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The document describes a portfolio designed by Srishti for her MBA class consisting of 17 stocks across various sectors with a corpus of 1 crore rupees. It then asks a series of behavioral finance questions about the portfolio and potential reactions to changes in stock performance or market conditions. The questions probe the emotional and psychological factors that may influence investment decisions.

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SRISHTI
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36 views

Individual Assignment

The document describes a portfolio designed by Srishti for her MBA class consisting of 17 stocks across various sectors with a corpus of 1 crore rupees. It then asks a series of behavioral finance questions about the portfolio and potential reactions to changes in stock performance or market conditions. The questions probe the emotional and psychological factors that may influence investment decisions.

Uploaded by

SRISHTI
Copyright
© © All Rights Reserved
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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Name Srishti

Class MBA-FS (2020-2022)


Roll no 17030420059
Subject Behavioural Finance
Traditional and Behavioural Portfolio
Sl No Name of Stock Sector
1 Indo Count Industries Fabric Mill Industry Capacity Expansion in future, Analysts Recommendatio
2 ICICI Bank Banking Relatively lower valuations, Reducing NPA, Increasing p
3 SBI Life Insurance Insurance Potential in the insurance sector, analyst recommenda
4 IRCTC Monopoly in the sector
Building a strong omni channel pharmacy business, exp
5 Apollo Hospitals Healthcare execpected to see compounding growth.
6 ITC FMCG Relatively inelastic demand for FMCG products, Marke
7 HUL FMCG Relatively inelastic demand for FMCG products, Leader
8 Nestle FMCG Relatively inelastic demand for FMCG products
9 Larsen and Tourbo Capital Goods Improvement in margins, cheaper valuations, analyst r
10 CCL Products India Tea/Coffee Strong performance and fundamentals, regular dividen
11 Dabur FMCG Relatively inelastic demand for FMCG products, strong
12 HDFC Bank Banking One of the leaders in Private Banking sector
13 State Bank of India Banking Leader in Public Banks, personal discretion
14 Tata Steel Metals Leader in Metal sector
15 ONGC Oil and Gas Leader in the sector
16 Bharti Airtel Telecom Improving ROCE, increasing revenue
17 Infosys IT Strong performance and potential of IT sector, one of t
itional and Behavioural Portfolio
Rationale
n future, Analysts Recommendation
ations, Reducing NPA, Increasing profit margin and ROA
rance sector, analyst recommendation
tor
ni channel pharmacy business, expectations of increasing market share in the sector, revenue and profit are
ompounding growth.
emand for FMCG products, Market leader for cigarettes in India, Low debts
emand for FMCG products, Leader in FMCG sector, growth in profit and profit margin
emand for FMCG products
gins, cheaper valuations, analyst recommendation
and fundamentals, regular dividends
emand for FMCG products, strong fundamentals
n Private Banking sector
ks, personal discretion
or

reasing revenue
and potential of IT sector, one of the Big 4 IT firms in India
Design a portfolio of minimum 15 stocks with a corpus of 1 crore. Justify the reasons of selection of the stocks based
1. Traditional finance method (ideal portfolio)
2. Behavioural finance method (optimum portfolio)

After reviewing your portfolio, justify which stocks in your portfolio you will be selling in loss or booking profits in va
to the behavioural finance portfolio answer:

1. For the above designed portfolio in selecting the stocks any sort of emotions or psychological preferences was con
Ans: Yes. The stocks are selected based on the fundamentals, popularity, recommendations and personal preferences.

2. Suppose you get a new information with respect to the stocks you hold in the portfolio either or a positive or nega
Ans: I will not react immediately rather I would wait and understand the significance of the news before taking any deci

3. Have you selected the stock on the basis of looking at the price action that is 52-week high/low.
Ans: No
4. Have you selected the stock on the basis of first impression or notion which you initially have about the stock? Exp
Ans: I might get attracted to a stock on the basis of the first impression it would create on me but wouldn't invest only b

5. Suppose your stock goes up in next few trading sessions do you feel you should liquidate your position. State the r
Ans: Based on the market conditions if there is a significant increase i would like to book profits by liquidating the stock

6. Have you bought the stock in your portfolio because a well known investor has bought the stock recently.
Ans: Yes

7. How frequently will you churn your portfolio? Do you give more weightage to latest price moves? Based on that do
Ans: I prefer to review my portfolio every 1-2 months and gauge the market conditions. I would make changes to my po

8. Do you have a tendency to hold on to a losing stock for too long and winning for too soon?
Ans: I might wait long to sell a losing stock.

9. Do you have few stocks in your mind which you will select only if it comes to a particular price level? Why so?
Ans: This tendency would be helpful while trading for short term. Unless I am investing for short term I would not wait

10. What will you do if you get dividends from a stock? Will you spend?
Ans: I will prefer reinvesting it most of the times.

11. Suppose a bear market starts, what will you do with your existing portfolio?
Ans: I will avoid being impulsive and will conduct market research thoroughly to predict the future market conditions be
for defensive and less riskier investment options.

12. In your portfolio you claim to be a long term investor(buy/hold) but you trade often on impulse in the same stock
Ans: I try being patient and avoid being impulsive while making any trading decisions.

13. Do you select the stocks from one sector which is doing well as of now and buy all the stocks from that sector in y
Ans: Yes, definitely. I would invest in a stock from a sector which is outperforming but in order to reduce the unsystema
well.
14. Assume that you have got a negative alpha of your portfolio. Give the reasons why did you fail.
Ans: A negative alpha could be because of the underperformance of the portfolio. There could be several reasons reaso
out research before making investment, underdiversification, etc.
15. Have you selected the stock in your portfolio by listening to the media recently and how was the impact of the sa
Ans: I might consider stocks that are suggested by media.
selection of the stocks based on :

n loss or booking profits in various stocks or any other strategy you will adopt to revise your portfolio.With respect

hological preferences was considered? Highlight the same.


ns and personal preferences.

io either or a positive or negative news, how will you react/reset your stock? (Hold on/exit/average)
he news before taking any decision.

k high/low.

ally have about the stock? Explain the reason for the same.
me but wouldn't invest only because of this reason. I would carry out proper research before making an investment.

date your position. State the reasons for the same.


profits by liquidating the stock.

ht the stock recently.

price moves? Based on that do you decide to make your opinion about the stock?
would make changes to my portfolio as and when required.

soon?

ular price level? Why so?


r short term I would not wait for a stock to hit a certain price level as prices are relative.

he future market conditions before making any changes to my portfolio. I would try cutting down my losses, would go

on impulse in the same stock.

he stocks from that sector in your portfolio?


order to reduce the unsystematic risk I would invest in other sectors as well which are consistent and are performing

did you fail.


could be several reasons reasons for the same like underperformance of the market, being negligent while carrying

how was the impact of the same stock in your portfolio going forward?
respect

estment.

would go

orming

rrying

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