12-09-2013, 02:49 PM
Portfolio Management of CNX Midcap Companies at Kotak Securities Ltd., Surat
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EXECUTIVE SUMMARY
This project report on is based on understanding portfolio management,
which is taking place in the stock market. Kotak being the market leader in PMS,
which is having corpus 3200 crore out of 6200 crore total market corpus. Under
project I have done marketing of Trading and Demat account and made IPO sub-
broker. So this helps in understanding how practically the market works.
Under project title firstly I find out 9 securities, which has made technical break out
in CNX Midcap Index. Company selection is based on return and beta of that
security also. On the basis of Sharpe Model of optimum portfolio, only 6
companies remained in my portfolio out of 9 companies. I found out the risk and
return trade-off, beta, systematic and unsystematic risk, correlation between
security and market and between two securities also, and covariance of security
and market also. After which, the selected companies under portfolio, I found out
the portfolio return and risk on the basis of Markowitz and Sharpe Single Index
Model.
COMPANY PROFILE
The Kotak Mahindra Group was born in 1985 as Kotak Capital Management Finance
Limited. Uday Kotak, Sidney A. A. Pinto and Kotak & Company promoted this company.
Industrialists Harish Mahindra and Anand Mahindra took a stake in 1986, and that's when
the company changed its name to Kotak Mahindra Finance Limited. Since then it's been a
steady and confident journey to growth and success.
Kotak Securities Ltd., is one of India's largest brokerage and securities distribution
house in India. Over the years Kotak Securities has been one of the leading investment
broking houses catering to the needs of both institutional and non-institutional investor
categories with presence all over the country through franchisees and co-ordinates. Kotak
Securities Ltd. offers online (through www.kotaksecurities.com) and offline services
based on well-researched expertise and financial products to the non-institutional
investors.
Kotak Securities Limited is the world of Capital Markets where everything newsworthy
exists only in the present moment and where knowing the importance of timing,
sentiments and strategic forecasting makes the difference between profit and loss.
Kotak Securities Limited, a strategic joint venture between Kotak Mahindra Bank and
Goldman Sachs (holding 25% - one of the world’s leading investment banks and
brokerage firms) is India’s leading stock broking house with a market share of 7 - 8 %.
Kotak Securities Limited is one of the larger players in distribution of IPOs - it was ranked
number One in 2003-04 as Book Running Lead Manager in public equity offerings by
PRIME Database. It has also won the “Best Equity House” Award from Finance Asia -
April 2004.
KOTAK SECURITIES RESEARCH CENTER
Kotak Securities Research Center is a special research cell where some of India's finest
financial analysts bring you intensive research reports on how the stock market is faring,
when is the right time to invest, when to execute your order and more. KSL provides both
type of research reports.
PORTFOLIO MANAGEMENT
Individual securities have risk-return characteristics of their own. Portfolio, which is
combination of securities, may or may not take on the aggregate characteristics of
their individual parts. Portfolio analysis considers the determination of future risk
and return in holding various blends of individual securities.
Under portfolio, risk defines as the standard deviation around the expected return.
The simple fact that securities carry differing degrees of expected risk leads most
investors to the notion of holding more than one securities at a time, in an attempt
to spread risks by not putting all their eggs into one basket.
Diversification of one’s holdings is intended to reduce risk in an economy in
whichever asset’s returns are subject to some degree of uncertainty. Most
investors hope that if they hold several assets, even if one goes bad, the other will
provide some protection from an extreme loss. Best diversification comes through
holding large numbers of securities scattered across industries.
CNX Midcap Index
The medium capitalised segment of the stock market is being increasingly
perceived as an attractive investment segment with high growth potential.
The CNX Midcap Index has a base date of Jan 1, 2003 and a base value of 1000.
All constituents of the CNX Midcap Index must have a minimum listing record of 6
months. In addition, all candidates for the Index are also evaluated for trading
interest, in terms of volumes and trading frequency. All companies in the CNX
Midcap Index have a minimum track record of three years of operations with a
positive net worth. A company which comes out with a IPO will be eligible for
inclusion in the index, if it fulfills the normal eligibility criteria for the index for a 3
month period instead of a 6 month period.
Cement Industry
The Indian cement industry is on a roll. Driven by a booming housing sector,
global demand and increased activity in infrastructure development such as state
and national highways, the cement industry has outpaced itself, ramping up
production capacity, attracting the top cement companies in the world, and
sparking off a spate of mergers and acquisitions to spur growth.
Engineering Sector
The engineering sector is the largest segment of the overall Indian industrial
sector. India has a strong engineering and capital goods base. The important
groups within the engineering industry include machinery & instruments, primary
and semi finished iron & steel, steel bars & rods, non-ferrous metals, electronic
goods and project exports. The engineering sector employs over 4 million skilled
and semi-skilled workers (direct and indirect).
The sector can be categorised into heavy engineering and light engineering
segments. Heavy engineering segment forms the majority of the engineering
sector in India. In the year 2003-04, out of the total engineering production of US$
22 billion, the heavy engineering market contributed over 80 per cent with the light
engineering segment accounting for the remaining.