A

STUDY ON

PORTFOLIO MANAGEMENT

AT

ING VYSYA BANK LTD

A Project report submitted to Osmania University

In partial fulfillment for the Award of the Degree of

MASTER OF BUSINESS ADMINISTRATION

Submitted by

G. ASHWINI

HT NO: 2121-120-672-128

UNDER THE GUIDANCE OF

--------------------------------------------

ARISTOTLE PG COLLEGE

(Affliated To Osmania University,Hyderabad)

Recognized By UGC under section 2(f) of UGC Act 1956

Beside Moinabad Police Station,

Chilkur, Moinabad ,Ranga Reddy District, Telangana.

2020-2022
 CHAPTER-I

1.1 INTRODUCTION

Portfolio

A portfolio is a collection of assets. The assets may be physical or financial like Shares,

Bonds, Debentures, Preference Shares, etc. The individual investor or a fund manager would

not like to put this money in the shares of one company that would amount to great risk. He

would therefore, follow the age-old maxim that one should not put all the eggs into one

basket. By doing so, he can achieve objective to maximize portfolio return and at the same

time minimizing the portfolio risk by diversification.

Portfolio management

Portfolio management is the management of various financial assets which comprise the

portfolio. Portfolio management is a decision–support system that is designed with a view to

meet the multi-faced needs of investors. According to Securities and Exchange Board of

India Portfolio Manager is defined as: “Portfolio means the total holdings of securities

belonging to any person”. To frame the investment strategy and select an investment mix to

achieve the desired investment objectives.

Functions of portfolio Management

 To provide a balanced portfolio which not only can hedge against the inflation but can

also optimize returns with the associated degree of risk 3?

 To make timely buying and selling of securities.

 To maximize the after-tax return by investing in various tax saving investment

instruments.
Characteristics of portfolio management

Individuals will benefit immensely by taking portfolio management services for the following

reasons:

Whatever may be the status of the capital market over the long period capital markets have

given an excellent return when compared to other forms of investment. The return from bank

deposits, units, etc., is much less than from the stock market.

The Indian Stock Markets are very complicated. Though there are thousands of Companies

that are listed only a few hundred which have the necessary liquidity. Even among these, only

some have the growth prospects which are conductive for investment. It is impossible for any

individual wishing to invest and sit down and analyze all these intricacies of the market

unless he does nothing else.

Even if an investor is able to understand the intricacies of the market and Separate chaff from

the grain the trading practices in India are so complicated that it is really a difficult task for an

investor to trade in all the major exchanges of India, look after his deliveries and payments.
 CHAPTER-II
REVIEW OF LITERATURE

Importance of portfolio Management

Emergence of institutional investing on behalf of individuals. A number of financial

institutions, mutual funds and other agencies are undertaking the task of investing money of

small investors, on their behalf. Growth in the number and size of ingestible funds–a large

part of household savings is being directed towards financial assets.

Increased market volatility–risk and return parameters of financial assets are continuously

changing because of frequent changes in government‘s industrial and fiscal policies,

economic uncertainty and instability.

 Greater use of computers for processing mass of data.

 Professionalization of the field and increasing use of analytical methods (e.g., quantitative

techniques) in the investment decision–making.

Larger direct and indirect costs of errors or short falls in meeting portfolio objectives–

increased competition and greater scrutiny by investor.

Traditional Approach:
Traditional approach was based on the fact that risk could be measured on each individual
security through the process of finding out the standard deviation and that security should be
chosen where the deviation was the lowest. Traditional approach believes that the market is
inefficient and the fundamental analyst can take advantage of the situation. Traditional
approach is a comprehensive financial plan for the individual.
It takes into account the individual need such as housing, life insurance and pension plans.
Traditional approach basically deals with two major decisions. They are
a) Determining the objectives of the portfolio
b) Selection of securities to be included in the portfolio
Modern Approach:
Modern approach theory was brought out by Markowitz and Sharpe. It is the combination of
securities to get the most efficient portfolio. Combination of securities can be made in many
ways. Markowitz developed the theory of diversification through scientific reasoning and
method.
Modern portfolio theory believes in the maximization of return through a combination of
securities. The modern approach discusses the relationship between different securities and
then draws inter-relationships of risks between them. Markowitz gives more attention to the
process of selecting the portfolio. It does not deal with the individual needs.

Markowitz Model:
Markowitz model is a theoretical framework for analysis of risk and return and their
relationships. He used statistical analysis for the measurement of risk and mathematical
programming for selection of assets in a portfolio in an efficient manner. Markowitz
approach determines for the investor the efficient set of portfolio through three important
variables i.e.
 Return
 Standard deviation
 Co-efficient of correlation.

Markowitz model is also called as an “Full Covariance Model “. Through this model the
investor can find out the efficient set of portfolios by finding out the tradeoff between risk
and return, between the limits of zero and infinity. According to this theory, the effects of one
security purchase over the effects of the other security purchase are taken into consideration
and then the results are evaluated. Most people agree that holding two stocks is less risky
than holding one stock. For example, holding stocks from textile, banking and electronic
companies is better than investing all the money on the textile company’s stock.

Markowitz had given up the single stock portfolio and introduced diversification. The single
stock portfolio would be preferable if the investor is perfectly certain that his expectation of
highest return would turn out to be real. In the world of uncertainty, most of the risk adverse
investors would like to join Markowitz rather than keeping a single stock, because
diversification reduces the risk.
 2.2 REVIEW OF LITERATURE
Review-1: Equity portfolio management within the MCDM frame
Authors: Panagiotis Xidonas, John Psarras
Publisher: International Journal of Banking Accounting and Finance,vol.1 No.3
Abstract
The current study provides a categorized bibliography on the application of the techniques of
multiple criteria decisions making (MCDM) to the problems and issues of portfolio
management. A large number of studies in the field of portfolio management have been
compiled and classified according to the different multicriteria methodological approaches
that have been used. Except the in-depth presentation of the MCDM contributions in the area
of portfolio management, the outmost aim of this paper is to stress the inarguable multiple
criterion nature of the majority of the problems that modern financial management faces.

Review- 2: The modern portfolio theory as an investment decision tool

Authors: Iyiola Omisore, Munirat Yusuf and Nwufo Christopher
Publisher: Journal of Accounting & Taxation, Vol.4 (2), pp. 19-28, March 2012
Abstract
This research paper is academic exposition into the modern portfolio theory (MPT) written
with a primary objective of showing how it aids an investor to classify, estimate, and control
both the kind and the amount of expected risk and return in an attempt to maximize portfolio
expected return for a given amount of portfolio risk, or equivalently minimize risk for a given
level of expected return. A methodology section is included which examined applicability of
the theory to real time investment decisions relative to assumptions of the MPT. A fair
critique of the MPT is carried out to determine inherent flaws of the theory while attempting
to proffer areas of further improvement (for example, the post-modern portfolio
theory [PMPT]). The paper is summarized to give a compressed view of the discourse upon
which conclusions were drawn while referencing cited literature as employed in the course of
the presentation.
 CHAPTER-III

RESEARCH METHODOLOGY

1.2 NEED FOR THE STUDY

Its present individual best investment plan as per their age, income, budget and ability to take

risk and read the fluctuations in the share price of the company. It enables portfolio managers

to provide customized investment solutions as per their need and requirements of the clients

and test portfolio strategies before taking action.

1.3 OBJECTIVES

 To study the concepts of portfolio management.

 To study the investing decision process in ING VYSYA BANK.

 To identify the portfolio which results in low risk.

 To calculate the returns of various portfolios and identify the highest.

 To construct an effective portfolio which offers the maximum return for minimum risk.

 To analyze and select the best portfolio out of selected portfolios.

 To analyze the effect of diversification of investment.

 1.4 SCOPE OF THE STUDY

To get maximum knowledge of share market, which will help anticipating the future stock

market? It gives an idea which is the right time invested or not, whether market will face up’s

and downs. Scope of investing your money in stock market and getting profit out of that. The

results are based on the study conducted during last five years i.e., 2014-15 to 2019-20.

Portfolio management has emerged as a separate academic discipline in India. Portfolio

theory that deals with the rational investment decision-making process has now become an

integral part of financial literature.

Investing in securities such as shares, debentures & bonds is profitable well as exciting. It is

indeed rewarding but involves a great deal of risk & need artistic skill. Investing in financial

securities is now considered to be one of the most risky avenues of investment. It is rare to

find investors investing their entire savings in a single security. Instead, they tend to invest in

a group of securities. Such group of securities is called as PORTFOLIO. Creation of

portfolio helps to reduce risk without sacrificing returns. Portfolio management deals with

the analysis of individual securities as well as with the theory & practice of optimally

combining securities into portfolios.

 1.5 RESEARCH METHODOLOGY

This report is based on secondary data, however secondary data collection was given more

importance since it is overhearing factor in attitude studies. One of the most important users

of research methodology is that it helps in identifying the problem, collecting, analyzing the

required information data and providing an alternative solution to the problem. It also helps

in collecting the vital information that is required by the top management to assist them for

the better decision making both day to day decision and critical ones.

Data Collection Methods

Secondary Data

Research is totally based on Secondary data can be used only for the study. Research has

been done by secondary collection. The secondary data has been collected through various

journals and websites.

Sample size

The sample size 4 companies are taken for analysis.

1) Cipla

2) Sun Pharma

3) Mahendra and Mahendra

4) Bajaj Auto.
 1.6 TOOLS AND TECHNIQUES USED

1. Portfolio Risk

√
σ p= x 2a σ 2a + x 2b σ 2b + ( 2 x a x b ) ρab σ a σ b

Where Xa= weight or proportion of investment in security a.

Xb= weight or proportion of investment in security b.

σ a= standard deviation of security a.

σ b =standard deviation of security b.

ρab = correlation co-efficient between securities.

σ p= portfolio risk.

2. Portfolio Return

R p =R a x a + R b x b

R p = Return on portfolio

R p = Return on investment a

Rb = Return on investment b

x a=Weight of investment a

x b=Weight of investment b

3. Variance

It is a measure of dispersion of a set of data points around their mean value. Variance is a

mathematical execution of the average squared deviation from the mean.

1 2
Variance = N −1 Σ ( R−R )
4. Standard Deviation

The concept of standard deviation was first suggested by Karl Pearson in 1983. Standard

deviation is calculated as the square root of variance.

Standard Deviation = √ variance =

√ 1
N −1
Σ ( R−R )
2

Where ( R−R ) = square of difference between sample and mean

2

N = number of sample observed

1
5. Covariance of A & B = Σ ( R A−R B ) ( R ¿¿ B−R)¿
N

6. Correlation —Coefficient A and B=

CO V A , B
ρ A ,B =
[ σ A ][ σ B ]
Where ( R A −R B ) (R¿¿ B−R) ¿ = Combined deviation of A&B

[ σ A ] [ σ B ] standard Deviation of A&B

CO V A ,B = Covariance between A&B

N = number of observations
 LIMITATIONS
 Construction of Portfolio is restricted to two companies based on Markowitz model.
 Very few and randomly selected scripts / companies are analyzed from BSE listings.
 Data collection was strictly confined to secondary source. No primary data is associated
with the project.
 Detailed study of the topic was not possible due to limited size of the project.
There was a constraint with regard to time allocation for the research study i.e., for a period
of two months.
 CHAPTER-IV

COMPANY PROFILE

ING Vysya Life Insurance is a part of the ING groups the world’s fourth largest financial
services company and also the world’s second largest life insurance provider. ING vysya life
insurance is here to provide with the innovative and well designed products that effectively
meet your life insurance needs. ING vysya life insurance stands 13th in the fortune 500 list.
ING Vysya life insurance company ltd entered the private life insurance industry in
India in September 2001. it has a dedicated and committed advisor sales force of over 21000
people, working from 140 branches located in 74 major cities across the country and over
3000 employees. It’s headquarter is situated at Bangalore.
The company portfolio offers products that later to every financial requirement at any
life stage. It brings to you over 150 years of experience and the heritage of a name trusted in
50 countries. More than 60 million customers around the world have entrusted it with over
US$700 billion of their wealth.
ING vysya life CEO and managing director, [Link] Koster, said that a study had
found that the life insurance business had a good potential in rural India because people had a
strong savings habit and a high level of awareness about life insurance. The bulk of the
company’s business comes from the traditional distribution route of insurance agents. ING
vysya life insurance recorded an income of Rs 102 crore in 2003-04.
ING vysya life on Wednesday june 2009 enrolled Madras fertilizers as corporate agent
to use the latter’s infrastructure to penetrate the rural life insurance market in south India. The
company has over 6500 dealers and 100 field staff who deal with over one lakh farmers.
The company aims to make customers look at fire insurance afresh, not just as a tax
saving device as a means to add protection to life. The company portfolio offers products that
later to every financial requirement, at any life stage
Origin of ING Group:

On the other hand, ING group originated in 1990 from the merger between Nationale and
Nederlanden NV the largest Dutch Insurance Company and NMB Post Bank Group NV.
Combining roots and ambitions, the newly formed company called Internationale
Nederlanden Group. Market circles soon abbreviated the name to I-N-G. The company
followed suit by changing the statutory name to ING Group N.V.
Profile:
ING has gained recognition for its integrated approach of Isurance, insurance and
asset management. Furthermore, the company differentiates itself from other financial
service providers by successfully establishing life insurance companies in countries with
emerging economies, such as Korea, Taiwan, Hungary, Poland, Mexico and Chile. Another
specialization is ING Direct, an Internet and direct marketing concept with which ING is
rapidly winning retail market share in mature markets. Finally, ING distinguishes itself
internationally as a provider of employee benefits, i.e. arrangements of non wage benefits,
such as pension plans for companies and their employees. Ing vysya Ltd. is a joint venture
between Vysya Bank Ltd, a premier bank in the Indian Private Sector and ING, a global
financial powerhouse of Dutch origin. Ing vysya was founded in October 2002.
Vysya Bank was founded in 1930 to extend a helping hand to those who were deprived of
Isurance services. Since then the Bank has made rapid strides and has carved a distinct
identity of being India's Premier Private Sector Bank. In 1985, the Bank became the
number one private sector bank in India.
ING group originated in 1990 from the merger between National - Nederland NV the
largest Dutch Insurance Company and NMB Post Bank Group NV. The newly formed
company called "International Nederland Group" came to be known as ING.

As on 31/12/04, Ing vysya had an asset base of 866 billion Euros and an operating net profit
of 5.97 billion Euros. The Bank has presence in 57 countries and has employee strength of
over 113000 people. In 1980, the Bank completed fifty years of service to the nation and
post 1985; the Bank made rapid strides to reach the coveted position of being the number
one private sector bank. In 1990, the bank completed its Diamond Jubilee year. At the
Diamond Jubilee Celebrations, the then Finance Minister Prof. Madhu Dandavate, had
termed the performance of the bank ‘Stupendous’. The 75th anniversary, the Platinum
Jubilee of the bank was celebrated during 2005.
 CHAPTER-V

CHAPTERIZATION

CHAPTERIZATION
CHAPTER-1
INTRODUCTION
CHAPTER-2
REVIEW OF LITERATURE
CHAPTER-3
RESEARCH METHODOLOGY
 NEED OF THE STUDY
 OBJECTIVES OF THE STUDY
 SCOPE OF THE STUDY
 DATA COLLECTION
 LIMITATIONS
 STATISTICAL TOOLS
CHAPTER-4
INDUSTRY/COMPANY PROFILE
CHAPTER-5
DATA ANALYSIS
CHAPTER-6
FINDINGS
CHAPTER-7
SUGGESTION & CONCLUSION
BIBLIOGRAPHY
ANNEXURES