Construction of Optimal Portfolio using Sharpe’s Single Index Model

mba finance projectsCapital market comprising the new issues market and secondary markets or stock exchanges, is one of the most sensitive markets in the whole economy. The secondary market enables investors to continuously rearrange their assets if they so desire by divesting themselves of such assets while others can use their surplus funds to acquire them. This rearrangement is not a product of instant decisions but a thorough research.

The major tools used for this are Fundamental analysis and technical analysis. Of which fundamental analysis requires a large amount of inside data regarding the companies concerned and also requires lot of calculations and deep knowledge. Whereas technical analysis is comparatively a simpler tool for an investor to decide his short/medium term investment decisions.

By closely watching the price changes, its trend can be analyzed and the timings of entry and exit can be decided. In short his decisions such as when to buy or when to sell particular scrip or when to reorganize his portfolio can be influenced by the technical analysis, moving averages method where in the daily prices are compared with average of certain number of days.

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The company is also a depository participant with National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL), providing dual benefit services wherein the investors can avail the company’s brokerage services for executing the transactions and the depository services for settling them. Allegro Capital Advisors Pvt Ltd. processes more than 4,00,000 trades a day which is much higher even than some of the renowned international brokers.

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Indian Stock Markets are one of the oldest in Asia. Its history dates back to nearly 200 years ago. The earliest records of security dealings in India are meager and obscure. The East India Company was the dominant institution in those days and business in its loan securities used to be transacted towards the close of the eighteenth century.

By 1830’s business on corporate stocks and shares in Bank and Cotton presses took place in Bombay. Though the trading list was broader in 1839, there were only half a dozen brokers recognized by banks and merchants during 1840 and 1850.

The 1850’s witnessed a rapid development of commercial enterprise and brokerage business attracted many men into the field and by 1860 the number of brokers increased into 60. In 1860-61 the American Civil War broke out and cotton supply from United States of Europe was stopped; thus, the ‘Share Mania’ in India begun. The number of brokers increased to about 200 to 250. However, at the end of the American Civil War, in 1865, a disastrous slump began (for example, Bank of Bombay Share which had touched Rs 2850 could only be sold at Rs. 87).

At the end of the American Civil War, the brokers who thrived out of Civil War in 1874, found a place in a street (now appropriately called as Dallal Street) where they would conveniently assemble and transact business. In 1887, they formally established in Bombay, the “Native Share and Stock Brokers’ Association” (which is alternatively known as “The Stock Exchange “). In 1895, the Stock Exchange acquired a premise in the same street and it was inaugurated in 1899. Thus, the Stock Exchange at Bombay was consolidated.

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