A Report on The personal Portfolio Management

Submitted To:
Maksudur Rahman Sarker Associate Professor Department of Accounting & Information Systems University of Dhaka

Submitted By:
Ibrahim Khan Md.Aslam Hossain 13th Batch,Sec:A Department of Accounting & Information Systems University of Dhaka

Roll 13090 13010

Date of Submission: 16th April, 2011 Acknowledgement

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All praises and thanks to omnipotent creator for enabling us to complete our report with good health and sound mind.

At this point, we would like to acknowledge some of the persons who have made a major contribution to its preparation. At first I would like to thank our honorable course teacher Maksudur Rahman Sarker who assigned us such important report. We would also like to thank our Librarian, lab superintendent for making cordial co-operation

Ibrahim Khan &Md. Aslam Hossain B.B.A (13th batch) Section: A Department of Accounting & information systems University of Dhaka.

Abstract Portfolio management is the process of planning and executing a portfolio of investments in order to generate a desired future income stream.
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This means that portfolio management starts with looking at what one is investing for and how far into the future one is looking. The next stage is to look at how much investors need to invest, how they allocate those investments to meet their goals with reasonable certainty, and how much uncertainty They are willing to bear. By portfolio management investors try to maximize his return and minimize the risk of his investment by managing the combination of different securities. When an investor invests in one security, s/he can use expected returns as the measure of securities return and standard deviation or variance as the measure of risk. An investor, who holds a diversified portfolio, cares about the contribution of each security to the expected return and the risk of the portfolio. An investor can maximize the returns of a portfolio by choosing securities with high returns and minimize the risk by diversification of securities. By using completely diversified portfolio, an investor can eliminate most or all unsystematic risk. So the goal of an investor when s/he invests in portfolio of securities is to choose a portfolio with high expected return and low risk. Portfolio management performs this job Before selecting the companies where to invest, an investor should investor has to analyze economy of that country, industry in which to invest and the companies of the chosen industry. By performing these analysis investors will be able to get idea about the investment environment and investment potentials. He will be able to have knowledge about the level of risk he will be able to bear.

Origin of the Report This report was assigned by Maksudur Rahaman Sarket, Associate professor, Department of Accounting & Information Systems, University of Dhaka.
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In this report we have tried to analyze the economy of a country, Industries under that economy and the companies under the industries where the investor wants to invest. We have tried to conduct day to day trading from February 1, 2011 March 31, 2011 efficiently. After the investment period, we have tried to measure the overall performance of our personal portfolio. We also have measured the correlation of our portfolio with the market. Objective of the Report: The report has been undertaken with the following objectives:

To determine the overall economic condition of Bangladesh To analyze the overall condition of Industries of Bangladesh. To analyze the financial performance of the companies of different industries To learn how to form a portfolio while making any investment To learn how to handle the investment portfolio To get an idea how to measure the portfolio risk and return To get an idea about the market risk and return To relate the performance of our portfolio with the market performance Determining whether funds are over-allocated to any individual stock or sector Determining the probability that our portfolio will be able to support a future income stream for a specified period of time Finding the best personal balance of risk and return to meet investment goals

Methodology:

The report has been prepared by using secondary resources of data. To prepare this report we have taken the help of some books, different websites, different news papers, different articles computer lab of the department of Accounting & Information systems. Limitations: There are some limitations that we have faced during preparing the report. First of all, we have no previous experience like this kind personal portfolio management. In some cases, it was to possible to get latest data on different issues.

Table of Content

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Serial 1.

Contents Economy Analysis: Major Trading partner of Bangladesh: Credit rating of Bangladesh:

Page No

2 3 4 5 18-22 23-30 31-41 42-43 43 44

Private sector investment scenario Investment incentives provided in Bangladesh 2. 3 4 5. 6. 7 Industry analysis Company Analysis Personal Portfolio Portfolio Performance Conclusion Bibliography

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Chapter-1: Economy analysis

Introduction:
For the formulation of useful economic policies for the nation, economic analysis is of the utmost significance. Economic policies cannot be obviously based on the basis of the fortunes of a single firm or even a single industry or the price of individual commodity. It is for more fruitful to regulate aggregate employment and national income and to work out a national wage policy.
Economic analysis enriches out knowledge of the functioning of an economy by studying the behavior of national income, output investment, saving and consumption. Moreover, it throws much light in solving the problems of unemployment, inflation, economic instability and economic growth.

General overview of Bangladesh Economy:

particulars GDP at Current Price : Per Capita GNI : Amount Tk. 4,161.55 billion US$ 482

GDP Growth at Constant Price) :

6.71%

Industrial Growth at Constant Price) :

9.56%

Inflation Rate :

6.17%

Investment Rate :

24.97% of GDP

National Savings Rate :

26.61% of GDP

Exports (US$) :

US$ 10,526.16 million

Imports (US$) :

US$ 13,949.79 million

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Exchange Rate:
Foreign currency US Dollar Euro Currencies (2006) British Pound = Australian Dollar = Japanese - Yen = Tk. Tk.69.68 Tk.83.32 Tk. 124.86 Tk. 48.74 Tk. 0.56

Swiss Frank =

Tk. 52.79

Hong Kong Dollar =

Tk. 8.54

Saudi Riyal - SAR =

Tk. 17.64

Foreign Exchange Reserve :

US$ 3,877.0 million on (31-12-2006)

Bank Rate :

5.00%

Major Trading partner of Bangladesh:

Bangladesh has direct trade relations with the following countries: USA, EU Countries, India, China, Japan, South, Korea, Australia, Malaysia, Hong Kong, Taiwan, Indonesia, Pakistan, Thailand, Kuwait, Saudi Arabia, UAE.

Legal framework for Bangladesh economy:

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There are number of laws and regulations available in Bangladesh to protect the investment of the investors. These laws and regulations ensure the right of the investors in this country. These laws and practices are as follows 1. 2. 3. 4. 5. 6. The Companies Act 1994 The Industrial Policy 1999 The Import Policy Order 2003-2006 The Bangladesh Export Processing Zones Authority Act of 1980 The Bangladesh Private Export Processing Zones Act of 1996 The Investment Board Act of 1989

Besides these, Investors have to follow the directions and guidelines issued by Bangladesh Bank, National Board of Revenue on different issues.

Credit rating of Bangladesh:

Global rating agency Moody's Investors Service has assigned a sovereign rating of Ba3 to Bangladesh, with a stable outlook for the financial sector in line with S&Ps sovereign rating of BB-/ stable announced earlier. The sovereign credit ratings would give an assessment of the governments ability and willingness to repay its local and foreign currency debts. Both quantitive and qualitative factors have been considered in deriving the sovereign rating In the global financial arena the BB- and Ba3 sovereign credit ratings put Bangladesh at a position higher than Pakistan and Srilanka and in the same category of countries like Vietnam, the Philippines, Indonesia and Turkey. Bangladesh has also been categorized by Goldman Sache as one of the next 11 fast growing emerging countries after Brazil, Russia, India and China, which are referred to as BRIC countries Both the rating agencies have given high score to Bangladesh because of its continued macroeconomic stability on back of prudent macro-economic policy setting and microeconomic reforms. Both agencies highlighted Bangladeshs strong and stable economic growth over the past decade. While S&P used the average of 4.2% real capital GDP growth as the barometer. Moodys highlighted the 6.0% average GDP growth as a major contributor to its positive rating. They have also stressed on the resilience of the Bangladesh economy to external shock as well as domestic stress as positive indicators. Strong and resilient readymade garments(RMG) sectors as well as the continued inflow of workers remittance from abroad, also underpinned the economic growth. The strong growth in countrys foreign exchange reserve has also been rated favorably. Prudent macro-economic management and sound policies have been accredited for price stability as well as a stable exchange rate. S&P further pointed out the positive impacts of substantial donor engagement that helped improved policy formulation and eased some of the burden of providing education and health services on the government. Moodys remarked that the conservative institutional frameworks which are supported by capital control have ensured better external balance and price stability. Also the growing role of micro finance institutions has helped to supplement domestic consumption as well as developing a critical social safety net. Debt roll-over risk is also contained by the governments cash balances in the banking system and the countrys respectable savings rates that provide greater debt absorption capability compared with its peers. There is also less contingent fiscal pressures on the government because outstanding guarantees

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for non financial state-owned enterprises are relatively low. The banking sector is not reliant on external funding is not likely to pose any serious contingent sovereign risks.

Private sector investment scenario

Private sector activities have expanded enormously in diversified economic fields. It is playing a significant role in the economic development of the country. Country has experienced industrial growth rate all time high nearly double digit (9056%) at the same time manufacturing sectors has experienced double digit growth (40.45%). UNCADs LDC Report identified that of the 40 LDCs for which data are available, only 7 have experienced steadily sustained growth and Bangladesh is one of them. World Bank has recognized Bangladesh as one of the most rapidly growing economy in the recent times and it comment that Bangladesh is 10th most rapidly growing economy among 31 large developing countries with population above 20 million with GDP averaging 5% since 1990.

Investment incentives provided in Bangladesh:

There are number of incentives available in the Bangladesh for the investors provided issued by Ministry of Finance, Bangladesh Bank, Bangladesh Export Processing Zones Authority, National Board of Revenue and other authorities. The incentives are summarized as follows:-

Major Fiscal Incentives

Major Non-Fiscal Incentives

Tax holiday Accelerated depreciation allowance instead of tax holiday Concessionary income tax in lieu of Tax holiday and Accelerated depreciation allowance Concession duty on imported machinery Avoidance of double taxation

Remittance of royalty, technical know-how, technical assistance fee 100% foreign equity allowed Unrealistic exit policy

Full repairation facilities of dividend and capital at the event of exit Permanent Residence Permit on investing US $75000 and Citizenship Offer for investing US $500,000
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A brief overview of the above incentive scheme is given below Tax holiday and Concession:
1. For existing industries: Tax holiday facilities are available in the existing industry for 4

or 6 years depending on the location of the industrial enterprise Location Dhaka and Chittagong Divisions (excluding 3 Hill tract districts of Chittagong division) Khulna, Sylhet, Barisal and Rajshahi Divisions and 3 Chittagong hill tract districts Years 4 6

List of Tax holiday applicable sectors:

1. 2. 3. 4. 5. 6. 7. 8.

Textile 9.Pharmacuticals Melamine 10. Plastic Ceramic and sanitary 11. Steel Production from Iron ore Fertilizer production 12. Insecticide and Pesticide Computer hardware production 13. Residential hotels of Three Star Standard Petro- chemicals 14.Basic ingredients of Drug, Chemical Agro machineries 15. Ship building Physical infrastructure 16. Textiles a. Agro Machineries b. Boiler and compressor c. LNG terminal /Internal container depot/Container freight station d. CNG terminal and Transmission Line e. Gas pipe line f. Flyover g. Large scale water treatment plant and its supply through pipe line h. Waste processing plant i. Export processing zone

2.1 Growth Performance in FY2009-10 Real GDP growth is estimated to be lower (at 5.54 per cent for FY2009-10) than the target, driven by sluggish investment, severe power crunch and lower export growth. If this actually turns out to be the case, it will be for the fourth consecutive year that growth rate has come down year-on-year.

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It is thus to be noted that this lower growth would be attained over a lower-than-provisionally estimated GDP for FY2008-09. Whilst, from expenditure side, growth in consumption and public development expenditures contributed to the GDP growth in FY2009-10, decelerated growth rates of both agriculture and industry held the growth back from sectoral perspective. The below par performance of the economy reflects lackluster performance by the manufacturing sector which is projected to post a modest growth of 5.28 per cent in FY2009-10 against 6.68 per cent growth in FY2008-09 and was significantly lower than the performance recorded in the recent past. Industry sector as a whole could manage only a 6.04 per cent growth in FY2009-10 compared to the 6.46 per cent growth attained in FY2008-09. Agriculture sectors performance is also expected to be lower than the target, recording 2.20 per cent growth. While high base-year growth was an important factor, impact of price disincentive in FY2008-09, a drought during the Aus season and flash flood also contributed to the lower growth performance. The 6.59 per cent growth projected for the service sector was in line with trend growth rates of recent times (6.3 per cent in FY2008-09). Fall in global commodity prices and lower import demand resulted in only a 1.37 per cent growth for import duty in FY2009-10. Over the last four years, GDP growth performance has been consistently lower than the targets set in respective budgets. As a result, the GDP in FY2009-10 was lower by 2.23 per cent than it would have been had the targets in last four years been achieved.

FIGURE 1: TARGETED AND ATTAINED GDP GROWTH RATES

2.2 Macroeconomic stability Overall macroeconomic stability was maintained in the backdrop of higher NBR-generated income and lower fiscal deficit on account of lower subsidy payment and under spent ADP.

During the first ten months, NBR was able to collect about 77 per cent of the revenue target with a growth rate of 17.16 per cent that comfortably crossed the targeted growth of 16.13 per cent for the full fiscal year. In the event only a 12.85 per cent growth will be required over the last two months to attain the target set out for the NBR (Table 1).

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Although Customs Duty (CD) collection will still require a big jump to achieve the target set out for this particular sub-component, it was partially compensated by higher revenue collection efforts from Value Added Tax (VAT) and Supplementary Duty (SD) at the import stage. However, overall indirect tax collection at the import stage was off the track with only 8.79 per cent growth during the first ten months against an annual target of 11.34 per cent. Income tax collection was impressive, along the demonstrated trends of the recent past. Here the growth was 20.83 per cent although revenue earnings performance under the ambit of the legalization of undisclosed income scheme was dismal by any account. Indirect tax collection, particularly the VAT component at local stage achieved higher growth than that was targeted (25.60 per cent and 26.72 per cent respectively)

PRICE AND INFLATION SCENARIO

Inflationary trends in Bangladesh have tended to follow global trends, with pressure building up in recent times. Global commodity prices have experienced unprecedented volatility since 200405 due to loss of production of major crops in some of the important food producing countries and diversion of food grains for ethanol in a number of developed countries including the USA and the EU. Though inflation rate in Bangladesh was lower when compared to that of other South Asian counties, except for Sri Lanka (Figure 3), price levels, particularly for food items, have been on the rise in the recent past. Point to point inflation rose from 2.25 per cent in June 2009 to 8.78 per cent in March 2010 (Figure 4) and was driven mainly by the rise in food inflation. However, non-food inflation decreased during this period both in rural and urban areas. Twelve month average national inflation, however, decreased from 6.66 per cent in June 2009 to 6.26 per cent in March 2010 thanks mainly to lower levels during the earlier months of FY2009-10 when
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global commodity prices were lower and in the domestic front the agriculture sector posted commendable performance.

Interpreting the nature of forces driving inflation In view of price hikes the government has continued to take up a number of fiscal and monetary measures. While these measures may result in some positive changes in the short run, keeping price stability over the medium term would necessitate identification of the driving forces of inflation and interpreting their nature a. Growth in money supply

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Inflation and money supply have started to rise in tandem since November 2009; however, contractionary monitory policy may not be the answer. A look at the short term movement of inflation and monetary growth indicates that since November, 2009 both inflation and State of the Bangladesh Economy in FY2009-10 Money supply has started to rise. At the end of March, 2010 broad money (M2) grew by 21.29 per cent as opposed to a growth rate of 19.30 per cent at the end of March, 2009 and against the target of 15.50 per cent at the end of June, 2010 set by the Bangladesh Bank. The growth of reserve money (RM) at the end of March, 2010 was 17.86 per cent, a moderate decline from the 22.93 per cent experienced in March, 2009 but much higher than the target of 7.0 per cent by June, 2010

b. Exchange rate policy: Exchange rate management policy pursued by the central bank helped maintaining taka-dollar rates stable. Exchange rate is a key macroeconomic variable because of its implications for inflation, export sector performance and competitiveness, import and overall state of economic activities. Several countries have used exchange rate as a tool for inflation targeting through appreciation of their currencies. Exchange rate depreciation directly affects prices of tradable goods in domestic currency units and indirectly affects the general price level if pricing decisions are influenced by the cost of imported inputs. Depreciation of Bangladeshi Taka (BDT), particularly against currencies which could have an influence on the domestic prices, such as the Indian Rupee (INR), may have contributed to higher food inflation in Bangladesh in the recent past

It has been Bangladesh Banks practice to resort to sterilization, on a regular basis, to maintain stability in the countrys exchange rate market and protect the interests of exporters and

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remitters. It is to be noted that the corresponding exchange rate as per Real Effective State of the Bangladesh Economy in FY2009-10: Second Reading 11 Exchange Rate (REER) has been lower compared to Nominal Effective Exchange Rate (NEER) during FY2009-10 indicating a depreciated BDT against USD. In the event this policy may have contributed to a larger foreign exchange reserves. In order to understand the linkages between inflation and exchange rate in the Bangladesh context, there is a need to examine the long-term trend which reveals that BDT has depreciated over time against the United States Dollar (USD) compared to other South Asian countries (Figure 6)

c. Output gap and international prices

Movement of prices in the domestic market has tended to follow price behavior in the global commodity market. Bangladesh is now able to largely meet its demand for rice through domestic production (Figure 7). The narrow gap between production and demand for rice is met through imports mainly from Thailand and India. During periods of lower global production of rice, Bangladesh needs to import rice at a high price which may lead to inflationary pressure with negative impact on purchasing power of people with limited income. For many other major items such as wheat, pulses, sugar, soybean oil, onion and milk, Bangladesh has to rely more on importation. Consequently, price volatility of these items in the international market affects prices in Bangladesh to a significant extent. In FY2009-10 variability in prices in the domestic market decreased for rice, flour, soybean oil, milk powder and sugar, but increased for lentil, eggs, potato, onion and egg plant. It is to be noted in this connection that between the July, 2009 and April, 2010 prices of rice, soybean oil, sugar, and crude oil have shown fluctuating but rising trend in the international market

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PUBLIC AND PRIVATE INVESTMENT: Overall Investment Bangladesh has witnessed sluggish public sector investment which had adverse implications for investment by the private sector. Declining investment efficiency also emerged as a concern. Low level of investment has been a major barrier to stimulating economic growth in Bangladesh in recent years. Although nominal growth in FY2009-10 for public and private investment were 10.3 per cent and 12.7 per cent respectively, investment has stalled at around 24 per cent of GDP since FY2003-04 (Figure 9). More importantly, a continuing fall of public investment as a share of GDP (from 6.2 per cent in FY2004-05 to 4.6 per cent in FY2009-10) is emerging as a serious concern in the context of the need to generate the desired crowd-in effect on private investment and to attain higher levels of investment efficiency

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Public Investment: Annual Development Programme (ADP):

In the context of low level public investment scenario, the weak ADP performance has undermined the catalytic role that public sector is expected to play in terms of stimulating domestic private sector investment. In Bangladesh public investment (Tk. 31,875.2 crore during FY2009-10) is largely driven by governments Annual Development Programme (ADP) (89.4 per cent of public investment in FY2009-10). While the ADP for FY2009-10 was set at Tk. 30,500 crore, the RADP for FY200910 was slashed by an amount of Tk. 2,000 crore and was set at Tk. 28,500 crore. However, allocation for top ten ministries (according to implementation performance during the first part of the fiscal year) saw an upward revision by an amount of Tk. 671 crore in the RADP (Tk. 23,837.8 crore) (Figure 10). Thus, a number of ministries such as Water Resources (39.5 per cent growth in allocation in RADP), Education (50.4 per cent), Energy and Mineral Resources (50.7 per cent) and LGD (6.2 per cent) saw increased availability of resources in the RADP. Mainly projectfunded activities were revised downward (-12 per cent).

Investment under Public-Private Partnership (PPP)

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The much hyped PPP component of the FY2009-10 budget has remained unutilized inspite of some progress being made in terms of putting in place the regulatory framework. With an investment target of Tk. 70 billion, government had allocated an amount of Tk. 25 billion earmarked separately under the PPP budget. Rather, Tk. 5 billion was slashed from the PPP budget in the revised ADP for FY2009-10. It is anticipated that Tk. 30 billion will be allocated in the upcoming budget for FY201011 under the PPP head; the public-private investment leverage ratio is estimated to be close to 1:2.7. Also, 23 projects under PPP relating to power, infrastructure and healthcare sectors have been included in the FY2010-11 ADP project list though no fund has been allocated for these projects.

Private Investment
Private investment remained subdued because of weak public sector response with regard to investment in power and infrastructure. Private investment has maintained a double-digit growth in nominal terms over last two decades (e.g. on an average 13.1 per cent in FY2001-05 and 14.3 per cent in FY2005-2006). Private investments share in GDP is about 19 per cent, accounting for about 80 per cent of total investment in the country. Low levels of private investment (Tk. 13,6284.6 crore or 19.7 per cent of GDP in FY2009-10) was mainly due to absence of conducive investment environment rather than availability of funds (considering the prevailing high level of excess liquidity with the scheduled banks), although investors have complained about high interest rates and high spread between lending and deposit rates. Composition of private investment in the form of outstanding credit balance appears to have remained unchanged over the past several years. As of December, 2009 shares of outstanding credit balance for various sectors were as follows: 35.5 per cent in manufacturing activities, 6.15 per cent in agriculture, 1.94 per cent in services, 6.85 per cent in construction and 36.8 per cent in trading (including export and import financing).

Investment in Agriculture Sector: Disbursement of Agricultural Credit

In view of development of diversified agriculture, particularly in non-rice and non-crop sectors, large scale private investment is needed along with public investment, if required on PPP basis. Investment in agriculture, in terms of share of outstanding credit balance, in December, 2009, was only about 6.2 per cent (Tk. 14,369.1 crore). This small share of institutional credit does not reflect the substantial investment in agriculture since a large part of investment in the sector originates from other sources. In terms of outstanding loans, major share of investment in agriculture sector was mainly for crop cultivation (67 per cent of outstanding loans to agricultural activities as of December, 2009) (Figure 12a). Credit disbursed by microfinance institutions (MFIs) was another source of capital for investment in agriculture sector. As of December, 2008 their disbursement of agricultural credit was Tk. 1,42,725.7 million, which was 31.6 per cent higher compared to that of commercial banks (Figure 12b). In view of its high income elasticity, and the expected rise in demand, investment in non-crop agricultural activities needs to be increased further through channeling of more financial resources of commercial banks and MFIs into the related areas.
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Investment in the Manufacturing Sector: Disbursement of Credit

Manufacturing sector experienced a declining trend in production in the current year (coming down from 10.8 per cent in FY2005-06 to 5.28 per cent in FY2009-10). Production in the manufacturing sector was affected mainly due to lack of adequate supply of electricity and gas. Other contributing factors were volatility in the market for raw materials particularly of cotton yarn and raw jute, depreciation of Euro, and low demand of some of the export items. However, several export-oriented industries have posted higher growth including leather and leather products, jute goods, and ceramic product among others It is of interest to note that disbursement of industrial term loan recorded significant improvement thanks to increased demand for credit by major industries. During July-March, FY2009-10 disbursement of term loan was Tk. 18,827.5 crore registering a growth 42.9 per cent compared to that in the previous year (Tk. 13,174.2 crore; growth (-) 9.6 per cent)

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Foreign Investment: FDI and Portfolio Investment

Aggregate FDI inflow was dismally low; however, higher FDI flow to EPZs has reinforced the need to address power and infrastructure issues on an urgent basis. FDI inflow (gross) in July-March FY2009-10 (USD 447 million) has declined by 50.9 per cent compared to the corresponding period of the previous year. Because of various constraints, including shortages of electricity and gas, FDI in the domestic tariff area (DTA) has declined by 61.7 per cent during this period On the other hand, FDI flow to export processing zones (EPZs) was able to demonstrate high growth, (24.9 per cent in July-March, FY2009-10) most likely because of assured power and utility facilities and better infrastructure.44FDI in the power sector has also fallen significantly in recent years, as shown in. The road shows organized in New York and Singapore to attract FDI in the energy sector is yet to generate results in terms of concrete investment proposals. Portfolio investment flow was negative during July-March FY2009-10 ((-) USD 42 million), continuing the trend of FY2008-09 in the backdrop of the global financial crisis. In contrast to the high growth of registration of local companies (3,293 units; with a growth of 63 per cent during July20 | P a g e

April, FY2009-10) registration of FDI, similar to the FDI flow, has experienced negative growth (797 units and (-) 62.0 per cent growth).

Investment in the Capital Market

In the backdrop of slow growth of industrial production over the last few years, particularly during the first half of FY2009-10, significant growth of capital market attracted attention of industrial analysts. Between May, 2009 and May, 2010, DSI index registered a growth of 134.4 per cent (index value was 5,030.05 at the end of May, 2010), DSE20 index gained 70.5 per cent (index value was 3,432.23 the end of May, 2010); market capitalization rose by 133.6 per cent (amounting to USD 36.88 billion at the end of May, 2010 which was equivalent to about 40 per cent of the GDP) (Figure 16). These developments in the market are particularly attributed to a number of issues: firstly, highest number of initial public offerings (IPOs) were floated during the ongoing fiscal year (21 new IPOs) which included a large MNC the Grameen Phone (GP), which contributed to the depth of the capital

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market.47 Secondly, the bullish market attracted a huge number of small investors (in April, 2010 total number of BO account holders reached about 2.5 million Number of new BO accounts that were opened in the DSE between April, 2009 and April, 2010 was 0.32 million (corresponding figures for the same period of previous two years were: 0.34 and 0.31 million, respectively). Most of these investors were small investors with limited knowledge about the market.Some analysts have argued that the market is becoming overheated and investment in the market is becoming increasingly risky (Box 4). The sharp rise of price earnings (P/E) ratio (P/E ratio for DSE was 29.9, whereas for some companies it was as high as 75 and above) has reinforced this argument

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Chapter-2: Industry Analysis\ 2.1 Introduction:

Industry analysis is a tool that facilitates a company's understanding of its position relative to other companies that produce similar products or services. Understanding the forces at work in the overall industry is an important component of effective strategic planning. Industry analysis enables small business owners to identify the threats and opportunities facing their businesses, and to focus their resources on developing unique capabilities that could lead to a competitive advantage A comprehensive industry analysis requires a owner to take an objective view of the underlying forces, attractiveness, and success factors that determine the structure of the industry. Understanding the company's operating environment in this way can help the business owner to formulate an effective strategy, position the company for success, and make the most efficient use of the limited resources of the small business

2.2 Major Industries of Bangladesh Bank Industry (30):

AB Bank, City Bank, IFIC Bank, Islami Bank, National bank, Pubali Bank, Rupali Bank, Uttara Bank, ICBI Bank, Eastern Bank, Al-Arafa Bank, Prime Bank, Southeast bank, Dhaka Bank, NCC Bank, Social Islami Bank, Dutch Bangla Bank, Mutual Trust Bank, Standard Bank, One Bank, Bank Asia, Mercantile Bank, Exim Bank, Jamuna Bnak, Brac Bank, Sahajalal Bank, Premier Bank, Trust Bank, First Security Bank,

Non- Banking Financial Institutions (21):

IDLC Finance Ltd, United Leasing, Uttara Finance, Midas Finance, First Leasing, Peoples Leasing, Prime Finance, Premier Leasing, Islamic finance, Lanka Bangla Finance Ltd, BIFC, IPDC, Union Capital, BD Finance, Inter. Leasing, Phoenix Finance, Fidelity Asset, Delta Brac, National Housing Finance, Bay Leasing.
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Mutual Fund (32):

ICB, 1st ICB MF, 2nd ICB MF, 3rd ICB MF, 4th ICB MF, 5th ICB MF, 6th ICB MF, 7Th ICB MF, 8th ICB MF, 1st BSRS, IAMCLS 1st MF, Grameen 1 MF, Grameen 2 MF, ICBE MF etc.

Food and Allied (15):

Alpha Tobacco, Apex Foods, Bangas, BLTC, BATC, National Tea, Zheal Bangla, Chittagong Vegetable, AMCL Pran, Dhaka Fisheries, Shyampur Sugar Mills Ltd, Rahima Food, Gulf Foods, Fu-Wang food, Meghna Pet, Meghna Condensed Milk, Beach Hatchery, Fine Foods.

Engineering (23):
Aftab Auto, Aziz Pipes, Olympic Industries Ltd, Bangladesh Lamps, Eastern Cables, Singer BD, Atlas Bangladesh, BD Auto, Quasem Dry cells, Renwick Jajneswar & co, National Tubes, BD Thai Aluminum, Anwar Galvanizing, K & Q, Rangpu Foundry, S.Alam Steel, Golden Son, BSRM Steel, Navana CNG, National Polymer etc.

Fuel & Power (11):

BOC BD, Padma Oil, Eastern Lubricants, Bangladesh Welding, Summit Power, Desco, Power Greed, Meghna Petroleum, Titas Gas etc.

Jute (3):
Jute Spinners, Sonali Aansh etc. Textiles (25): Al-Hajj Textile, Stylecraft, Rahim Textile, Quasem Textile, Saiham Textile, Modern Dying, Desh Garments etc

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2.3 Sectoral P/E Ratio:

Price to Earning (P/E) ratio = price (per share) earnings (per share). P/E ratio reflects the

price currently being paid by the market for each Taka of currently reported EPS. In other words, the P/E ratio measures investors expectations and the market appraisal of the performance of a firm.
The P/E tells you what the market is willing to pay for the companys earnings. If a stock has a P/E of 15, that means the market is willing to pay 15 times its earnings for the stock. For this reason, P/E is sometimes referred to as a multiple. In the above example, the stock has a multiple of 15. Companies with good growth potential will have a higher P/E because investors are willing to pay a premium for future profits. High-risk companies will typically have low P/Es, which means the market is not willing to pay a high price for risk. From the above graph, we see that P/E ratio of Financial institutions, Fuel & Power, Engineering, Textile, Pharmaceuticals has increased in 2010 that is indicating that business prospects of these sectors is increasing. On the other hand P/E ratio of the Bank, Fuel & Power, Mutual funds and other has decreased that is indicating the lack of confidence of the investors on these sectors in this year. But P/E ratio always does not predict the actual scenario of the market. Sometimes some shares are overvalued because of different rumor and through different fraudulent activities of the related parties. In that case P/E ratio does not give meaningful picture of the respective industries.

2.4 Market Capitalization:

Figure: Sectoral Market Capitalization- December 2010

Market capitalization or Market cap refers to the total market value of all the publicly traded shares of that company. Basically one takes the number of shares available for a company, multiply by the stock price and that gives you the market capitalization. It gives one a starting place for evaluation. When looking a stock, it should always be in a context.

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From the above graph, we see that Banking sector holds about 32%, that is largest share of all the sectors, Financial institutions hold 13%, Power and Fuel 10% and other holds the remaining portion of the total market capitalization.

2.5 Sectoral Turnover in 2010:

From the above graph, it is visible that of the total turnover Banking sectors gain 41%, Financial institutions 11%, Insurance 9%, Textile 7% and other sectors gain the remaining portion of the total Turnover of the market. Here we see that financial sectors are making more turnover than other other sectors. Investors will me more interested to invest in the financial sectors as the possibility of positive return is higher here. Pharmaceuticals, Textile and Fuel and power sectors are also making substantial return from their investments. But it will not be a wise decision for investors to invest in a sector only looking at its return only. They have to analyze the risk of their investment in the particular sector. They should make a risk- return trade off to take investment decision.

2.6 Conclusion:

After analyzing the performance and financial strength of all the sectors, we see that turnover of the Banking sector is higher than other sectors. Also market capitalization of this sector is higher than other sectors. Other than Banking sectors, Financial institutions, Insurance, Textile sector are contributing a substantial portion of total return. Banking, Financial institutions, Fuel & Power, Pharmaceuticals are holding the major portion of the total market Capital. In comparison with the performance and the financial strength of these sectors their sectoral P/E ratio is lower. This indicates that the price of the shares of these companies is undervalued. So investors can invest in the shares of these companies with minimum risk and maximum possibility of return.

Chapter-3: Company Analysis:

3.1 Introduction:
While investing in stock market, analyzing the companies under different industries is very important. This help the investors to make a well informed decisions about their investment. While analyzing the companies, investors have to analyze the performance and financial stability of the companies. To analyze the performance of the companies we can look at the EPS, ROE, ROA and P/E ratio of the companies and to analyze the financial strength we can look at the
26 | P a g e

companys NAV. Companies with good EPS are good performing but only on the basis of EPS, Investors should not take their investment decision. They have to look at the companies financial strength

3.2 Engineering: Companies EPS

Aftab Auto Atlas BD Aziz pipe Goldenson Singer BD S Alam BSRM
2009 3.19 22.39 6.20 2.61 114.36 21.85 39.59 2008 30.95 9.69 -98.52 1.51 68.22 22.86 -153 2007 8.06 12.63 0.38 61.26 13.42 N/A

NAV
2009 39.04 55.93 -375.16 20.97 481.68 116.69 8.62 2008 N/B 43.62 -365.88 20.51 278.81 109.85 -30.97 2007 35.22 57.40 -254.39 10.84 259.40 103.98 N/A

P/E
2009 69.72 28.45 78.06 23.92 24.42 48.83 29.67 2008 15.82 37.70 N/A 45.54 29.06 16.80 N/A 2007 20.26 24.42 40.79 31.02 9.37 N/A

If we observe the companies in the Engineering Sectors, we see that according to EPS BSRM Steel, Singer BD, S Alam Steel, Atlas BD are very good performing companies. All the above mentioned companies except BSRM have good asset base. P/E ration of the Aftab Auto, S Alam Steel is very good that indicates that these companies have good prospects in future. Though Aziz Pipes have very good P/E ratio, its EPS and NAV are not to the expected extent. So we can conclude that Copanies which have higher P/E ratio with strong assets base are very much suitable for investment. At the same time investors have to notice to the EPS companies earn to evaluate its performance.

3.3 Food & Allied: Companies EPS

AMCL Apex Food BATBC Fuwang Food Bangas
2009 49.96 15.66 34.48 1.17 17.02 2008 44.94 41.51 27.81 0.77 22.50 2007 36.66 37.60 13.32 0.70 21.74

NAV
2009 449.96 695.82 86.04 13.96 168.06 2008 428.39 731.49 75.56 13.90 164.80 2007 383.91 707 54.75 12.73 162.78

P/E
2009 27.32 11.87 46.09 98.11 2008 25.33 29.22 7.25 37.20 21.59 2007 10.92 15.13 11.15 29.87 10.46

Above graph shows that AMCL, BATBC and Bangs has good EPS that indicate that these companies are performing well. On the other hand APEX food has negative EPS this year that indicate that company has made loss this year but this company has good NAV that tells about its financial strength. Bangas has moderate level of EPS but its assets base is good also its P/E ratio is also good that indicate it has good potentials. Fuwang food does not have good EPS, NAV but its P/E ratio is somewhat high. Its share may be overvalued and may be risky to invest in its share

3.4 Pharmaceuticals & Chemicals:

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Companies ACI Beximco Pharma IBN SINA Kohinoor Chem Square Pharma

EPS
2009 30.64 4.13 54.70 76.69 170.51 2008 57.69 4.33 48.09 63.45 N/A 2007 21.04 3.08 31.19 35.48 218.61

NAV
2009 151.62 72.02 239.34 -124.83 905.05 2008 154.85 82.97 209.64 -161.53 N/A 2007 105.55 73.56 187.75 -194.98 1280.08

P/E
2009 14.59 43.40 34.05 41.80 28.13 2008 10.84 46.45 20.70 10.82 23.44 2007 9.39 19.12 25.23 11.82 35.90

Above graph shows that Square Pharmaceuticals, Kohinoor Chemicals, IBN SINA have good EPS. ACI has moderate level of EPS but EPS of Beximco Pharma is very poor in 2009. Assets base of the Square pharma, ACI, IBN SINA is very strong but the assets base of the Kohinoor Chemicals is negative. It indicates that total liability of the company surpasses its total assets value. So it is riskier for the investor to invest in its share. In comparison with the NAV of the Square pharma, IBN SINA and ACI their P/E ratio is lower. This indicates that the price of these companies share is undervalued. So investors can invest in the shares of these companies to gain a handsome return in the future.

3.5 Textile:
Companies All Tex Bex Tex Metrospin Prime Tex Sqare Tex Al Haj Tex HR Tex

EPS
2009 -12.20 4.16 3.74 10.59 5 -1.71 12.54 2008 1.26 -3.23 3.05 18.61 6.89 1.30 11.34 2007 2.24 -5.28 1.16 13.97 8.94 2.76 9.65

NAV
2009 118.51 26.22 79.56 632.86 47.41 14.27 125.85 2008 131.97 17.81 N/A 300.32 852.69 19.16 124.51 2007 131.20 10.25 15.31 291.67 53.23 N/A 122.93

P/E
2009 N/A 22.49 94.80 21.86 25.61 N/A 24.14 2008 66.27 N/A 12.47 7.75 23.85 46.15 9.54 2007 28.46 8.88 4.42 14.25 6.99

From the above data we see that EPS of the HR Textile, Prime Tex is somewhat good and their assets base is also good. So in Textile industry they are somewhat profitable and secured. EPS both Altex Industries, Al Haj Tex is negative and their assets base is very poor. It is very risky and not so profitable to invest in the share of those companies.

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3.6 Insurance:
Companies Agrini Insur. Eastland Ins Rupali Ins Global Ins Janata Ins Sonarbangla

EPS
2009 12.10 46.74 33.50 12.04 12.46 14.07 2008 11.90 42.76 28.07 10.27 10.61 11.64 2007 11.40 67.22 26.26 13.85 10.51 1.71

NAV
2009 124.88 263.06 471.51 137 136.58 124.99 2008 122.22 284.96 282.738 128.16 136.15 119.25 2007 110.31 335.72 317.76 124.89 N/A 107.61

P/E
2009 42.78 28.94 44.44 45.89 82.32 31.90 2008 27.92 30.85 25.49 20.80 39.52 14.13 2007 10.90 6.03 14.08 9.17 17 63.30

In the insurance sector, EPS of the Eastland insurance, Rupali insurance is good over the year. Their assets base is also good. In comparison with their EPS and NAV their R/E is not so high. So it is very safe and profitable to invest in the shares of these companies. Global insurance, Janata insurance and Sonarbangla insurance have moderate EPS and have moderate NAV. So it is not so profitable and so safe to invest in the share of these companies.

3.7 Fuel & Power:

Companies BOC DESCO Jamuna Oil Megna Pet. SummitPower Titas Gas Powergrid

EPS
2009 40.08 120.42 9.32 8.66 3.14 63.67 42.39 2008 23.61 78.73 11.36 9.53 25.71 49.25 46.46 2007 17.32 55.94 N/A N/A 30.90 N/A 34.4

NAV
2009 120.85 548.46 34.23 27.86 19.57 194.27 390.01 2008 99.28 N/A 32.9 25.52 197.19 159.88 351.55 2007 91.62 273.06 N/A N/A 184.58 N/A 270.21

P/E
2009 12.15 14.03 21.63 30.32 48.04 10.57 13.13 2008 11.26 11.92 17.50 22.38 46.69 N/A 11.98 2007 18.53 17.06 N/A 46.65 N/A 16.99

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Desco, Titas Gas, Powergrid, BOC are making good EPS over the years and their assets base is also very strong at the same time their P/E ratio is very low in comparison with their performance and financial position. So it will be very wise decision to invest in the shares of these companies. Jamuna oil, Megna Petroleum and Summit Power are not earning enough EPS and their assts base is not strong enough. At the same time their P/E ratio is higher in comparison with their performance. So it will not be a wise decision to invest in the shares of these companies if investors want to make a safe and profitable investment.

3.8 Bank:
Companies AB Bank Bank Asia SoutheastBan Brac Bank Dutch Bangla IFIC NCC Bank SIBL Uttra Bank

EPS
2009 133.26 61.88 56.64 64.37 75.85 51.58 7.53 1.84 6.92 2008 103.18 39.38 31.11 61.463 82.17 49 50.20 1.72 142.55 2007 256.10 47.30 53.60 55.95 237.37 143.87 50.09 17.60 102.56

NAV
2009 399 230.98 331.01 404.59 290.12 240.70 26.40 13.20 38.86 2008 301.49 191.44 257.95 343.28 3222.05 238.31 230.73 14.26 416.88 2007 807 184.76 294.28 256.55 1154.8 8 389.70 218.83 165.75 614.42

P/E
2009 11.04 9.65 8.24 13.88 34.42 22.30 15.26 16.74 31.44 2008 9.16 11.97 8.77 17.52 52.46 31.54 9.47 12.49 47.61 2007 10 11.03 10.69 29.33 28.50 16.13 8.81 28.79 47.34

EPS of AB Bank, Bank Asia, Southeast Bank, Dutch Bangla Bank and IFIC Bank is very attractive. At the same time their Assets base is also very strong to support them. In comparison with their performance their P/E ratio is lower that indicate that shares of these companies are undervalued. So it will be very safe and profitable to invest in the shares of these companies. EPS and NAV of SIBL, Uttara Bank is not so good. So it is not so much profitable and safe to invest in the shares of these companies.

Conclusion:
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After analyzing performance of all the companies, we see that some companies have good EPS and good assets base but these companies P/E ratio is lower. This indicates that the shares of these companies are undervalued. If the investors invest in these shares, there are higher potentials of getting good return with minimum risk. Again some companies dont have good EPS and NAV, but their P/E ratio is very high. This indicates that these shares are overpriced. It is great risk for the investors to invest in the shares of these companies because when the market will get corrected, investors will lose their capital.

Chapter-4: Personal portfolio

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1st February
No of Company AB Bank Bay Leasing Apex Spin Buy 1318 2650 1680 Sale Share 30 50 100 Total Buy 39540 13250 0 16800 0 Total Sale Market Value 1318 2650 1680 Gain 0 0 0 % of Gain 0 0 0 Balanc e 46046 0 32796 0 15996 0

2nd February
No of Company AB Bank Bay Leasing Apex Spin 1680 100 2650 50 Buy 1318 Sale Share 30 Total Buy 39540 13250 0 16800 0 1640 -4000 2600 -2500 Total Sale Market Value 1330 Gain 360 % of Gain 0.9104 7 1.8867 9 2.3809 5 Balanc e 15996 0 15996 0 15996 0

3rd February
No of Company Buy Sale Share Total Buy Total Sale Market Value Gain % of Gain 1.3657 AB Bank Bay Leasing Apex Spin 2650 1680 50 100 1318 30 39540 13250 0 16800 0 2500 1725 -7500 4500 1300 -540 1 5.6603 8 2.6785 71 Balanc e 15996 0 15996 0 15996 0

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6th February
No of Company Buy Sale Share Total Buy Total Sale Market Value Gain % of Gain 1.3657 AB Bank Bay Leasing Apex Spin 1318 2650 1680 1750 30 50 100 39540 13250 0 16800 0 17500 0 1725 7000 1300 2370 -540 -14000 1 10.566 4.1666 67 Balanc e 15996 0 15996 0 33496 0

7th February
No of Company Buy Sale Share Total Buy Total Sale Market Value Gain % of Gain 0.0971 AB Bank Bay Leasing 2650 50 1318 1190 30 39540 13250 0 2250 -20000 35700 1170 -3840 2 0.1509 4 Balanc e 37066 0 37066 0

8th February
No of Company Bay Leasing Apex Spinning 1680 100 2650 50 Buy Sale Share Total Buy 13250 0 16800 0 1650 -3000 2250 -20000 Total Sale Market Value Gain % of Gain 0.1509 4 1.7857 1 Balanc e 37066 0 37066 0

9th February
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No of Company Bay Leasing Apex Spinning 1680 100 2650 2450 50 Buy Sale Share

Total Buy 13250 0 16800 0

Total Sale 12250 0

Market Value Gain

% of Gain 7.5471 7 1.7857 1 0.4301 1

Balanc e 49316 0 49316 0 40016 0

2375

-10000

1650

-3000

SE Bank

465

200

93000

463

-400

10th February
No of Company Apex Spinning Buy 1680 Sale Share 100 Total Buy 16800 0 Total Sale Market Value 1700 Gain 2000 % of Gain 1.1904 76 1.5053 SE Bank 465 200 93000 458 -1400 8 Balanc e 40016 0 40016 0

13th February
No of Company Apex Spinning Buy 1680 Sale 1760 Share 100 Total Buy 16800 0 Total Sale 17600 0 Market Value 1720 Gain 8000 % of Gain 4.7619 05 10.752 SE Bank Beximco Ltd. 465 240 200 1200 93000 28800 0 415 250 -10000 12000 7 4.1666 67 Balanc e 57616 0 57616 0 28816 0

14h February
No of Company SE Bank Buy 465 Sale Share 200 Total Buy 93000 Total Sale Market Value 380 Gain -17000 % of Gain 18.279 Balanc e 28816 0

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6 Beximco Ltd. 240 1200 28800 0 229 -13200 4.5833 3 28816 0

15th February
No of Company SE Bank Beximco Ltd. Bextex Buy 465 240 52 Sale Share 200 200 500

Total Buy 93000 48000 26000

Total Sale

Market Value 410 262 53 Gain -11000 4400 500

% of Gain 11.828 9.1666 67 1.9230 77

Balanc e 28816 0 28816 0 26216 0

20th February
No of Company Buy Sale Share Total Buy Total Sale Market Value Gain % of Gain 4.9462 SE Bank Beximco Ltd. Bextex 465 240 52 275 200 200 1000 93000 48000 52000 55000 442 268 55 -4600 7000 3000 4 14.583 33 5.7692 31 Balanc e 18906 0 24406 0 24406 0

22nd February
No of Company SE Bank Buy 465 Sale 420 Share 200 Total Buy 93000 Total Sale 84000 Market Value 400 Gain -9000 % of Gain 9.6774 Balanc e 32806 0

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2 4.4230 Bextex 52 1000 52000 54.3 2300 77

32806 0

23rd February
No of Company Bextex Stan Bank Buy 52 410 Sale Share 1000 450 Total Buy 52000 18450 0 Total Sale Market Value 55.5 410 Gain 3500 0 % of Gain 6.7307 69 0 Balanc e 32806 0 14356 0

24th February
No of Company Bextex Stan Bank 410 250 Buy 52 Sale 57 Share 1000 Total Buy 52000 10250 0 383 -6750 Total Sale 57000 Market Value 55.8 Gain 5000 % of Gain 9.6153 85 6.5853 7 Balanc e 20056 0 20056 0

27th February
No of Company Stan Bank Aziz Pipe 410 425 250 300 Buy Sale Share Total Buy 10250 0 12750 0 362 425 -12000 0 Total Sale Market Value Gain % of Gain 11.707 3 0 Balanc e 13316 0 13316 0

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28th February
No of Company Stan Bank 410 350 250 Buy Sale Share

Total Buy 10250 0 12750

Total Sale

Market Value Gain

% of Gain 14.634 1 3.5294 1 0

Balanc e 22066 0 22066 0 68660

87500

342

-15000

Aziz Pipe Meghna Pet

425 15.2

300 10000

0 15200 0

410 15.2

-4500 0

1st March
No of Company Buy Sale Share Total Buy 12750 Aziz Pipe Meghna Pet 425 15.2 300 10000 0 15200 0 405 15.8 -6000 6000 Total Sale Market Value Gain % of Gain 4.7058 8 3.9473 68 68660 68660 Balanc e

2nd March
No of Company Aziz Pipe Meghna Pet Cont. Insu Buy 425 15.2 410 17 Sale Share 300 10000 400 Total Buy 12750 0 15200 0 16400 0 Total Sale Market Value 425 17000 0 17 415 18000 2000 Gain 0 % of Gain 0 11.842 11 1.2195 12 Balanc e 68660 23866 0 23866 0

3rd March
No of Company Buy Sale Share Total Buy Total Sale Market Value Gain % of Gain Balanc e

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12750 Aziz Pipe Cont. Insu Beach Hatch 425 410 65 300 400 2000 0 16400 0 13000 0 435 425 66 3000 6000 2000

2.3529 41 3.6585 37 1.5384 62

23866 0 23866 0 10866 0

6th March
No of Company Aziz Pipe Cont. Insu Beach Hatch Buy 425 410 65 Sale Share 300 400 2000 Total Buy 12750 0 16400 0 13000 0 Total Sale Market Value 460 440 68 Gain 10500 12000 6000 % of Gain 8.2352 94 7.3170 73 4.6153 85 Balanc e 10866 0 10866 0 10866 0

7th March
No of Company Aziz Pipe Cont. Insu Beach Hatch Buy 425 410 65 Sale Share 300 400 2000 Total Buy 12750 0 16400 0 13000 0 Total Sale Market Value 450 430 67 Gain 7500 8000 4000 % of Gain 5.8823 53 4.8780 49 3.0769 23 Balanc e 10866 0 10866 0 10866 0

8th March
No of Company Aziz Pipe Cont. Buy 425 410 Sale 473 455 Share 300 400 Total Buy 12750 0 16400 Total Sale 14190 0 18200 Market Value 470 450 Gain 14400 18000 % of Gain 11.294 12 10.975 Balanc e 25056 0 43256

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Insu Beach Hatch 65 2000

0 13000 0

0 70 10000

61 7.6923 08

0 43256 0

9th March
No of Company Beach Hatch CTGVEG Buy 65 2100 Sale Share 2000 100 Total Buy 13000 0 21000 0 Total Sale Market Value 71 2100 Gain 12000 0 % of Gain 9.2307 69 0 Balanc e 43256 0 22256 0

10th March
No of Company Beach Hatch CTGVEG Buy 65 2100 Sale 78 Share 2000 100

Total Buy 13000 0 21000 0

Total Sale 15600 0

Market Value 77 2200 Gain 24000 10000

% of Gain 18.461 54 4.7619 05

Balanc e 37856 0 37856 0

13th March
No of Company CTGVEG CMA Kamal 65 2500 Buy 2100 Sale Share 100 Total Buy 21000 0 16250 0 62 -7500 Total Sale Market Value 2300 Gain 20000 % of Gain 9.5238 1 4.6153 8 Balanc e 37856 0 37856 0

14th March
No of Company CTGVEG CMA Kamal Buy 2100 65 Sale Share 100 2500 Total Buy 21000 0 16250 0 Total Sale Market Value 2400 68 Gain 30000 7500 % of Gain 14.285 71 4.6153 85 Balanc e 37856 0 37856 0

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15th March
No of Company CTGVEG CMA Kamal Rahim Tex Buy 2100 65 1850 Sale Share 100 2500 150 Total Buy 21000 0 16250 0 27750 0 Total Sale Market Value 2500 75 1850 Gain 40000 25000 % of Gain 19.047 62 15.384 62 0 Balanc e 37856 0 37856 0 37856 0

16th March
No of Company CTGVEG CMA Kamal Rahim Tex Buy 2100 65 1850 Sale Share 100 2500 100 Total Buy 21000 0 16250 0 18500 0 Total Sale Market Value 2625 82 1925 Gain 52500 42500 7500 % of Gain 25 26.153 85 4.0540 54 Balanc e 37856 0 37856 0 37856 0

20th March
No of Company CTGVEG CMA Kamal Rahim Tex Buy 2100 65 1850 90 Sale Share 100 2500 100 Total Buy 21000 0 16250 0 18500 0 Total Sale Market Value 2700 90 2000 Gain 60000 62500 15000 % of Gain 28.571 43 38.461 54 8.1081 08 Balanc e 37856 0 60356 0 60356 0

22500 0

21st March
No of Company CTGVEG Rahim Buy 2100 1850 Sale Share 100 100 Total Buy 21000 0 18500 Total Sale Market Value 2875 2075 Gain 77500 22500 % of Gain 36.904 76 12.162 Balanc e 60356 0 60356

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Tex Pharma AID 2350 200

0 47000 0 2375 5000

16 1.0638 3

0 13356 0

22nd March
No of Company CTGVEG Rahim Tex Pharma AID Buy 2100 1850 2350 2150 Sale Share 100 100 100 Total Buy 21000 0 18500 0 23500 0 Total Sale Market Value 3020 2150 2415 Gain 92000 30000 6500 % of Gain 43.809 52 16.216 22 2.7659 57 Balanc e 13356 0 34856 0 34856 0

21500 0

23rd March
No of Company CTGVEG Pharma AID Buy 2100 2350 Sale Share 100 100 Total Buy 21000 0 23500 0 Total Sale Market Value 3250 2510 Gain 11500 0 16000 % of Gain 54.761 9 6.8085 11 Balanc e 34856 0 34856 0

24th March
No of Company CTGVEG Pharma AID Buy 2100 2350 Sale Share 100 100 Total Buy 21000 0 23500 0 Total Sale Market Value 3380 2700 Gain 12800 0 35000 % of Gain 60.952 38 14.893 62 Balanc e 34856 0 34856 0

27th March
No of Company CTGVEG Buy 2100 Sale 3500 Share 100 Total Buy 21000 Total Sale 35000 Market Value 3500 Gain 14000 % of Gain 66.666 Balanc e 69856

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Pharma AID ILFSL 2350 1380 100 300

0 23500 0 41400 0

0 2810 1380

0 46000 0

67 19.574 47 0

0 69856 0 28456 0

28th March
No of Company Pharma AID ILFSL Tallu Spinn Buy 2350 1380 648 Sale 3000 Share 100 300 600 Total Buy 23500 0 41400 0 38880 0 Total Sale 30000 0 Market Value 3000 1400 648 Gain 65000 6000 0 % of Gain 27.659 57 1.4492 75 0 Balanc e 58456 0 58456 0 19576 0

29th March
No of Company ILFSL Tallu Spinn ULC Buy 1380 648 1330 Sale Share 300 600 100 Total Buy 41400 0 38880 0 13300 0 Total Sale Market Value 1390 685 1330 Gain 3000 22200 0 % of Gain 0.7246 38 5.7098 77 0 Balanc e 19576 0 19576 0 62760

30-Mar
No of Company ILFSL Tallu Spinn ULC Buy 1380 648 1330 Sale 1405 Share 300 600 300 Total Buy 41400 0 38880 0 39900 0 Total Sale 42150 0 Market Value 1405 735 1340 Gain 7500 52200 3000 % of Gain 1.8115 94 13.425 93 0.7518 8 Balanc e 48426 0 48426 0 85260

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31st March
No of Company Tallu Spinn ULC Buy 648 1330 Sale 780 Share 600 100 Total Buy 38880 0 13300 0 Total Sale 46800 0 Market Value 780 1380 Gain 79200 5000 % of Gain 20.370 37 3.7593 98 Balanc e 55326 0 55326 0

Portfolio Performance Measurement

Working Day 1 2 3 4 5 6 7 8 9 10 11 12 Portfolio return(A) -1.80566992 -1.04105399 -2.21738619 -0.13857243 -1.06489185 -3.10533672 0.229885057 1.821493625 -7.92650919 -3.65269461 2.797927461 -4.620689966 Average portfolio return(B) 5.162493 5.162493 5.162493 5.162493 5.162493 5.162493 5.162493 5.162493 5.162493 5.162493 5.162493 5.162493 (A-B)^2 Market return -2.51 -5.7 -4.83 6.7 -2.19 -2.19 -7.27 -7.81 6.22 7.82 -3.38 -2.51 Average market return(D) -0.37756 -0.37756 -0.37756 -0.37756 -0.37756 -0.37756 -0.37756 -0.37756 -0.37756 -0.37756 -0.37756 -0.37756 (C-D)^2 (A-B)(C-D)

48.555294 38.483995 54.462617 28.101295 38.780322 68.357008 24.330621 11.162277 171.32198 77.707533 5.5911702 95.710669

4.5473 28.32837 19.82422 50.09186 3.284939 3.284939 47.50573 55.24116 43.5278 67.19999 9.014646 4.5473

14.85919 33.01801 32.85847 -37.5186 11.28676 14.98495 33.9977 24.83178 -86.3555 -72.263 7.099466 20.86205

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13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38

1.479915433 -1.13268608 -5.2173913 -5.10471204 -0.03312608 4.509582864 2.609727165 6.761565836 4.62633452 10.05931198 3.529411765 10 3.355704698 10.0611409 10 18.38565022 24.66367713 12.13872832 20.3968254 29.43820225 36.62921348 21.65308498 6.841395259 2.692883095 5.217174239 16.13645075

5.162493 5.162493 5.162493 5.162493 5.162493 5.162493 5.162493 5.162493 5.162493 5.162493 5.162493 5.162493 5.162493 5.162493 5.162493 5.162493 5.162493 5.162493 5.162493 5.162493 5.162493 5.162493 5.162493 5.162493 5.162493 5.162493

13.561378 39.62928 107.742 105.4155 26.994458 0.4262916 6.5166134 2.5570339 0.2874659 23.978836 2.6669543 23.401474 3.264484 23.996751 23.401474 174.85189 380.29618 48.667859 232.08488 589.31006 990.1545 271.93962 2.8187128 6.0989731 0.00299 120.42775 (A-B)^2= 38883.0582

-3.61 -5.82 -4.76 7.66 -5.52 2.57 2 4.39 4.69 4.39 5.11 -6.92 4.51 -2.165 1.48 0.904 0.901 -1.17 -1.72 -2.78 -1.14 2.44 -0.35 0.45 1.64 1.5

-0.37756 -0.37756 -0.37756 -0.37756 -0.37756 -0.37756 -0.37756 -0.37756 -0.37756 -0.37756 -0.37756 -0.37756 -0.37756 -0.37756 -0.37756 -0.37756 -0.37756 -0.37756 -0.37756 -0.37756 -0.37756 -0.37756 -0.37756 -0.37756 -0.37756 -0.37756

10.44867 29.62015 19.20578 64.60237 26.44469 8.68811 5.652792 22.72963 25.68016 22.72963 30.11331 42.80352 23.88824 3.194942 3.450529 1.642396 1.634716 0.627961 1.802145 5.771718 0.581315 7.938644 0.00076 0.684856 4.070548 3.525232 (C-D)^2= 703.9311

11.90371 34.26113 45.48922 -82.5233 26.71816 -1.92449 -6.06935 7.623676 -2.71702 23.34588 -8.96163 -31.6491 -8.83079 -8.75604 8.98596 16.94627 24.93343 -5.52825 -20.4512 -58.3209 -23.9915 46.46323 0.046271 -2.04375 0.110323 20.60426 (A-B)(C-D) 3.325496

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1. Portfolio Risk(P)=38883.058238 =10.1087 2. Portfolio Average Return = 5.162493 3. Market Average Return = -0.37756 4. Market Risk(M)=703.931138 =4.30401 5. CovariencePM =3.32549638 =0.087513 6. Portfolio Beta = 0.0875134.30401^2

=0.004724 7. Alfa =[5.162493-0.004724*(-0.37756)] =5.164277 8. CorrelationPM = CovariencePMPM

= 0.08751310.10874.30401 = 0.00201126
Conclusion: An investor can maximize the returns of a portfolio by choosing securities with high returns and minimize the risk by diversification of securities. By using completely diversified portfolio, an investor can eliminate most or all unsystematic risk. So the goal of an investor when s/he invests in portfolio of securities is to choose a portfolio with high expected return and low risk. Portfolio management performs this job In our report we have continued trading from 1st February, 2011 31st march, 2011. After completion of our trading period, we have calculated the average return of our portfolio, related risk of our portfolio. Again we have calculated the average market return and risk of the market. We also have measured the correlation between the market and portfolio.

Bibliography:

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10. Investments-Bodie, Kane, Marcus

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