Portfolio mgmt & mutual fund analysis presentation of ICICI Bank

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Internship Project during M.B.A 4th Sem. Project Title: A Study on Portfolio Management & Mutual Fund Analysis of ICICI Bank Responsibilities : •To measure the performance of mutual funds using Sharpe’s Performance index •To calculate Risk & Return of different banks •To calculate an ideal portfolio using Sharpe’s model of different banks

Transcript of Portfolio mgmt & mutual fund analysis presentation of ICICI Bank

  • Contents Industry Profile Company Profile Product Profile Future growth & Prospect General introduction Objectives of the study Research methodology Findings Suggestions Conclusion Learning Experience
  • Industry Profile : The Indian banking market is growing at an astonishing rate, with Assets expected to reach US$1 trillion by 2010. An expanding economy, middleclass, and technological innovations are all contributing to this growth. The countrys middle class accounts for over 320 million People. Banks are now realizing the importance of being a big player and are beginning to focus their attention on mergers and acquisitions to take advantage of economies of scale and/or comply with Basel II regulation. Indian banking industry assets are expected to reach US$1 trillion by 2010 and are poised to receive a greater infusion of foreign capital, says Prathima Rajan, analyst in Celent's banking group and author of the report.
  • Company Profile : ICICI Bank (formerly Industrial Credit and Investment Corporation of India) is India's largest private sector bank by market capitalization and second largest overall in terms of assets. Total assets of Rs. 3,562.28 billion (US$ 77 billion) at December 31, 2009 and profit after tax Rs. 30.19 billion (US$ 648.8 million) for the nine months ended December 31, 2009. The Bank also has a network of 1,640+ branches (as on February 11, 2010) and about 4,721 ATMs in India and presence in 18 countries, as well as some 24 million customers (at the end of July 2007). ICICI Bank has got its equity shares listed on the stock exchanges at Kolkata and Vadodara, Mumbai and the National Stock Exchange of India Limited, and its ADRs on the New York Stock Exchange (NYSE).
  • Company Profile(Contd) : TYPE Private INDUSTRY Banking, Insurance and Capital market FOUNDED 1955(As industrial credit and investment corporation of India) HEADQUARTERS ICICI Bank ltd, Bandra Mumbai CEO Chanda Kochhar Products Loans, Credit cards, Savings, Investment vehicles, Insurance etc.
  • Product Profile : Funds & Investments Mutual Funds Portfolio Management services Alternative investments Deposits Insurance & Risk Protection Life Insurance General Insurance Banking Products Savings Account Family wealth Account Home Loans Car Loans Foreign Exchange Services Lockers Demat Account Business Banking Business Loans Business Insurance Business advice by Experts Banking Services iMobile iwealth e-Locker
  • Future Growth & Prospects To be the leading provider of financial services in India and a major global bank. To be the preferred brand for total financial and banking solutions for both corporate and individuals. To be the dominant Life, Health and Pensions player built on trust by world- class people and service. The ICICI Bank hopes to achieve by: Understanding the needs of customers and offering them superior products and service. Leveraging technology to service customers quickly, efficiently and conveniently. Developing and implementing superior risk management and investment strategies to offer sustainable and stable returns to their policy holders. Providing an enabling environment to foster growth and learning to their employees.
  • General Introduction : PORTFOLIO MANAGEMENT AND MUTUAL FUND ANALYSIS Investment options : Savings form an important part of the economy of any nation. With the savings invested in various options available to the people, the money acts as the driver for growth of the country. Indian financial scene too presents a plenty of avenues to the investors. Though certainly not the best or deepest of markets in the world, it has reasonable options for an ordinary man to invest his savings. What is Portfolio Management? An investor considering in securities is faced with the problem of choosing from among a large number of securities. His choice depends upon the risk return characteristics of individual securities. He would attempt to choose the most desirable securities and like to allocate his funds over this group of securities. Again he is faced with problem of deciding which securities to hold and how much to invest in each. The investor faces an infinite number of possible portfolios or groups of securities. The risk and return characteristics of portfolios differ from those of individual securities combining to form a portfolio. The investor tries to choose the optimal portfolio taking into consideration the risk return characteristics of all possible portfolios.
  • General Introduction (Contd) : Performance Measures Of Mutual Funds : Mutual Fund industry today, with about 34 players and more than five hundred schemes, is one of the most preferred investment avenues in India. However, with a excess of schemes to choose from, the retail investor faces problems in selecting funds. Factors such as investment strategy and management style are qualitative, but the funds record is an important indicator too. Though past performance alone can not be indicative of future performance, it is, frankly, the only quantitative way to judge how good a fund is at present. Therefore, there is a need to correctly assess the past performance of different mutual funds. Risk involved in investing in Mutual Funds? Mutual Funds do not provide assured returns. Their returns are linked to their performance. They invest in shares, debentures and deposits. All these investments involve an element of risk. The unit value may vary depending upon the performance of the company and companies may default in payment of interest / principal on their debentures / bonds / deposits.
  • Objectives of the study : To understand the basic concepts of Portfolio management and Mutual funds and its benefits as an investment avenue. To know about the top performing mutual fund schemes To measure the performance of mutual funds using Sharpes performance index. To calculate the risk and return of different Banks. To calculate an ideal portfolio using Sharpes model of different Banks.
  • Research methodology : Descriptive Analytical Research PRIMARY DATA : It includes the data collected from the personal interaction with authorized manager of Indian ICICI Bank. SECONDARY DATA : The secondary method includes the lectures delivered by the super intend of respective dept. The Boucher and materials provided by ICICI Bank & also collected from www.moneycontrol.com
  • Findings : The top performing mutual Funds are : 1. ICICI Prudential Top 100 Fund(G) 2. Kotak 50 3. Birla Sun Life top 100 Fund(G) 4. SBI Magnum Midcap fund(G) 5. HDFC Top 200 fund 6. Reliance Vision Fund
  • Findings : The study analyzed four different funds using Sharpes index model which ranked Ist i.e. 1.88 for ICICI Pru Top 100, 1.182 for Kotak , 1.11 for Birla SL Top 100 and the lowest among the banks was HDFC top 200 is 0.948. 0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 1.8 2 ICICI pru Top 100 Birla SL Top 100 HDFC top 200 Kotak 50 Sharpes Index Interpretation : The larger the SI, better the fund has performed. Thus, ICICI Pru Top 100 Sharpes Index is better i.e 1.88, next Kotak 50 has SI of 1.182, then Birla SL Top 100 has SI of 1.11,the lowest among the banks are HDFC top 200 is 0.948, Sharpes index can be used to rank the desirability of funds or portfolios, but not the individual assets. The individual asset contains its diversifiable risk.
  • Findings(Contd) The ICICI has 2.5829% of Return and 4.77% of Risk, AXIS Bank has 2.77 % of Return and 4.72% of Risk, SBI has 1.40% of Return and 4.65% of Risk, IDBI has 1.26% of Return and 5.96% of Risk, HDFC has 1.23% of Return and 5.13% of Risk, KOTAK has 2.64% of return and 5.85% of Risk. The comparison of the Risk and Return between BANKING SECTOR suggest that the investment in ICICI & AXIS is better than Other banks because there return is more compared to other Banks and risk is less. 0 1 2 3 4 5 6 7 ICICI AXIS SBI IDBI HDFC Kotak Mean RiskInterpretation: The comparison of the Risk and Return between BANKING SECTOR says that investment in ICICI & AXIS is better than Other banks because there return is more compared to other Banks and risk is less.
  • Findings(Contd) The investor always likes to purchase a combination of stocks that provides the highest return and has lowest risk. Sharpes model helps us to analyze the portfolio. As per the model analysis AXIS bank is 2.78% is yielding the highest return followed by ICICI Bank i.e 2.58%, KOTAK bank is 2.64%, SBI bank is 1.40%, IDBI bank is 1.27%,HDFC bank is 0.23%.Investing in these Banks investor can earn good return compared to other Banks.The less return yielding Bank is HDFC bank 0.23%. Interpretation: The investor always likes to purchase a combination of stocks that provides the highest return and has lowest risk. Sharpes model helps us to analyze the portfolio. As per the model analysis AXIS bank is 2.78% is yielding the highest return followed by ICICI Bank i.e 2.58%, KOTAK bank is 2.64%, SBI bank is 1.40%, IDBI bank is 1.27%,HDFC bank is 0.23% 0 0.5 1 1.5 2 2.5 3 ICICI AXIS SBI IDBI HDFC KOTAK sharp