISK:

When both the parties refuse to fulfil their contractual obligations, then it is said to be counterparty
risk. In other words, it is a default by counterparty.

2). LIQUIDITY RISK:

This risk is an inability to exit from a position.

3). PRICE RISK:

Loss on position because of price movement in the market.

INDEX-

• A stock index is an indicator of the performance of overall market or a particular sector.

• It serves as a benchmark for portfolio performance - Managed portfolios, belonging either

to individuals or mutual funds; use the stock index as a measure for evaluation of their
performance.

IMPACT COST

Liquidity in the context of stock market means a market where large orders are executed
without moving the prices. Let us understand this with help of an example. The order book of
a stock at a point in time is as follows:

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 Buy Sell
Sr. No. Quantity Price (in Rs.) Price (in Rs.) Quantity Sr. No.
1 1000 4.00 4.50 2000 5
2 1000 3.90 4.55 1000 6
3 2000 3.80 4.70 500 7
4 1000 3.70 4.75 100 8

In the order book given above, there are four buy orders and four sell orders. The difference between
the best buy and the best sell orders is 0.50 - called bid-ask spread. If a person places a market buy
order for 100 shares, it would be matched against the best available sell order at Rs. 4.50. He would
buy 100 shares for Rs. 4.50. Similarly, if he places a market sell order for 100 shares, it would be
matched against the best available buy order at Rs. 4 i.e., the shares would be sold at Rs.4. Hence, if a
person buys 100 shares and sells them immediately, he is poorer by the bid-ask spread i.e., a loss of
Rs 50. This spread is regarded as the transaction cost which the market charges for the privilege of
trading (for a transaction size of 100 shares).

INDEX MANAGEMENT-

Index construction, maintenance and revision process is generally done by specialized

agencies. For instance, all NSE indices are managed by a separate company called as follow
1). “India Index Services and Products Ltd. (IISL)”,
2). a joint venture between Standard and Poor’s (S&P)
3). National Stock Exchange (NSE) and
4). CRISIL Ltd. (Now a part of Standard & Poor’s).

MAJOR INDICES IN INDIA-

These are few popular indices in India:

• S&P BSE Sensex

• S&P BSE Midcap
• S&P BSE 100
• S&P BSE 200
• S&P BSE 500

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• CNX Nifty
• CNX Nifty Junior
• CNX Midcap
• CNX 100
• CNX 500
• SX 40

INDEX FUNDS-
These types of funds invest in a specific index with an objective to generate returns
equivalent to the return on index. These funds invest in index stocks in the proportions in
which these stocks exist in the index. For instance, Sensex index fund would get the similar
returns as that of Sensex index. Since Sensex has 30 shares, the fund will also invest in these
30 companies in the proportion in which they exist in the Sensex.

FORWARDS CONTRACT-
Forwards are bilateral over-the-counter (OTC) transactions where the terms of the contract,
such as price, quantity, quality, time and place are negotiated between two parties to the
contract. Any alteration in the terms of the contract is possible if both parties agree to it.

Essential features of a forward are:

- It is a contract between two parties (Bilateral contract).
- All terms of the contract like price, quantity and quality of underlying, delivery terms like
place, settlement procedure etc. are fixed on the day of entering into the contract.
For example, if on April 9, 2015 the gold trades at Rs. 15,500 in the cash market, the forward
contract becomes favourable to you because you can then purchase gold at Rs. 15,450 under
the contract and sell in cash market at Rs. 15,500 i.e., net profit of Rs. 50. Similarly, if the
spot price is 15,390 then you incur loss of Rs. 60 (buy price – sell price).

FUTURES CONTRACT-
A futures contract is an agreement made through an organized exchange to buy or sell a fixed
amount of a commodity or a financial asset on a future date at an agreed price. Simply,
futures are standardised forward contracts that are traded on an exchange. The clearinghouse
associated with the exchange guarantees settlement of these trades. A trader, who buys
futures contract, takes a long position and the one, who sells futures, takes a short position.

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Essential features of futures contract:
- Contract between two parties through Exchange.
- Centralised trading platform i.e., exchange
- Price discovery through free interaction of buyers and sellers
- Margins are payable by both the parties
- Quality decided today (standardized)
- Quantity decided today (standardized)

FUTURES TERMINOLOGIES-

• Spot Price: The price at which an asset trades in the cash market.

• Futures Price: The price of the futures contract in the futures market. The closing price of
Nifty in futures trading.

• Contract Cycle: It is a period over which a contract trade. On September 16, 2015, the
maximum number of index futures contracts is of 3 months contract cycle- the near month
(September 2015), the next month (October 2015) and the far month (November 2015).
Every futures contract expires on last Thursday of respective month (in this case September
24, 2015). And, a new contract (in this example - December 2015) is introduced on the
trading day following the expiry day of the near month contract.

• Expiration Day: The day on which a derivative contract ceases to exist. It is last trading
day of the contract. The expiry date in the quotes given is September 24, 2015. It is the last
Thursday of the expiry month. If the last Thursday is a trading holiday, the contracts expire
on the previous trading day. On expiry date, all the contracts are compulsorily settled. If a
contract is to be continued then it must be rolled to the near future contract. For a long
position, this means selling the expiring contract and buying the next contract. Both the sides
of a roll over should be executed at the same time. Currently, all equity derivatives contracts
(both on indices and individual stocks) are cash settled.

• Tick Size: It is minimum move allowed in the price quotations. Exchanges decide the tick
sizes on traded contracts as part of contract specification. Tick size for Nifty futures is 5

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paisa. Bid price is the price buyer is willing to pay and ask price is the price seller is willing
to sell.

• Contract Size and contract value: Futures contracts are traded in lots and to arrive at the
contract value we have to multiply the price with contract multiplier or lot size or contract
size.

• Basis: The difference between the spot price and the futures price is called basis. If the
futures price is greater than spot price, basis for the asset is negative. Similarly, if the spot
price is greater than futures price, basis for the asset is positive.

• Initial Margin: The amount one needs to deposit in the margin account at the time entering
a futures contract is known as the initial margin. Let us take an example - On November 3,
2015 a person decided to enter into a futures contract. He expects the market to go up so he
takes a long Nifty Futures position for November expiry. Assume that, on November 3, 2010
Nifty November month futures closes at 8000. The contract value = Nifty futures price * lot
size = 8000 * 75 = Rs 6,00,000. Therefore, Rs 6,00,000 is the contract value of one Nifty
Future contract expiring on November 26, 2010.
Assuming that the broker charges 10% of the contract value as initial margin, the person has
to pay him Rs. 60,000 as initial margin. Both buyers and sellers of futures contract pay initial
margin, as there is an obligation on both the parties to honour the contract.

• Marking to Market (MTM): In futures market, while contracts have maturity of several
months, profits and losses are settled on day-to-day basis – called mark to market (MTM)
settlement. The exchange collects these margins (MTM margins) from the loss-making
participants and pays to the gainers on day-to-day basis. Let us understand MTM with the
help of the example. Suppose a person bought a futures contract on November 3, 2015, when
Nifty was at 8000. He paid an initial margin of Rs. 60,000 as calculated above. On the next
trading day i.e., on November 4, 2015 Nifty futures contract closes at 8100. This means that
he/she benefits due to the 100 points gain on Nifty futures contract. Thus, his/her net gain is
Rs 100 x 75 = Rs 7,500. This money will be credited to his account and next day the position
will start from 8100.

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• Open Interest and Volumes traded: An open interest is the total number of contracts
outstanding (yet to be settled) for an underlying asset. It is important to understand that
number of long futures as well as number of short futures is equal to the Open Interest. This
is because total number of long futures will always be equal to total number of short futures.
Only one side of contracts is considered while calculating / mentioning open interest. The
level of open interest indicates depth in the market. Volumes traded give us an idea about the
market activity with regards to specific contract over a given period – volume over a day,
over a week or month or over entire life of the contract.

• Contract Specifications: Contract specifications include the salient features of a derivative

contract like contract maturity, contract multiplier also referred to as lot size, contract size,
tick size etc.

POSITIONS IN DERIVATIVES MARKET-

Long position:
Outstanding/ unsettled buy position in a contract is called “Long Position”. For instance, if
Mr. X buys 5 contracts on Sensex futures then he would be long on 5 contracts on Sensex
futures. If Mr. Y buys 4 contracts on Pepper futures then he would be long on 4 contracts on
pepper.

Short Position:
Outstanding/ unsettled sell position in a contract is called “Short Position”. For instance, if
Mr. X sells 5 contracts on Sensex futures then he would be short on 5 contracts on Sensex
futures. If Mr. Y sells 4 contracts on Pepper futures then he would be short on 4 contracts on
pepper.

Open position:
Outstanding/ unsettled either long (buy) or short (sell) position in various derivative contracts
is called “Open Position”. For instance, if Mr. X shorts say 5 contracts on Infosys futures and
longs say 3 contracts on Reliance futures, he is said to be having open position, which is
equal to short on 5 contracts on Infosys and long on 3 contracts of Reliance. If next day, he

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buys 2 Infosys contracts of same maturity, his open position would be – short on 3 Infosys
contracts and long on 3 Reliance contracts.

Naked and calendar spread positions:

Naked position in futures market simply means a long or short position in any futures
contract without having any position in the underlying asset. Calendar spread position is a
combination of two positions in futures on the same underlying - long on one maturity
contract and short on a different maturity contract. For instance, a short position in near
month contract coupled with a long position in far month contract is a calendar spread
position. Calendar spread position is computed with respect to the near month series and
becomes an open position once the near month contract expires or either of the offsetting
positions is closed.
A calendar spread is always defined with regard to the relevant months i.e., spread between
August contract and September contract, August contract and October contract and
September contract and October contract etc.

Opening a position:
Opening a position means either buying or selling a contract, which increases client’s open
position (long or short).

Closing a position:
Closing a position means either buying or selling a contract, which essentially results in
reduction of client’s open position (long or short). A client is said to be closed a position if he
sells a contract which he had bought before or he buys a contract which he had sold earlier.

PAYOFF CHARTS FOR FUTURES CONTRACT

Pay off Charts:

Pay off on a position is the likely profit/ loss that would accrue to a market participant with
change in the price of the underlying asset at expiry. The payoff diagram is graphical
representation showing the price of the underlying asset on the X-axis and profits/ losses on
the Y-axis.

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Pay off charts for futures:
In case of futures contracts, long as well as short position has unlimited profit or loss
potential. This results into linear pay offs for futures contracts.

Payoff for buyer of futures: Long-futures

Let us say a person goes long in a futures contract at Rs.100. This means that he has agreed to
buy the underlying at Rs. 100 on expiry. Now, if on expiry, the price of the underlying is Rs.
150, then this person will buy at Rs. 100, as per the futures contract and will immediately be
able to sell the underlying in the cash market at Rs.150, thereby making a profit of Rs. 50.
Similarly, if the price of the underlying falls to Rs. 70 at expiry, he would have to buy at Rs.
100, as per the futures contract, and if sell the same in the cash market, he would receive only
Rs. 70, translating into a loss of Rs. 30. This potential profit/ loss at expiry when expressed
graphically, is known as a payoff chart.

Short Futures payoff:

As one person goes long, some other person has to go short, otherwise a deal will not take
place. The profits and losses for the short futures position will be exactly opposite of the long
futures position.

Price risk:
It is nothing but change in the price movement of asset, held by a market participant, in an
unfavourable direction. This risk broadly divided into two components - specific risk or
unsystematic risk and market risk or systematic risk.

Unsystematic Risk:
Specific risk or unsystematic risk is the component of price risk that is unique to particular
events of the company and/or industry. This risk is inseparable from investing in the
securities. This risk could be reduced to a certain extent by diversifying the portfolio.

Systematic Risk:
An investor can diversify his portfolio and eliminate major part of price risk i.e., the
diversifiable/unsystematic risk but what is left is the non-diversifiable portion or the market
risk-called systematic risk. Variability in a security’s total returns that are directly associated
with overall movements in the general market or economy is called systematic risk.
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 PORTFOLIO MANAGEMENT SERVICES
Portfolio Management Services (PMS) is a service that is offered to the client which contains
a portfolio in stocks, fixed income, debt, structured and unstructured securities etc.
These are managed by a portfolio manager; a portfolio manager is a person who is
responsible for investing and trading in assets, with the objective of implementing its
investment strategy. They also deal with the day-to-day portfolio trading.

This service includes selection, analysing and scope of all projects and programs in business
to deliver the best output. The goal is to get the maximum return from the best investment
provided. Some of PMS provided are:

• HDFC Bank
• ICICI Bank
• Asian paints
• Titan
• Ultra-tech

TYPES OF PMS-

• Active Portfolio Management

• Passive Portfolio Management
• Discretionary Portfolio Management
• Non-Discretionary Portfolio Management

PHASES OF PMS-

There are basically five phases in the portfolio management and each of these phases makes up an
integral part of the Portfolio Management and the success of it depends on the effectiveness in
implementing these phases.

Security Analysis: It forms the initial phase of the portfolio management process and
involves the evaluation and analysis of risk return features of individual securities. The basic

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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. There are many types of securities available in the market including equity shares,
preference shares, debentures and bonds. Apart from it, there are many new securities that are
issued by companies such as Convertible debentures, Deep Discount bonds, floating rate
bonds, flexi bonds, zero coupon bonds, global depository receipts, etc.

Portfolio Analysis: A portfolio refers to a group of securities that are kept together as an
investment. Investors make investment in various securities to diversify the investment to
make it risk averse. A large number of portfolios can be created by using the securities from
desired set of securities obtained from initial phase of security analysis.
By selecting the different sets of securities and varying the number of investments in each
security, various portfolios are designed. After identifying the range of possible portfolios,
the risk-return characteristics are measured and expressed quantitatively. It involves the
mathematically calculation of return and risk of each portfolio.

Portfolio Selection: During this phase, portfolio is selected on the basis of input from
previous phase Portfolio Analysis. The main target of the portfolio selection is to build a
portfolio that offer highest returns at a given risk. 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. The
optimal portfolio is determined in an objective and disciplined way by using the analytical
tools and conceptual framework provided by Markowitz’s portfolio theory.

Portfolio Revision: After selecting the optimal portfolio, investor is required to monitor it
constantly to ensure that the portfolio remains optimal with passage of time. Due to dynamic
changes in the economy and financial markets, the attractive securities may cease to provide
profitable returns. These market changes result in new securities that promises high returns at
low risks. In such conditions, investor needs to do portfolio revision by buying new securities
and selling the existing securities. As a result of portfolio revision, the mix and proportion of
securities in the portfolio changes.

Portfolio Evaluation: This phase involves the regular analysis and assessment of portfolio
performances in terms of risk and returns over a period of time. During this phase, the returns

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are measured quantitatively along with risk born over a period of time by a portfolio. The
performance of the portfolio is compared with the objective norms. Moreover, this procedure
assists in identifying the weaknesses in the investment processes.

PMS CHARGES-
PMS contains many fees and charges for its operations, generally it comprises of three
components: upfront fee, management fee and performance fee. Sometimes it also has fixed
fee.
Some of the charges are:

Entry Load: Many PMS providers charge 2-3% at the time of entry.
Management Charges: It varies from 1-3% and these are charged on a quarterly basis to the
client by the service provider.

Profit Sharing/Performance Fee: Some PMS charges a fixed flat fee and asks for
percentage of profit over the stipulated returns against the investment. These are generally
associated with the profit-sharing arrangements.

Fixed Fee: It is the fixed flat fee that is charged on the client, it depends on the size of his
investment or any other service provided to him, it may be charged on a monthly, quarterly or
yearly basis.

Exit Load: It is the fee that is charged at the time of exit if it is before the minimum
investment period. It may also include brokerage charges.

GOALS OF PMS
There are generally 3 goals:
1). Maximizing the value of portfolio
First of all is to maximize the return on the portfolio, it can be done by variety of methods
ranging from financial models through to scoring models. Every model has its own strength
and weakness and then they are being considered as ‘go’ and ‘hold’ project.
Some of the financial models are:
-Net Present Value (NPV)

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-Expected Commercial Value (ECV)
-Productivity Index (PI) etc.

2). A Balanced Portfolio

The second goal is to have a balanced portfolio which contains fit projects in terms of many
parameters. They are measured in various term like high risk versus blue chip stocks, sector
of the industry, backed by technical charts, these are all done by the portfolio manager. These
visual chart representations include portfolio maps or bubble diagrams which is also an
adaption of the four quadrants BCG. It also includes traditional chart for portfolio
management that includes histogram, pie charts which help in analysing the portfolio. For ex-
timing is a key issue in the quest for balance, one doesn’t want short-term project or long-
term project only therefore try to have a balanced portfolio with the guidance of manager.

3). Building Strategy into the Portfolio

Developing a sound strategy is very important in portfolio management services; it helps in
achieving goals by getting the maximum output.
There are two primary strategies used by the manager everywhere and they are:

• Bottom-Up Strategic Approach:

Scoring models also help in making strategies, they can measure the likelihood of success so
that strategic fit can be maximized, and it can be done by building number of strategic
questions and analysing their data.
With the help of this, a projects position and approach towards the goal can be measured.

• Top-Down Strategic Approach:

This approach consists of the method which ensures that the eventual portfolio of project
reflects.
It sets out where the money is spent in the portfolio and equates itself with the spending
targets defined in the strategy. This is also known as Strategic Buckets model. This model
requires the senior management to allocate their money resources appropriately, this helps in
creating ‘envelopes of money’ or ‘buckets’. Projects are divided into buckets and money is
given according to the buckets and each bucket is defined with a target limit. These are also
monitored by R&D department.

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SELECTING AN OPTIMAL PORTFOLIO:
An optimal stock portfolio refers to a stock portfolio that incorporates the stocks configured
in such a manner that they yield the optimal return statistically possible at a given level of
risk accepted by an investor. The modern portfolio theory stresses on the optimal portfolio
concept by assuming that the investors try to minimize risk obsessively while looking for the
highest return possible. As per this theory, investors should make rational decisions for
achieving maximum returns at their acceptable level of risk. The working of the optimal
portfolio can be easily understood by looking at the chart below-

The optimal-risk portfolio is generally found in the middle of the curve. If one goes further
higher up the curve, it will mean taking more risk proportionately for achieving lower
incremental return. Similarly, if one goes at lower end of the curve, it will mean low risk/low
return portfolios.

INVESTORS APPROACH TOWARDS MAKING PROFITABLE

PORTFOLIO-

Portfolio management is basically an approach of balancing risks and rewards. Investors should keep
the following tips in mind while deciding about the right portfolio blend.

Goals: One should be clear about their goals as an investor. The objective of the portfolio
management should be utmost clear if one wants to accumulate wealth by good returns or to hold on
his investments.

Risk Tolerance: As an investor one should know how to handle the fluctuations of ever-changing
volatile market. It is important to know the ways for tolerating the risks and subsequent rise and fall of
net worth. If you are not capable of handling the pressure of sharp decline in the values of tour
investments then you should try to invest in more stable funds/stocks. By this way, you may not make
the returns quickly however it can offer you sound sleep at night. Know your investments: It is
recommended to invest in the stocks/funds of the businesses and industries that you are aware of. You
should know the activities of the companies and procure knowledge about the sector you are investing
in. This way you would be able to know if the company will continue to be successful. The
performance of the specific business or industry cannot be easily predicted with certainty. When to

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Buy/Sell: In order to succeed in the stock markets, it is very important to know when to buy or when
to sell. You should do every purchase with a purpose, and constantly re-assess that purpose as per the
prevailing market and other conditions.
Measuring Return on Investment (ROI): The performance of the portfolio is measured by the
return on investment (ROI). The individuals can successfully formulate a logical money management
strategy by knowing the probability of returns received by each dollar invested.
ROI = (Gains – Cost)/Cost
The ROI can change depending on the improvement or worsening of the market conditions. It also
depends on the kind of assets or securities held by the investor. In general, the higher potential ROI
involves higher risk and vice- versa. Thus, one of the major tasks of the portfolio management is the
proper risk control.

Measuring Risk: The risk tolerance of the person determines the pace of his/her returns. The risks
and rewards are in essence interrelated to each other where tolerance of the risks tends to influence or
even dictate the rewards. An investor whose goal is to maintain his/her current assets instead of
growing them, he/she will keep only safe and secure investments in the portfolio.

Diversification of the portfolio: The diversification of the portfolio is required to minimize the
risks and maximizes the returns in the long term. It is preferred to diversify your portfolio however;
one should take care to avoid over- diversifying. The diversified portfolio led to smoothing of peak-
and-valley pricing effects caused by the fluctuations in the normal market and in surviving long term
market downturns. The over diversification can become counterproductive so it needs to be avoided.

Avoiding the gambling: As an investor, one should avoid portfolio that relies on high-risk, high-
return investments. It is because; the higher speculative investment can lead to conditions where
investor may require selling his holdings prematurely at a loss due to liquidity crisis and expected
returns won’t materialize.

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 FUNDAMENTAL ANALYSIS

UNDERSTANDING THE FINANCIAL PERFORMANCE OF

THE COMPANY ANALYSIS OF BALANCE SHEET
The balance sheet has several purposes including telling us the assets a company has to protect
shareholders, how efficiently management is using capital, the risk of bankruptcy, and how fast a
business can grow.
With the help of below stated ratios we can easily get an idea about SMC Global Securities
Company’s financial position.

KEY FINANCIAL RATIOS OF SMC GLOBAL MAR MAR MAR MAR MAR
SECURITIES (in Rs. Cr.) 21 20 19 18 17

PROFITABILITY RATIOS

PBDIT Margin (%) 28.12 22.31 18.97 22.53 19.38

PBIT Margin (%) 25.72 19.02 16.83 21.29 18.39

PBT Margin (%) 20.04 8.90 7.83 13.51 12.52

Net Profit Margin (%) 14.22 7.04 7.76 9.03 8.25

Return on Capital Employed (%) 9.66 12.75 11.61 14.61 11.57

Return on Assets (%) 3.61 2.10 1.70 2.71 2.35

Total Debt/Equity (X) 0.35 0.10 0.86 0.46 0.37

Asset Turnover Ratio (%) 25.40 29.80 21.96 30.03 28.58

LIQUIDITY RATIOS

Current Ratio (X) 2.11 1.70 0.45 1.17 1.23

Quick Ratio (X) 2.09 1.70 0.45 1.04 1.10

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 Inventory Turnover Ratio (X) 37.42 0.00 71.68 3.92 4.18

Dividend Payout Ratio (NP) (%) 0.00 45.66 32.91 14.80 32.39

Dividend Payout Ratio (CP) (%) 0.00 31.12 25.79 13.01 28.93

Interpretation:

Profitability Ratio:
Profit margin is increasing year on year it's has seen company is growing and earning good profit as
well over the 5 years.
There's a fluctuation in ROCE in the year 2020-2021 is has decreased by around 3%.
Return on Asset is also increasing it shows the percentage of how profitable a company's assets are in
generating revenue.
According to ratios Debt has also been increased in year 2020-2021 but profit margin ratios are also
increased that shows company is utilising it's debt effectively but there is fall in Asset turnover ratio
which shows inefficiency.

Liquidity Ratio:

Liquidity is quite good in recent years both Quick Ratio and Current Ratio they have increased and
became more than 2 which means Current asset is twice of Current Liability.
Inventory Ratio is having high volatility.
Dividend payout Ratio was doing good but in recent year it became zero.

Shareholding Pattern
Entity Percentage Holding

Promoters 62.32%

Institutions 0.33%

Non-Institutions 37.35%

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 SECURITY ANALYSIS
Security analysis refers to the analysis of the proper value of the individual securities likes stocks,
shares, bonds, etc. Security analysis are been done for three different listed financial sector companies
i.e., Aarti Industries, Tata Consumer Products and ICICI Bank.

Aarti Industries

AARTI Industries Ltd (ARTO) is a global leader in Benzene based derivative products. The company
has a diversified product portfolio with end users in pharma, agrochemicals, specialty polymers,
paints & pigments. Q4FY21 revenue grew by 12% YoY, led by revival in specialty chemicals &
stable growth in Pharma segment. EBITDA margins improved by 120bps YoY to 21.5% led by better
volume & value-added products. PAT grew by 23% YoY. Revival in discretionary portfolio ~40% of
specialty chemicals (Auto, industrial, dyes/pigments) to pre-Covid levels is positive.

Period Instrument Authorized Capital Issued Capital -PAIDUP-

Capital (Rs.
From To (Rs. cr) (Rs. cr) Shares (nos) Face Value Cr)

Equity
2019 2020 Share 115.1 87.1 174234474 5.0 87.1

Tata Consumer Products

The company reported an exceptional loss of Rs 63.93 crore during the quarter. It mainly represents
the costs relating to the business restructure and re-organisation of Rs 18 crore and loss on disposal of
an overseas subsidiary/joint venture of Rs 46 crore. Net sales soared 26.28% (24% in constant
currency) to Rs 3,037.22 crore in Q4 FY21 from Rs 2,405.03 crore in Q4 FY20, mainly driven by
strong volume and value growth in the India Food & Beverage business. Tata Consumer Products'
consolidated net profit stood at Rs 133.34 crore in Q4 FY21 compared with net loss of Rs 50.21 crore
in Q4 FY20.

Period Instrument Authorized Capital Issued Capital -PAIDUP-

Capital (Rs.
From To (Rs. cr) (Rs. cr) Shares (nos) Face Value Cr)

Equity
2019 2020 Share 125.0 92.2 921551715 1.0 92.2

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ICICI Bank

Net interest income (NII) rose 16.9% YoY in Q4FY21, aided by 3.4% YoY growth in interest income
and 8.3% YoY decline in interest expenses. Pre provision profit improved 15.6% YoY to Rs. 8,540cr,
benefitted by lower employee costs. Net profit jumped ~3x YoY to Rs. 4,403cr, primarily on lower
provisions (-51.7% YoY). Outlook remains intact on the back of strong deposit growth, significant
lower cost of deposit. Also, improved asset quality with strong liquidity position provides strong base
for growth.

Period Instrument Authorized Capital Issued Capital -PAIDUP-

Capital (Rs.
From To (Rs. cr) (Rs. cr) Shares (nos) Face Value Cr)

Equity
2019 2020 Share 2500.0 1294.6 6472765203 2.0 1294.6

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 TECHNICAL ANALYSIS
Technical Analysis is the study of historical market data, including price and volume. It is a
blanket term for a variety of strategies that depend on interpretation of price action in a stock.
Most technical analysis is focused on determining whether or not a current trend will
continue and, if not, when it will reverse. Some technical analysts swear by trend lines, others
use candlestick formations, and yet others prefer bands and boxes created through a
mathematical visualization. Most technical analysts use some combination of tools to
recognize potential entry and exit points for trades. A chart formation may indicate an entry
point for a short seller, for example, but the trader will look at moving averages for different
time periods to confirm that a breakdown is likely.

Technical analysts generally believe that prices move in trends and history tends to repeat
itself when it comes to the market's overall psychology. The two major types of technical
analysis are chart patterns and technical indicators.

A) Chart patterns are a subjective form of technical analysis where technicians attempt
to identify areas of support and resistance on a chart by looking at specific patterns.
These patterns, underpinned by psychological factors, are designed to predict where
prices are headed, following a breakout or breakdown from a specific price point and
time.

For example, an ascending triangle chart pattern is a bullish chart pattern that shows
a key area of resistance. A breakout from this resistance could lead to a significant,
high-volume move higher.

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 Ascending triangles often have two or more identical peak highs which allow for the
horizontal line to be drawn. The trend line signifies the overall uptrend of the pattern,
while the horizontal line indicates the historic level of resistance for that particular
asset.

B) Technical indicators are a statistical form of technical analysis where technicians

apply various mathematical formulas to prices and volumes. The most common
technical indicators are moving averages, which smooth price data to help make it
easier to spot trends. More complex technical indicators include the moving average
convergence divergence (MACD), which looks at the interplay between several
moving averages. Many trading systems are based on technical indicators since they
can be quantitatively calculated.

Moving Average Convergence Divergence (MACD) is a trend- following momentum

indicator that shows 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.

The MACD has a positive value whenever the 12-period EMA (blue) is above the 26-period
EMA (red) and a negative value when the 12-period EMA is below the 26-period EMA. The
more distant the MACD is above or below its baseline indicates that the distance between the
two EMAs is growing. In the following chart, we can see how the two EMAs applied to the
price chart correspond to the MACD (blue) crossing above or below its baseline (red dashed)
in the indicator below the price chart.

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MACD is often displayed with a histogram (see the chart below) which graphs the distance
between the MACD and its signal line. If the MACD is above the signal line, the histogram
will be above the MACD’s baseline. If the MACD is below its signal line, the histogram will
be below the MACD’s baseline. Traders use the MACD’s histogram to identify when bullish
or bearish momentum is high.

Chart Types

There are three main types of charts that are used by investors and traders depending on the
information that they are seeking and their individual skill levels. The chart types are: the line
chart, the bar chart and the candlestick chart.

Line Chart

The most basic of the three charts is the line chart because it represents only the closing
prices over a set period of time. The line is formed by connecting the closing prices over the
time frame. Line charts do not provide visual information of the trading range for the
individual points such as the high, low and opening prices. However, the closing price is
often considered to be the most important price in stock data compared to the high and low
for the day and this is why it is the only value used in line charts.

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Bar Chart-

The bar chart expands on the line chart by adding several more key pieces of information to
each data point. The chart is made up of a series of vertical lines that represent each data
point. This vertical line represents the high and low for the trading period, along with the
closing price. The close and open are represented on the vertical line by a horizontal dash.
The opening price on a bar chart is illustrated by the dash that is located on the left side of the
vertical bar. Conversely, the close is represented by the dash on the right. Generally, if the
left dash (open) is lower than the right dash (close) then the bar will be shaded black,
representing an up period for the stock, which means it has gained value. A bar that is
coloured red signals that the stock has gone down in value over that period. When this is the
case, the dash on the right (close) is lower than the dash on the left (open).

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Candlestick Chart-

The candlestick chart is similar to a bar chart, but it differs in the way that it is visually
constructed. Similar to the bar chart, the candlestick also has a thin vertical line showing the
period’s trading range. The difference comes in the formation of a wide bar on the vertical
line, which illustrates the difference between the open and close. And, like bar charts,
candlesticks also rely heavily on the use of colours to explain what has happened during the
trading period. A major problem with the candlestick colour configuration, however, is that
different sites use different standards; therefore, it is important to understand the candlestick
configuration used at the chart site you are working with. There are two colour constructs for
days up and one for days that the price falls. When the price of the stock is up and closes
above the opening trade, the candlestick will usually be white or clear. If the stock has traded
down for the period, then the candlestick will usually be red or black, depending on the site.
If the stock’s price has closed above the previous day’s close but below the day’s open, the
candlestick will be black or filled with the colour that is used to indicate an up day.

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Types of Chart Patterns

Chart patterns fall broadly into three categories: continuation patterns, reversal patterns and
bilateral patterns.

• Continuation patterns signals that an ongoing trend will continue

• Reversal chart patterns indicate that a trend may be about to change direction

• Bilateral chart patterns let traders know that the price could move either way – meaning the
market is highly volatile.

Some of the chart patterns commonly used by the traders are:

a) Head and Shoulders pattern-

Head and shoulders is a chart pattern in which a large peak has a slightly smaller peak on
either side of it. Traders look at head and shoulders patterns to predict a bullish-to-bearish
reversal. Typically, the first and third peak will be smaller than the second, but they will all
fall back to the same level of support, otherwise known as the ‘neckline’. Once the third peak
has fallen back to the level of support, it is likely that it will breakout into a bearish
downtrend.

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 b) Double Top pattern ('M' pattern) –

A double top is another pattern those traders use to highlight trend reversals. Typically, an
asset’s price will experience a peak, before retracing back to a level of support. It will then
climb up once more before reversing back more permanently against the prevailing trend.

c) Double bottom pattern ('W' pattern) –

A double bottom chart pattern indicates a period of selling, causing an asset’s price to drop
below a level of support. It will then rise to a level of resistance, before dropping again.
Finally, the trend will reverse and begin an upward motion as the market becomes more
bullish. A double bottom is a bullish reversal pattern, because it signifies the end of a
downtrend and a shift towards an uptrend.

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 d) Cup and Handle pattern-

The cup and handle pattern is a bullish continuation pattern that is used to show a period of
bearish market sentiment before the overall trend finally continues in a bullish motion. The
cup appears similar to a rounding bottom chart pattern, and the handle is similar to a wedge
pattern – which is explained in the next section. Following the rounding bottom, the price of
an asset will likely enter a temporary retracement, which is known as the handle because this
retracement is confined to two parallel lines on the price graph. The asset will eventually
reverse out of the handle and continue with the overall bullish trend.

e) Flag pattern-

A flag is a price pattern that, in a shorter time frame, moves counter to the prevailing price
trend observed in a longer time frame on a price chart. It is named because of the way it
reminds the viewer of a flag on a flagpole. The flag pattern is used to identify the possible

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continuation of a previous trend from a point at which price has drifted against that same
trend. Should the trend resume, the price increase could be rapid, making the timing of a
trade advantageous by noticing the flag pattern.

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Technical Analysis of Aarti Industries, Tata Consumer Products and ICICI
Bank-
Aarti Industries:

Chart Type: Candlestick

Chart Pattern: Double top pattern or M pattern

Interpretation:

• All red candles are considered as bearish which means it occurs after a price move higher and
indicates lower prices to come.

• All green candles are considered as bullish engulfing which means it occurs after a price fall
and indicates higher prices to come.

• In the month of May Price went high from 750 to 890 then it went down 800 again it went up
in the month of June to 910 then again it went down to the level of 850 which made double
top or M pattern.

• By analysing this chart investor will take its decision for buying, holding or investing. In this
graph we can see that down ward trend is started after a bearish engulfing candlestick and in
MACD graph also we can see that MACD line cut signal line from above and sell of share is
high.

• So, I would suggest that investor should not buy any share until next signal, they should put
the stop loss as per their loss taking capacity.

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Tata Consumer Products:

Chart Type: Candlestick

Chart Pattern: Upward pattern

Interpretation:

• All red candles are considered as bearish which means it occurs after a price move higher and
indicates lower prices to come.

• All green candles are considered as bullish engulfing which means it occurs after a price fall
and indicates higher prices to come.

• Since May, graph is in upward trend share price is increasing day by day, before May graph
price was in sides ways trend. Now it is going up but in the end of June a big bearish
engulfing candlestick is formed, and MACD line is near to signal line though signal line is
below but not far, buying of share is also declining.

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 • I would suggest that before doing anything investor should wait for more signal, they should
not hurry for buying or selling of share. They should wait for two or three more days so get
sure which call they should follow.

ICICI Bank

Chart Type: Candlestick

Chart Pattern: Sideways pattern

Interpretation:

• All red candles are considered as bearish which means it occurs after a price move higher and
indicates lower prices to come.

• All green candles are considered as bullish engulfing which means it occurs after a price fall
and indicates higher prices to come.

• Since February, graph is in sideways pattern though once or twice they have broken the
resistant level but support level is maintained. In recent most of the red candle have seen but
if we look at the MACD graph MACD line is going to cut signal line from below and sells
quantity is also declined.

• So, I would say that invest should wait for some days and watch the pattern if candle goes
green then they should invest. If they will get more signal then they should definitely buy this

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share and for selling they should hold the position. As it is a saying never sell in upward
trend.

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 ANALYSIS AND INTERPRETATION

Interpretation:
According to the survey, maximum number of age group who has responded this survey is around 20-
30 years which is showing 95.2% people are more likely to take risk in order to get good amount of
returns rest. 4.8% people belong to age group of 31-40 years.

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Interpretation:
According to the survey, maximum number of people belong to the male group (57.1%) and rest are
female (42.9%). So, we can say that males are more like to take the risk.

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Interpretation:
Most of the invest have done just graduation, they are 38.1% of total survey. Then people doing
professional courses they are 28.6% and then people with diploma courses with 23.8%, rest are others.
We can say that people after doing their graduation are likely to take risk and wants to invest in
securities.

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Interpretation:
In this sample most of the population are of age 20-30 years, most of them is having monthly income
up to 5000 i.e., 52.4% and population of income of 5000-20000 is 28.6% and rest are in above 20000
incomes.

This means that people have less amount of money are more concerned towards making money or to
gain profits. Investing any amount of money would not always gain profits, it will equally incur
losses. This might create risk however, on the basis of the survey 52.4% of respondents has an income
of up to Rs.5000, who is ready to take risks for the long-term benefits.

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Interpretation:
From the above chart given, it is be estimated that Rs.5000-10000 of the amount would be likely to
invest by the respondents i.e. showing 47.6% and Rs.10000-50000 of the amount would be likely to
invest about 33.3% of the respondents, rest are 9.5% in rest two categories.

It seems like sample is trying to learn investment by deposing less amount are sample is young and
with less income. But there are some sample who is willing or invested huge amount as well.

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Interpretation:
As per the survey, the purpose of the investment according to our sample respondents is mostly to
generate a specified sum of money for a specific goal in life which is accounted for 47.6%, and 23.8%
of the sample respondents do investment to earn return on idle resources and same percentage goes
for making provision for an uncertain future. A smaller number of respondents would do investment
to meet the cost of inflation and also to make a provision for an uncertain future, which is accounted
for 4.8%.

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Interpretation:
The above chart depicts that the respondents mostly like to invest in equity share market which is
accounted for 90.5% whereas currency and commodity market are accounted for very less number of
percentage. And no one is willing to invest in derivatives market, this make be due to lack of
knowledge or maybe lack of funds.

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Interpretation:
The above chart depicts that 71.4% of the respondents do trading occasionally while 9.5% and
14.30% do trading weekly and monthly respectively. However, least number of respondent do trading
on a daily basis.

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Interpretation:
The above chart depicts that 42.9% of the respondents feel that they have taken moderate or medium
risks with their past financial decisions. Only 14.3% of the respondents has taken very large and same
for the large financial decisions and 19% have taken small amount of risks and 9.5% have taken very
small risk.

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Interpretation:
As per the survey, after making an investment if the financial markets start to perform badly, mostly
38.1% of the respondents are likely to invest more funds to take advantage of the lower price. 28.6%
of the respondents monitor the investment carefully and 33.3% transfer money to a more secure
investment product.

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Interpretation:
As per the survey, maximum number of respondents are willing to invest half of the money in order to
get higher returns but also has a chance of losing some of their money, which is accounted for 38.1%.
While 28.6% willing to invest less than half, only 19% are willing to invest more than half.

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Interpretation:
As per the survey, mixture of two products is more preferable for the respondents which is accounted
for 61.9%. However, 19% prefer to invest some money in the product giving higher return and also
some risk of losing part of the initial investment. And 19% of the respondents prefers a product with a
low average annual return.

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Interpretation:
As per the survey, maximum number of respondents know about the online share trading which thus,
helps more in trading very easily, accounting for 81%. Only 19% are unaware of online share trading.

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Interpretation:
Online trading is more preferable for the respondents in the share market and it accounts for 85.7% as
per the survey. Whereas, only 9.5% accounts for both i.e., online and manual trading which is
preferred by the respondents and only 4.8% respondents prefer only manual trading.

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Interpretation:
As per the survey, maximum number of respondents i.e., 95.2% are trading online from the period of
one to three years. 4.8% are trading online within three to five years and no one is trading for above
five years.

It seems like most of respondent is have just started their investment. They are in learning phase.

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Interpretation:
As per the survey, 61.9% of the respondents are aware about the trading timings. Whereas, there are
38.1% respondents who is unaware about the trading timings.

Trading timings for equity market, which is more preferable by most of our respondents are:
• Pre-open timings- 9:00 a.m.-9:07a.m.
• Market working timings- 9:15 a.m.- 3:30 p.m.
• If there is any glitch hampering on trading activities on the expiry day, timings are3:40 p.m.- 4:00
p.m.

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Interpretation:
As per the survey, maximum number of respondents i.e. 57.1% collects cash or returns in T+2 days
which means trading gets settled in 2 days. 14.3% receives cash immediately and 28.6% of the
respondents are not aware of the same.

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Interpretation:
This above chart depicts that maximum number of respondents i.e. 57.1% belongs to the category of
all of the above which means online system of trading are being preferred by them because it is time
suitability, user friendly and place convenience.

Only 14.3% of the respondents has preferred online trading because of the user friendly and place
convenience. Thus, there is 9.5% respondents who prefers any other reason for adopting the online
trading system. And 19% respondent choose online system trading because of time suitability.

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Interpretation:
52.4% of the respondents receive confirmation regarding trading via email directly or broker's email
as per the survey while 23.8% by SMS and 23.8% by any other means.

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 Summary of Findings and Analysis
Survey shows 95.2% people are more likely to take risk in order to get good amount of
returns. Maximum number of age group who has responded is around 20-30 years which is
showing 4.8% people belong to age group of 31-40 years. Most of the invest have done just
graduation, they are 38.1% of total survey. Then people doing professional courses they are
28.6% and then people with diploma courses with 23.8%, rest are others. The above chart
depicts that the respondents mostly like to invest in equity share market which is accounted
for 90.5% whereas currency and commodity market are accounted for a smaller number of
percentage.

Maximum number of respondents are willing to invest half of the money in order to get
higher returns but also has a chance of losing some of their money. of trading on the stock
market. 52.4% of respondents receive confirmation regarding trading via email directly or
broker's email as per the survey. 23.8% by SMS and % by any other means.

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 Conclusion
The project "Portfolio management" has greatly aided me in gaining an understanding of the
numerous investing alternatives. Individuals can invest in a number of investment options, including
stocks, derivatives, commodities such as gold and silver, portfolio management services, mutual
funds, and so on. If one does not have much understanding about the aspects that make a successful
investment, one can approach a portfolio manager to benefit from his professional experience in order
to secure an enviable portfolio.

The Bombay stock market has implemented the BOLT system (Bombay On-line Trading). All BSE
trading activities are now conducted through BOLT. Similarly, the National Stock Exchange uses the
NEAT (National Exchange for Automated Trading) technology, which is a completely automated
screen-based trading system. From their Trading Work Stations, the brokers and their agents trade
using the BOLT and NEAT systems. SMC has developed ODIN (Open Dealer Integrated Network),
which allows them to trade on both the NSE and the BSE.

With the help of a poll, I've come to the conclusion that people between the ages of 20 and 30 are
more inclined to invest, which means they're more willing to accept risks in exchange for a high
return. Middle-aged adults, on the other hand, are less willing to take risks as their responsibilities
grow, such as family bills, children's fees, and so on. And the elderly are unwilling to take risks since
they are more reliant on their pension funds and do not want to take any risks by playing it safe. As a
result, it may be argued that an investor's risk-taking capacity is inversely proportional to his or her
age, while his or her income is directly proportional to his or her risk-taking ability.

I have done technical analysis of three different listed companies under different sectors i.e., Aarti
Industries, Tata Consumer Products and ICICI Bank which helped me to predict the future movement
in the prices and to forecast whether it would help the investors to make investment in particular
company or not.

Lastly, I would like to conclude that with the help of various indicators such as Growth rate of the
company in the current latest year (2019-20), Operating Margin of the company in the last three
financial years, company's EBITA (Earnings Before Interest and Taxes) in the last two financial
years, Earnings Per Share of the company, etc. has helped me to understand the financial performance
of the company.

This research has taught me not only about Portfolio Management Services, but also about several
aspects of the organisation, such as its financial performance, technical soundness, numerous
investment channels, people's attitudes toward investing, anticipating and forecasting future market
prices, and so on.

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 RECOMMENDATION
With the complexities of client’s objectives and today’s market uncertainty, I would like
recommend to kindly go through the PMS of overall Portfolio Strategy to help you achieve
long term financial goal.

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 BIBLIOGRAPHY

Sources:

➢ www.pmsindia.in
➢ www.smctradeonline.com
➢ www.nism.com
➢ www.sebi.com
➢ www.investopedia.com
➢ www.moneycontrol.com
➢ www.economictimes.indiatimes.com/
➢ https://trendlyne.com/
➢ https://www.chittorgarh.com/

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