CHAPTER-1

1.1 INTRODUCTION

Project work is a part of academic activity of Visvesvaraya Technological University, Belgaum. It

is an initial to bridge the gap between the knowledge and its application through a series of
invention to the student of MBA program that enable to achieve knowledge and explore to the
industry.
A meaningful six week project has exposed me to the corporate culture at PUBLIC AND PRIVATE
SECTOR STOCK BROKING LIMITED at Bangalore. This project training served as the right
platform to implement the theoretical imbibed concepts in a best possible way.

It was interesting to learn in an organization like PUBLIC AND PRIVATE SECTOR STOCK
BROKING LIMITED. This is committed with the society’s wellbeing and ethical standards. All
though the human resources are grouped into various levels of responsibility, the company keeps an
open door policy to encourage free intrapersonal interaction which I believe is real strength of any
organization. It exposed to the quality of work culture, timelines and cooperativeness in the
company.

The interaction with the company gave an insight and a first experience of the industrial scenario in
the competitive environment outside the realms of the company. Learnt how to interact with
customers, how to behave with the superiors, subordinates, and how to retain the customers. It helps
students to apply their skill in practical field under the guidance of experienced practitioners.
It helps to learn company ethics, organization behaviour, rules, provision, etc., once the students
finish the academy students can easily fit to the companies by learning norms through this project
program. It boosts confident level among the students. This program adds academic value and ability
to earn academic credit. It also gives the opportunity to make valuable future jobs.

All together it was a good learning experience to carry the project in the company like PUBLIC
AND PRIVATE SECTOR STOCK BROKING LIMITED and I thankful to all the people who have
helped to complete my project, without which the project would not have been success.

1
1.2 INDUSTRY PROFILE
Securities Market:
Securities market helps in transferring of assets from people with unmoving assets to people who
have a productive requirement meant from them. To state properly, securities markets make
available networks for distribution of funds to ventures and in this manner these two exercises. As
result, the savers and financial specialists are definitely not inhibited by their separate capacities, but
by the economy’s capacities to invest and save respectively, which certainly improves investment in
the economy.
The securities show case has two commonly subordinat portions:
1. Primary Market
2. Secondary Market.

Primary Market:
This was issued by the company for increasing new capital generating on the investors by creating
initial public offers(IPO) or rights problems or proposals aimed to sale the equity or debenture.

Secondary Market:
It makes available liquidity to the securities, over trade and settlement on the stock exchanges. It
works through two ways that are Over the Counter (OTC) market and Trade Exchanged Business
sector. OTC markets are the agreeable kind of business sectors where exchanges are talked about
and under standardized. In this sort of business sector, the securities are exchanged and settled
together through the counter. Indian markets have known OTC trade like the OTCEI; be that as it
may they don’t give numerous volumes. The additional decision of exchanging is over the stock
trade way, wherever exchanging and settlement is done by means of the stock trades and the
purchasers and dealers don’t have any acquaintance with each other. The exchanges performed on
the trade are settled over the clearing company, who executes as middle person and insurance
settlement.

2
1.3 COMPANY PROFILE

PUBLIC AND PRIVATE SECTOR was started as Public And Private Sector& Company by 5 well
experienced charted accountants on the year 1979-1980 at Hyderabad India. At the time it was
confined only to audit and with capital of 150000 Rupees. It achieves first milestone after first
investment in technology. But now Public And Private Sector Group is a premier integrated financial
services provider, ranked among the top 5 in the country across its business segments. The group
serves 70 million individual investors in various capacities, and provides investor service to over 600
corporate houses. Public And Private Sector Group is an Indian multinational enterprise. It has 460
branches, (over 935 offices) covering in excess of 400 cities and towns of India, Dubai and New
York with extra of 320 than franchisees the nation over.

Public And Private Sector covers the whole range of money related administrations, viz., Stock
Broking, Depository Participant, appropriation ofzmonetary items (counting common assets, security
and fixed stores), products broking, individual account warning administrations, dealer banking and
corporate fund, riches the board, NBFC, among others.

The Public And Private Sector Group is today a well- diversified conglomerate. Its business
straddles the entire financial services spectrum as well as data processing and managing segments.
Since most of its financial services were retail focused, the need to build scale and skill
in the transaction processing domain became imperative. Also duringvstressedvenvironment in the
financialvservices segment, the non-financialvbusiness brings in avlot of the group’s business.
Another key feature of Public And Private Sector has been its ability to offer leading edge advice
based on incisive ideas that are strongly rooted in high quality research on every conceivable aspect
of investments be it equities, Forex, commodities, bonds, fixed returns, debt instruments or any
other investment grade asset class.

The customer has always been at the centre of every Public And Private Sector initiative. Public And
Private Sector has a professional management group and ranks the best in innovation, operating
mainly, in research of several industrial segments.

3
1.4 PROMOTRS & MANAGEMENT TEAM

 Mr.C.Parthasarthy Chairman
 Mr.M.Yugandhar Managing director
 Mr.M.S.Ramakrishna Director
 Mr.V.MaheshManaging Director
 Mr.V.Ganesh CEO
 Mr.P.B.Ramapriyan CEO,Distribution&Allied Business
 Mr.Rajiv.R.Singh CEO,StockBroking
 Mr. Deepak Gupta Group Head- HR
 Mr.G.Krishna Hari Group head, Finance

1.5 Mission :To be the leading and preferred service provider to our customers, and we aim to
achieve this leadership position by building an innovative, enterprising, and technology driven
organization which will set the highest standards of service and business ethics.

Vision: Strive to be the leaders and experts through hour processes, people and technology offering
the unique blend that delivers superior value by establishing and maintaining the highest levels of
services and professionalism.

QUALITY POLICY

“To achieve and sustain market leadership, Public And Private Sector shall aim for complete
customer satisfaction, by combining its human and technological resources, to provide world class
quality services. In the process Public And Private Sector shall strive to meet and exceed customer’s
satisfaction and set industry standards.

4
Objectives
 Maintain and assassin house processes that will sustain transparent and
harmonious relationship with clients and customers to provide world services
 Aim to set industry standards in customer relations by way of establishing/reinforcing its
human& technological and suit customized needs of our clients
 Establish partner relationship with our business associates/ clients, investors, other
Customers service agents and vendors, which would help in building customer,
confidence.
 Provide high quality of work life for all our employees and equip them with adequate
knowledge &skills so as tomeaningfullyrespond to customers’ needs
 Use state of art information technology in developing new and innovative products
andservicesit meet the changing needs of our customers and clients
 Strive to be a reliable source of value-added support on products and services offered and
constantly guide individuals and institutions in marking a judicious choice of the same
 Aim to become a leader in the areas of activates being undertaken , by
setting standardsinefficiencyand responsiveness,therebyexceeding levels of customer
satisfaction
 Strive to keep all stake –holders (Shareholders,clients,investors, suppliers,
customers, regulatory authorities and employees)and business associates proud and satisfied

VALUE ADD SERVICES

 Ask the expert:-Resolve your stock queries intently through an online interactive session with
research analysts.
 Live chart:-Discuss your service related query directly through live chart for effective
support solutions.
 Advisory service:-Our team of 400+ trust equity assist you in making informed investment
decisions.
 Research Reports:-More than 270 companies reports published by our fundamental research
team for efficient research & analysis.
 Mobile App:-Making trading easy. Effective and enjoyable. Available on ions. Android and
windows.
 Advance calculators:-Calculate margin across sectors to make your money to its full
potential.

5
1.6 PRODUCTS OFFERED

Equity derivatives

PAN card Mutual fund

tax saving Kavry

investmen Currency
t
Products

online
investment commodity
platform

margin funding

6
PRODUCTS/ SERVICE PROFILE

Products Provided by the Public and Private Sector:

 Equity:
Public And Private Sector site (Public And Private Sectoronline.com) offers different choices
while exchanging values, for example, Delivery, Day exchanging, Buy Today Sell
Tomorrow (BTST), After Market Order (AMO), Market Order, Limit Order, Cover Order,
Basket Order and Bracket request.
 Future and Options:
This instrument is a great tool for speculation and its provides a good leverage opportunity.

 Currency:
Money Derivatives has additionally risen as an imperative and new resource class for
financial specialists
 Commodity:
Commodities are goods that are normally used as inputs in production of other goods and
services.

 Mutual Funds:
Public And Private Sector provide a platform to invest in Mutual Funds in a hassle-free,simple
and convenient manner

 Exchange Trading Funds:

Exchange Traded Funds or ETFs are securities that are traded, like individual stocks, on an
exchange.

 Margin Funding:
The funds that brokerages arrange to finance investors share purchases.

 IPOs:
An Initial Public Offer (IPO) is the selling of securities to the public in the primary market.

7
 NCDs / BONDs:

8
 Non-convertible debentures (NCDs) are debentures which cannot be converted into equities
or shares.
 Fixed Deposits:
Company fixed deposit is a deposit in company for a fixed rate of return over a fixed
period of time.

1.7 AREAS OF OPERATION

Public And Private Sector Stock Broking Limited being private financial services provider and brokerage firm
operates well in national and also in international market. Public And Private Sector Stock Broking Limited is
an individual from the National Stock Exchange of India and the Bombay Stock Exchange. With more than 6
Lakhs dynamic records, it positions among the main 5 Depository Participant in India, enrolled with NSDL
and CDSL. Public And Private Sector has 935 workplaces more than 27 states crosswise over India and
abroad at Dubai and New York Only player with full range of products and services well succeed.

Branches of Public And

Private Sector in India:
States No of office
1. New Delhi 29
2. Andhra Pradesh 48
3. Assam 12
4. Bihar 34
5. Chhattisgarh 1
6. Daman and Diu 4
7. Goa 1
8. Gujarat 55
9. Haryana 25
10. Himachal Pradesh 9
11. Jammu& Kashmir 4
12. Karnataka 67
13. Madhya Pradesh 21
14. Maharashtra 125
15. Odessa 36
16. Rajasthan 18
9
17. Punjab 35

10
 18. Telangana 50
19. Tamilnadu 51
20. Uttar Pradesh 143
21. Uttaranchal 23
22. West Bengal 54

1.8 Major Competitors Of Public And Private Sector

Public And Private Sector serves a tremendous scope of every single money related item like
administrations, Mutual Funds, Bonds, Insurance and so on.., so every one of the organizations who
offer these administrations are the contenders of the Public And Private Sector. There are numerous
contenders for Public And Private Sector on this premise and practically every one of them offer the
administrations which Public And Private Sector offers.
1. Share Khan Limited
2. Angel Broking
3. Kotak Securities Limited
4. ICICI Securities Limited
5. Religare Limited
6. India Inflame Limited
7. Royal Bank Of Scotland
8. Reliance Money Limited
9. Fidelity Investments Limited
10. Bonanza

1.9 SWOT ANALYSIS

SWOT Analysis is a study undertaken by organizations to identify internal strengths, weakness, as
well as its external opportunities and threats. The method of SWOT analysis is to collect the data
from an environmental analysis and separate into external (opportunities and threats) and internal
issue (strengths and Weakness). Once the identification of SWOT is done, it determines out what
might help the firm finishing its goal, and what impediment must be overcome accomplish coveted
results.

Strength
 Highly qualified, Co-operative and experienced branch managers working in the company.

11
 Company using updated software (Zeus) to maintain client’s transactions properly.

12
  Employees are highly empowered.
 Strong communication network.
 Number one dealers of investm0ent products in India.
 Number 1 recorder and move specialist in India.
 Differentiated products
 Good Brand image.
 Customers are Loyal.
 Company quickly adapt the new technology.

Weakness
 No access to rural market.
 Lack of distribution networks.
 High employee turnover

Opportunity
 Positive outlook of people towards mutual funds.
 Earnings of urban youths.

Threats
 Government Rules and Regulations
 Large number of financial giants presents in this field.
 Increasing number of local players

1.10 FUTURE GROWTH AND PROSPECTS

Knowledge and Research Resources
Constitution:
 Experience and comprehensive research team in Hyderabad and Mumbai more than 35 members
strong research team for equities and exclusive research team for commodities futures.
Operational Verticals:
 Research on multiple verticals as well as report generation for ad-hoc research requirement,
generation and distribution of up to date and active calls for our customers and affiliates in
various market segments (cash and future/options) and calls issued on multiple verticals-intraday
recommendations positional calls and hedge strategies.

13
1.11 FINANCIAL STATEMENT
Balance Sheet as on year ending March 2019, March 2020 & March 2021:

PARTICULARS 31/03/2019 31/03/2020 31/03/2021

AMOUNT AMOUNT AMOUNT
A) EQUITY AND LIABILITIES:
1.SHAREHOLDERS’ FUNDS:
Share capital 1,110,000,000 782,500,000 1,210,000,000
Reserves and surplus 2,539,241,649 3,463,692,412 4,560,485,500
3,649,241,649 4,246,192,412 5,770,485,500
2.NON-CURRENT LIABILITIES
Long term borrowings 8,762,597,606 11,378,586,523 12,958,857,525
Other long term borrowings 9,828,122 306,860 1,200,120
Long term provisions 42,131,076 56,520,512 67,658,821
8,814,556,804 11,435,413,895 13,027,716,466
3.CURRENT LIABILITIES
Short- term borrowings 4,935,487,346 3,989,717,431 4,050,214,421
Trade receivables - - -
-Total outstanding due to micro and - - -
small enterprises
-Total outstanding due of creditors 17,632,738 51,311,710 89,400,508
other than micro and small enterprises
Other current liabilities 4,840,336,464 5,097,350,005 7,045,452,210
Short- term provisions 86,032,502 101,239,496 150,254,851
9,879,488,988 9,239,618,642 11,335,321,990

TOTAL (A) 22,343,287,441 24,921,224,949 30,133,523,956

B) ASSETS
1.NON-CURRENT ASSETS
-Tangible assets 66,279,336 72,975,088 98,870,881
-Intangible assets 22,186,359 25,838,570 30,820,532
-Intangible assets under development 1,979,552 6,073,552 10,107,112
Non-current investment 106,552 106,552 178,457

14
Differed tax assets, net 24,262,206 56,384,123 78,745,545
Long term-loans and advances 14,269,955,972 16,213,848,986 19,258,785,125
Other non-current assets 875,368 1,035,731 1,985,731
14,385,645,345 16,376,262,602 19,479,493,374
2.CURRENT ASSETS
Current investment 9,070,101 - 2,435,178,663
Cash and bank balance 227,904,500 734,472,317 1,112,521,342
Short term loans and advances 6,774,509,796 6,730,188,681 5,990,785,323
Other current assets 946,154,699 1,080,301,349 1,115,545,254
7,957,642,096 8,544,962,347 10,654,030,582

TOTAL (B) 22,343,287,441 24,921,224,949 30,133,523,956

15
Profit and loss account for the year 31st March 2019, 31st March 2020 and 31st March
2021:

31/03/2019 31/03/2020 31/03/2021

PARTICULARS
AMOUNT AMOUNT AMOUNT

1.REVENUE

Revenue from operations 3,579,787,839 3,520,365,793 4,702,482,678

TOTAL REVENUE (A) 3,579,787,839 3,520,365,793 4,702,482,678

2.EXPENSES

Operating expenses 199,509,616 183,110,197 170,252,112

Employed benefits 355,013,826 404,784,405 392,173,550

Finance cost 2,093,317,852 2,338,148,652 2,980,540,425

Depreciation and amortisation 35,940,504 26,320,626 19,740,469

Other Expenses 307,960,750 387,126,733 510,451,220

TOTAL EXPENSES (B) 2,991,742,548 3,339,490,613 4,073,157,776

PROFIT BEFORE TAX (A-B)=(C) 588,045,291 180,875,180 629,324,902

3.TAX EXPENSES

Current tax (212,435,733) (96,998,960) (97,930,995)

Differed tax 10,435,408 32,121,917 45,458,541

TOTAL TAX EXPENSE 202,000,325 64,867,043 52,472,454

PROFIT/LOSS FOR THE PERIOD 386,044,966 116,008,137 576,852,448

NUMBER OF SHARES 111,000,000 78,250,000 121,000,000

EARNINGS PER SHARE 3.47 1.48 4.77

16
Table showing Ratio Analysis of the Company

PARTICULARS 2019 2020 2021

Current Ratio 0.81 0.92 0.94

Net Profit Ratio 10.78 3.29 12.27

Debt/Equity Ratio 2.40 2.68 2.25

Current Assets Turnover Ratio 0.45 0.41 0.44

Total Asset Turnover Ratio 0.16 0.14 0.1

INTERPRETATION:
Current Ratio:
Current ratio increased in the 2018 compared to 2020 and 2021 i.e. 0.94. It shows increase in
liquidity position and there is sufficient of working capital and the position is satisfactory. And also
it shows the company is better financial strain.

Net Profit Ratio: Net profit ratio increased in the year 2021 compared to 2020. It shows company is
able to control its cost.

Debt/Equity Ratio:
Debt equity ratio has gradually decreased that shows the company has paid off its debt in the year
2019.
Current Assets Turnover Ratio:
Current asset turnover ratio increased in the year 2019 compared to 2020 it shows that the company
is more efficient it indicates the company is using its assets efficiently to generate sales.

17
CHAPTER-2
CONCEPTUAL BACK GROUND AND LITERATURE REVIEW

2.1 THEORETICAL BACKGROUND OF THE STUDY

Investment
Investment comprises of employment of funds with an object of attaining additional income or
progress in values.
Investment is also called as allocating money to assets with a view to again profit over a period. An
investment decision is a trade-off between the risk and return.

Objectives of investment
1. Protection of capital
2. Current pay
3. Current development
4. Total return
5. Liquidity
6. Hedge against inflation

Investment process
An investment process describes that, how an investor should go about the decision making about
the marketable securities in which they invest, and how extensively the investment should beamed
when the investment should be made.
Five steps in investment process:
1. Set investment policy
2. Execute security analysis
3. Construction of portfolio
4. Review the portfolio
5. Appraise the performance of portfolio

Introduction to Indian mutual fund industry

Mutual fund industry came to Indian stock market in the year 1963. Mutual fund was formatted by
UTI and came with the initiative of government of India and RBI. Mutual fund has mainly four
stages that are mentioned below:
18
1. First Stage:1964-1987 (Establishment of UTI)
2. Second Stage:1987-1993 (Entry of public sector)
3. Third Stage1993-2003( Entry of private sector)
4. Fourth Stage: Since 2003

About Mutual Fund

A mutual fund refers to the collection of funds who saved by the little speculators, put them in
government and other corporate securities and procure return through interest and profits, other
than capital addition.

The hazard and benefit exchange offzdemonstrates that if financial specialists is eager to go for
broke with the goal that he can anticipate an exceptional yield, if the speculators relate to bring
lower risk devices he will get less returns.

The shared store industry was started in India in the year 1963 with the development of UTI
(joined trust of India) at the creativity of Government of India and Reserve Bank ofzIndia. In 1987,
SBI common store turned into the first Non-UTI shared reserve in India.
Later in 1993 foreshown a new period in the mutual fund sector. This was striking by the entry of
private companies in mutual fund sector. Later SEBI Act passed in 1992, the SEBI Mutual Fund
Regulations originated into existence in the year 1992. Then the mutual fund companies have
sustained to grow exponentially with foreign organisations opened a centre in India, with the help
of Joint ventures and acquisitions.

MUTUAL FUND
A mutual fund is a process that collects the savings from their income of some investors, who
ready to share a financial goal. The amount that, what collected from the investors is then invested
in capital market instruments like shares, stocks, debentures and in other securities. The return get
by these investments and the capital appreciations realised are shared by investors in proportion of
their investment. Thus, a mutual fund is the most suitable investment for the common peoples and
it attracts investors to invest in diversified, professionally managed securities at an
economical cost.

19
Definition:
According to SEBI (Mutual Fund) Regulation 1993 defines a mutual fund “A fund established in the
form of a trust by a sponsor, to raise the money by the trustees through the sale of units to the public
under one or more schemes for investing in securities in accordance with these regulations

Here is how Mutual Fund works?

INVESTORS

MUTUAL FUND
Pool their Money Give it back

Invests In Generate return

QUTITY SECURITIES

Mutual fund helps the investors to invest in capital market instruments through Systematic
investment Plan (SIP) so that the investors can invest from their savings to get the profit on the
invested fund, if any return get from these investments, it should be shared among the investors on
their shareholding capacity. Now days it is the best and most appropriate investments for the
investor and it provides an opportunity for the common people or for an investor investor to invest in
a diversified and professionally managed securities at affordable expense.
A fund manager, who uses his management skills to attract the investors, manages every mutual
fund and obligatory study works to get more return that an in vestor try to manage with its own.

Advantages of investing in Mutual fund

1. Mutual fund is a professional investment management.
2. As compare others it is very low cost of transaction.
3. It can liquidate easily.
4. The investor has a tax benefit.
5. It is very convenient and flexible to investor.
6. The risk can be diversified.

20
Disadvantages of investing in mutual fund
1. Dilution while investing in mutual funds
2. Complicated costs
3. Tax situation

TYPES OF MUTUAL FUND

Mutual funds can be classified into following categories:
On the basis of structure:
1. Open ended fund
2. Close ended

On the basis of investment objective:

1. Growth funds
2. Income funds
3. Balanced funds
4. Money market funds

On the basis of special schemes:

1. Industry specific schemes
2. Index schemes
3. Sectorial schemes

At present 44 AMCs are working in Indian Mutual Fund Industry and out of which around 20
companies are proposing equity midcap fund schemes. Now whether these schemes are performing
well or not is a question, hence the present study is being done to assess the enactment of these
mutual fund schemes, this study has used 10 midcap mutual fund schemes to assess their risk level
and return performance.
Mid-caps schemes are the mutual fund schemes, and they are invested in small or medium
sized companies. It doesn’t contain any standard definition for the companies’ classification into
small or medium sector. The companies with a market capitalisation or market value (number of
shares * market price of share) of up to Rs.5 billion (500crores) are categorized as small. Moreover,
the companies that have market capitalisation from Rs.5 billion (500crores) to Rs.10 billion
(1000crores) are classified as medium size.

21
RETURN
Return is the essential propelling power that determines venture. It speaks to the reward for
undertaking venture.
Components of returns are current return and capital return
Current return:
Is the occasional pay, for example, profit or premium, created by the speculation. It is estimated as
the occasional salary in connection to the starting cost of the venture.

Capital return:
Is reflected in the price change it is simply the price appreciation (or depreciation) divided by the
beginning price of the asset.
Therefore Total return = Current return + Capital return

RISK
Risk refers to the possibility that the actual outcome of an investment will deviate from its
expected outcome.
 Possibility of loss or injury
 Variability of return
 The degree or probability of loss

Components of risk are systematic risk and unsystematic risk

Systematic Risk:
Systematic risk caused by the external factors of the company it is uncontrollable by the company.

Unsystematic risk:
Unsystematic risk caused by the internal factors of an organisation that affects a particular business.

Tools used for analysis:

 Average return:
It is a change between present price and previous price.
Return = [(Today’s price – Yesterday’s price) / Yesterday’s price] * 100
 Standard Deviation:

22
 Standard deviation is nothing but a total risk includes both Systematic and Unsystematic risk,
it tries to measure the variability of returns from the expected value.

(𝑅−𝑅𝑎)2
Standard Deviation (σ) =√
𝑛−1

[R= Return, Ra= Average Return]

 Beta:
The concept of beta for measuring the riskiness of a stock is, if an investor selects stock with
low betas (i.e., (beta<1), then the investor will suffer less in a falling market. Of course, at
the same time investor will also stand to gain less than the market average in rising market.
In case an investor is prepared to take greater risk then he can choose stock with higher
betas (beta>1) in order to gain more than the market average in a rising market. At the same
time the investor should be prepared to lose more than the market average, in case the market
crashes. However, it is desirable to choose stocks with betas varying between 0.5 and 1.5.
Beta (β) =(𝑅 − 𝑅𝑎)(𝑅𝑚 − 𝑅𝑚𝑎)/(𝑅𝑚 − 𝑅𝑚𝑎)2
[Rm= Market Return, Rma= Average Market Return]

 Sharpe’s Ratio
Sharpe ratio is the tool used to measure total hazard balanced return of a money related
portfolio. A portfolio with a higher Sharpe proportion is viewed as better relative than its
funds. Sharpe proportion is likewise a proportion ofzabundance portfolio return
over hazard free rate in respect to its standard deviation .Ordinarily, the 90 days Treasury
bill rate is taken as the proxy for risk free rate.
Sharpe’s Ratio (σ) =𝑅𝑎 − 𝑅𝑓/𝜎
 Treynor’s Ratio:
Treynor ratio shows the systematic risk adjusted performance of the fund. Here the
denominator is the beta of the portfolio. Thus, it takes into account the systematic risk of
the portfolio. In other wordsTreynor’s Ratio processes a return per unit of market risk (i.e.
systematic risk) that is generated from the investment what we made. Strictly speaking, the
higher of value of Treynor’s measure the best fund or scheme. However, we would like to
have some benchmark with which to compare our individual Treynor’s measures.
o Treynor’s Ratio (β) = 𝑅𝑎 − 𝑅𝑓/𝛽

 Jensen’s Ratio:

23
 Jenson ratio is used to measure the unsystematic risk adjusted performance of a security in
relation to the expected market return. The higher the alpha, the more a portfolio has
earned above the level predicted. It is otherwise called Jensen's Performance Index and
Jensen measure.
Jensen’s Ratio (α) = 𝑅𝑎 − [𝑅𝑓 + 𝛽(𝑅𝑚𝑎 − 𝑅𝑓)]
 Correlation:
Correlation describes the degree of relationship between two variables (either positively or
negatively) and recycled in advanced portfolio management. Perfectly positively
correlation involvesthat in the event that one security moves either up or down the other
security moves a similar way. Perfectly adversely connection implies that on the
offzchance that one security moves in a single bearing, the other security moves inverse
way. On the offzchance that the relationship is zero, the exercises in the securities stay
expected to have no course.
𝑛∑𝑥𝑦−(∑𝑥)(∑𝑦)
 Correlation (𝑟) =
√𝑛(∑𝑥2 )−(∑𝑥)2∗√𝑛(∑𝑦2 )−(∑𝑦)2

2.2 LITERATURE REVIEW

1. Ratish Gupta and ShrutiMaheshwari (2017)
“An Empirical Study on Performance of Diversified Equity Mutual Funds with Special
Reference to Large cap and Midcap Funds”
In this study the author has evaluated the risk and return of the various large cap and mid cap funds
using financial performance evaluation techniques like Sharpe measure, Treynor,R2, Standard
deviation and beta. Selected funds are compared to their respective market index. In order to
analyse their ability to outperform the benchmark and also asses risk of investing in these
schemes. The result of the study tells that small investors can expect a double digit returns if they
keep a healthy ratio of large cap and mid cap funds in their portfolio
.
2. Dr.M. Ravichandran and T.Iswarya (2016)
“A Study on Performance of Risk and Return on Selected Mutual Funds”
In this study tells that a proper evaluation measure will remove confusion and help small investors
to choose about level of investment in many mutual fund schemes, so as to maximise the returns.
The main objective of the study is to study and analysis the five year annual growth return given in
their schemes. Methodology used for the study is based on only secondary data. Tools used for the
study Sharpe, Treynor and Jenson models. The performance of risk based mutual fund scheme

24
using CAPM. The result of the study tells that in the long run the private and public sector
companies have performed better than the public sector

3. Antonella Basso and StefeniaFunari (2016)

“The Role of Fund Size in the Performance of Mutual Funds Assessed With DEA Models”
In this study the author says about the job ofzthe extent of common assets in the assessment of the
reserve execution with an information envelopment examination (DEA) approach, with the point of
contemplating the issue from various edges with various specialized devices and looking at the
nearness of a positive or negative size impact in shared store advertise. Creator utilized DEA model
to assess the job ofzstore estimate. At end of the examination creator presume that European
common assets are expanding its size.

4. M. Gowri and MalabikaDeo (2016)

“Performance Evaluation of Equity Oriented Growth and Dividend Funds of Mutual Funds in
India: An Application of Risk Adjusted Theoretical Parameters”
This study attempted assesses the execution of reserve assets based on hazard balanced strategies.
The execution of reserve of assets were contrasted and the hazard free returns just as the (BSE
100), it was taken as the intermediary for the market returns. Tests were gathered through AMFI
sites and AMC sites from April 1, 2007 to March 31, 2014 and returns were determined from the
separate plans NAV cost. The philosophy utilized in the investigation is hazard balanced
apparatuses of Sharpe proportion, Treynor proportion, and Jensen alpha. Result of the study tells
that the performance of fund of funds had posted a negative Sharpe, Treynor and Jensen.

5. Vinita Bharat Manek (2016)

“A Study on the Effect of Portfolio Turnover on Mutual Fund Performance in the Indian
Financial Market”
The main of this study is to explore the significance of portfolio turnover on common reserve
return which would give a sign to speculators on the most proficient method to put resources into
assets dependent on the executives way. In this investigation just open finished enhanced
development arranged value reserves are contemplated.
Statistical tool used for the study is Quantitative measure. The result of the study tells
that portfolio turnover has a statistically significant effect on scheme returns. It is positively
correlated, that is with higher portfolio turnover, and there is a possibility that manager will be able
to out perform the Index.
25
6. Arathy B. Aswathy A Nair, Anju Sai P and Pravitha N R (2015)
“A Study on Factors Affecting Investment on Mutual Funds and its Preference of Retail
Investors”
This Study aims at finding out the factors affecting investment decision on mutual funds and its
preference over retail investors. Also aims at finding about the factors that prevent the people to
invest in mutual funds. Methodology used for a study is based on primary data it is collected
through questionnaire and personal interview. Sample size of the study is limited to 200 investors.
The result of the study is mutual fund have emerged as one of the important class of financial
intermediaries which cater to the retail investors.

7. SonalBabbar and Sanjay Sehgal (2015)

“Mutual Fund Characteristics and Investment Performance”
In this study author examine the role of fund characteristics in determining mutual fund
performance in India. Methodology used for the study is based on only secondary data. The
sample size of the study is evaluated by taking 237 open ended Indian equity (G) schemes during
the period April 2007 to March 2013. Using daily dividend adjusted net asset values (NAVs). The
result of the study tells that based on fixed effects estimator, show that the size ofzfund, growth in
size ofzfund and NAV negatively affect one period ahead risk adjusted performance in India,
while age of fund has a positive impact

8. Syed Husain Ashraf and Dhanraj Sharma (2014)

“Performance Evaluation of Indian Equity Mutual Funds against Established Benchmark
Index”
In this examination, an endeavour has been made to investigations the execution of value common
finances industry against hazard free rate and benchmarks return over the 5 years. Technique
utilized for the examination depends on just optional information. The example comprises 10
development arranged – open-finished value common store plans have a place with five open and 2
private shared reserve organizations. Consequences of the examination are tried through hazard
and return investigation coefficient ofzvariety, Treynor, Sharpe and Jensen Ratios, Fama's measure
and relapse investigation. Optional information gathered for the investigation. The consequence of
the examination demonstrates that Indian Asset Management Company has had the capacity to beat
their benchmarks on the normal.

26
9. Anuj Kumar and Rahat Ali (2013)
“Financial Performance Analysis of Selected Equity Large-Cap Mutual Fund Scheme”
In this study the author has evaluated the performance of equity large cap by considering the risk
and return. This risk and return is analysed by comparing with the benchmark. Objective of the
study is to compare the large cap selected mutual fund companies. Methodology used for the study
is based on only secondary data. The simple size of the study is evaluated by taking 10 open ended
equity large cap funds along with growth scheme. The result of the study tells that ICICI prudential
discovery fund- IP_ Growth, ICICI Prudential Discovery Fund- Growth, Birla Sun Life Dividend
Yield plus- Growth are the top three best performing

10. Dr.R.Narayanaswamy and V. Rathnamani (2013)

“Performance Evaluation of Equity Mutual Funds”
In this investigation the creator has assessed the execution of value shared assets by considering the
hazard and return relationship. This hazard and return is broke down by contrasting chosen gainful
common assets and the benchmark. The fundamental target of this examination is to investigation
monetary execution of chose common reserve plots through the factual parameters, for example,
alpha, beta, standard deviation, r-squared and Sharpe proportion. The consequence of the
examination tells that every one of the assets have performed well in the high unpredictable market
development with the exception of Reliance vision.

11. Y Prabhavathi, and N T Krishna Kishore (2013)

“Investors Preference towards Mutual Fund and Future Investments”
The main aim of the study is to understand the attitude, awareness and preference of mutual fund
investors. Methodology used for the study based on primary data by conducting personal interview
data was collected. In the study most commonly used tools such as percentage analysis, Garrett
ranking. The result of the study tells that investors ought to be cautions in selecting the schemes,
sector and various asset management companies.

12. Dr.Binod Kumar Singh (2012)

“A Study on Investors Attitude towards Mutual Funds as an Investment Option”
In this study the author has evaluated the structure of mutual fund, operation of mutual fund,
comparison between investment in mutual fund and bank. Objective of the study is to study and
analyse the impact of various demographic factors on investor’s attitude towards mutual fund. The
study is basically an analytical study so it is purely based on primary research as well as also
27
related to the analysis of the attitude of investors. To analyse the collected data Chi-square test has
been made. The study says that most ofzrespondents are still confused about the mutual funds and
have not formed any attitude towards the mutual fund for investment purpose.
13. Dr. Ravi Vyas (2012)
“Mutual Fund Investors Behaviour and Perception in Indore City”
This study focused attention on number of factors that highlights investor’s perception about
mutual funds by considering the risk and return. Required data collected through questionnaires.
The sample size consists of 363 respondents. Tools used for the study such as Chi square test,
Pearson Correlation, mean and median are used. By the study it was found that mutual funds were
not that much known to investors, still investors rely upon bank and post office deposits.

14. Dr.B.Nimalathasan and Mr.R.Kumar Gandhi (2012)

“Mutual Fund Financial Performance Analysis-A Comparative Study on Equity Diversified
Schemes and Equity Mid-Cap Schemes”
This study author focused on the financial performance analysis mutual fund schemes of selected
banks. The objective of the study is to analysis the financial performance of selected mutual fund
schemes through the statistical parameters (standard deviation, beta, and alpha) and ratio analysis
(Sharpe ratio, Treynor ratio, Jenson ratio and Information ratio) Methodology used for the
examination is absolutely founded on the optional information. The consequence of the
investigation is among the open finished Tax Saving plans, Canara Robeco Equity Diversified is
the favored and positioned top most, in the meantime among the Open finished – midcap plans,
HDFC Capital developer is the favored and positioned top through different devices.

15. Shrinivas R. Patil and K.S. Prakash Rao (2011)

“An Empirical Study on Performance of Mutual Fund in India”
In this study the authors has evaluated the performance of mutual fund by considering the risk and
return this risk and return is analysed by comparing with the index. The objective of the study is to
understand the performance of share market and to analyse the correlation of performance of
mutual funds and stock market for the year 2007-08, 2008-09 and 2009-10.Methodology used for
the study is based on only secondary data. The sample size of the study is evaluated by taking top
5 mutual fund (G) and 10 index funds. Thus it is analysed by using tools such as Arithmetic mean,
Standard deviation, Correlation and Testing Hypothesis.
The result of the study shows that, investors have made quite good returns in mutual funds like
Reliance Vision Fund, HDFC Top-200 Fund etc.
28
16. Bilal Pandow (2011)
“Risk and Return Analysis of Mutual Fund Industry in India”
In this examination the creator has assessed the execution of Mutual assets by thinking about the
hazard and return. This hazard and return is broke down by contrasting and the hazard free return.
The reason for the examination is to break down the development and improvement of Indian
common store Industry and to distinguish the difficulties facing by the business and to investigate
hazard and return of chosen shared reserve in India. Technique utilized for the examination is
completely founded on the optional information which was gathered from the database of
Association of Mutual Funds of India for Net Asset Value (NAV).The aftereffect of study tells that
the value culture has not yet grown completely in India all things considered, financial
specialist training would be similarly critical for more noteworthy entrance of common assets

17. Rajesh R. Duggimpudi, Hussein A Abdou and Mohamed Zaki (2010)

“An evaluation of equity diversified mutual funds the case of the Indian market”
The main aim ofzthis study is to evaluate the performance of Indian equity diversified mutual
funds. An auxiliary point is to investigate the connection among hazard and return of these assets
dependent on complete hazard and efficient hazard. Two distinctive covering informational
indexes have been utilized in this examination, from 2000 to 2009, covering seventeen common
assets. The assessment centres around three methods to be specific Treynor, Sharpe and the
Jensen. The consequence of the investigation tells that 17 reserves have outflanked than market as
far as their execution with higher returns for a given unit of hazard
.
18. Werner-Ria Murhadi and Universitas Surabaya (2010)
“Performance Evaluation of Mutual Funds”
In this study the author has evaluated the performance of mutual funds by comparing with the
market. The investigation test was taken from value common subsidizes enrolled with the capital
market supervisory office period February 2008-June 2009 of 68 common supports shares recorded
in June 2009, information demonstrated total common finances that are 55 shared assets. Tools
used for the study are Hendrickson and Merton and Treynor and Mazuy. The result of the study tells
that four mutual funds have a good performance in market timing and four mutual funds have a
good performance in stock selection. Both methods have a good indicator to reflect mutual funds’
performance.

19. AymenKaroui and Iwan Meier (2009)

29
“Performance and Characteristics of Mutual Fund Starts”
Author studied the performance and portfolio characteristics of 828 newly launched US equity
mutual funds over the period 1991-2005.By this study it was found that returns of fund starts
exhibit higher ratios ofzunsystematic to total risk. Portfolio of new funds are typically also less
diversified in terms of number of stocks and industry concentration and are invested in smaller and
less liquid stocks.

20. Lorne N. Switzer and Yanfen Huang (2007)

“How Does Human Capital Affect the Performance of Small and Mid-Cap Mutual Funds”
In this study the author has evaluated small and mid-cap fund performance by considering the
return, risk, expenses and turnover. Objective of the study is to examine whether small and midcap
fund performance is related to fund manager human capital characteristics including tenure,
investment, experience, education, professional training and gender. The data used for the study
based on sample of 1,004 small and midcap equity funds identified on the database as of 31st
December 2005.The result of the study tells that there are some systematic cross sectional
differences in fund performance that can be attributed to differences in managerial human capital
characteristics

30
CHAPTER-3
3.1 RESEARCH DESIGN STATEMENT OF THE PROBLEM
Mutual Fund Industry is a most potential area for safe investment compare to investing on stock
market directly. However there will be a risk factor as Asset Management Companies (AMC) are
investing the pooled funds in capital market that is on debt and equity investments. Unless thorough
analysis of the mutual fund investments, investors will not come forward to invest. In this regard
various parameters such as risk, return and performance of mutual fund etc. are required to
considered to assess the overall performance of mutual fund. In particularly selected equity midcap
category as most investors are in average income category.

3.2 NEED FOR THE STUDY

 This study helps to understand different schemes of mutual funds.
 This study helps to analyse the risk and return accompanying with the mutual fund schemes
and to select the best company or the scheme for the purpose of investment.
 Positive movement in mutual fund market so this study is undertaken evaluate the
performance of mutual funds.

3.3 OBJECTIVES OF THE STUDY

 To analyse the risk and return associated with the selected equity midcap mutual fund
schemes.
 To measure and compare the performance of selected equity midcap mutual fund schemes
with the market (NIFTY MIDCAP 100).
 To evaluate the selected equity midcap mutual fund scheme that yields the best return in
the short period.

3.4 SCOPE OF THE STUDY

Total area covered in this study is analysis on risk and return of the selected mutual fund schemes
by knowing the investment preference by the investors in various types of segments and also
covered data analysis like selection of different schemes which are best in terms of return and to
check the measure of risk and returns from the schemes.
The study will help to know the preference of the clients or investors in selecting the Asset
management company, Portfolio, mode ofzinvestment, and option for getting return and so on they

31
prefer. The study also helpsto investor to decide a suitable and profitable scheme in shorter period.
Selected mutual fund schemes performance will be evaluated with NIFTY MIDCAP 100 returns.

3.5 RESEARCH METHODOLOGY

Sources ofzdata
1. Primary data
2. Secondary data

Secondary data:
The secondary data can be collected through
 The internet sources
 Annual report of the company
 Material provided by the company
 Fund houses
 Fact sheets, Brochures etc.
The secondary data is obtained from the various mutual fund scheme and investor’s magazines and
websites. Monthly fact sheets of mutual fund companies are important sources of secondary data;
the data obtained is analysed using mathematical models
The secondary data obtained from various schemes such as
 Fact sheets of mutual fund companies
 Business line
 Moneycontrol.com
 Mutualfundindia.com
 Indiainfoline.com
 Finance magazines

Sampling procedure
Ten equity midcap mutual funds are considered to evaluate and compare the performance. These
ten equity midcaps are selected based on the advice of stock broker (Public And Private Sector
stock broking private limited).

Operational definition of the study:

Definition of Net asset value (NAV)

32
Net asset value (NAV) is the value of a fund’s less the value of its liabilities per unit.

Calculation of Net Asset Value

NAV= Market value ofzInvestments
+ Current assets and other assets
+ Accrued income
- Current liabilities and other liabilities
- Accrued expenses

3.7 LIMITATIONS OF THE STUDY

 This study is limited only for 6 weeks.
 The study is restricted only on 8 equity midcap mutual fund.
 The data collected on each fund is maximum for 5 years.
 The study has been conducted and analysed based on the available information, which is
governed by the time factor.
 The conclusion arrived on the subject is not exhaustive.

3.8 CHAPTER SCHEME

 Chapter 1: Introduction
First chapter of the study contains the Introduction about the project, Industry profile and
Company profile, Promoters, Vision, and Mission & Quality Policy of the Company.
Products or Services profile, areas ofzoperation, Infrastructure facilities,
Competitors information, SWOT Analysis, Future growth and prospects and
Financial Statement of the company. (Balance sheet, Profit & loss Statement)
 Chapter 2: Conceptual Background and Literature Review
Second chapter describes about Theoretical background of the study, Literature review with
research gap.

 Chapter 3: Research Design

Third chapter contains Statement of the problem, Need for the study, Objectives, Scope of the
study, Research methodology, Hypotheses, Limitations, Chapter scheme.

 Chapter 4: Analysis And Interpretation

33
Fourth chapter contains Analysis and interpretation of the data which was done by using
necessary tools tables and graphs

 Chapter 5: Findings, Conclusion And Suggestions

Chapter five is the over view of Summary of findings, Conclusion and suggestions /