Group members

Sectoral and Stock Allocation Logic:
We have discussed our stock and sector allocation logic in more detail in the excel model
Based on the sectoral importance, we allocated sector weights based on future outlook and Markowitz Optimization model results.

Sector	Weights	Amount
IT	20.00%	0.60
FMCG	20.00%	0.60
Automobile	4.00%	0.12
Paint	20.00%	0.60
BFSI	4.00%	0.12
Pharma	4.00%	0.12
Chemicals	4.00%	0.12
Oil	4.00%	0.12
Plastics	4.00%	0.12
Manufacturing	4.00%	0.12
Real_Estate	8.00%	0.24
Infrastructure	4.00%	0.12

We ran the Markowitz Optimization Model to allocate our equity portfolio to following stocks with weights ranging from 0.25% to 10%

Share	Weights	Amount(In Cr)
INFOSYS	0.25%	0.01
HUL	9.75%	0.29
HCL TECH	0.25%	0.01
H D F C	0.25%	0.01
BAJAJ AUTO	4.00%	0.12
TECH M	0.25%	0.01
BERGER PAINTS	10.00%	0.30
ICICI LOMBARD	0.25%	0.01
MINDTREE	0.25%	0.01
Bajaj Finserv	3.25%	0.10
ALKEM LAB	0.25%	0.01
AARTI IND	0.25%	0.01
OIL INDIA	3.50%	0.10
BAYER CROP	0.25%	0.01
SUPREME IND	4.00%	0.12
COFORGE	8.75%	0.26
AJANTA PHARMA	0.25%	0.01
DCM SHRIRAM	0.25%	0.01
GUJ. ST. PETRONET	0.25%	0.01
MOTILAL OSWAL FIN SERVICES	0.25%	0.01
KEI INDUSTRIES	3.25%	0.10
BALAJI AMINES	3.75%	0.11
ERIS LIFESCIENCES	0.25%	0.01
FINOLEX PIPES	0.25%	0.01
AEGIS LOGISTICS	0.25%	0.01
WELLSPUN INDIA	0.25%	0.01
SONATA SOFTWARE	0.25%	0.01
GRANULES INDIA	2.75%	0.08
KAMA HOLDINGS	7.75%	0.23
KNR CONSTRUCTIONS	0.25%	0.01
ITC	0.25%	0.01
MASTEK	10.00%	0.30
PNC INFRATECH	3.75%	0.11
SHARDA CROP	0.25%	0.01
CAPLIN POINTLAB	0.25%	0.01
Nestle	10.00%	0.30
Asian Paints	9.75%	0.29
Kansai Nerolac	0.25%	0.01

Based on data, we expect the following performance from our portfolio:

Expected Portfolio Return	30.50%
Expected Portfolio Risk (Variance)	5.12%
Portfolio Std Deviation	22.62%
Portfolio Weighted Avg Beta	1.0217
Risk Free Rate	6.00%
Sharpe Ratio	1.083

Debt Securities (30%)

Our investor is a risk neutral investor who wants to have sufficient corpus after he retires. Bonds although are not as attractive as equity asset class when it comes to upside potential, but they do have very limited downside exposure as compared to equity. The credit risk associated with the issuer can also be mitigated to some extent by choosing to invest in sovereign rated securities. Hence, we have decided to invest 30% of the total capital in debt securities.

Market overview:
The market has been quite unstable since the inception of Russia-Ukraine war coupled with rising red-hot inflation. In April as a surprise move RBI turned their dovish stance by hiking the policy rate by 40 bps and then again in June by 50 bps. Increasing interest rates have opposite effect on bond prices making them cheaper.

Portfolio

2^nd rate hike

1^st rate hike

bps	NAV	Yield
150	93.1166875	9.363875
100	95.411125	8.863875
50	97.7055625	8.363875
0	100	7.863875
-50	102.294438	7.363875
-100	104.588875	6.863875
-150	106.883313	6.363875

We have taken a healthy mix of all AAA rated bonds ranging from 2 years to maturity to 14 years to maturity which takes care of any liquidity risk that our investor might face if need arises. The PSU bonds offer slightly premium coupon compared to G-secs and we can benefit from the slightly higher coupon rate. The government securities have already factored in higher inflation expectations and are trading at higher YTM, the longer dated securities might see price appreciation as the inflation woes ease up. Adani bond (ESG issuance) will benefit from price appreciation because of pull to par phenomenon of the bond which is trading at 96 clean and is closer to its maturity. We have also invested in approximately 754 gms of SGBs which offer a natural hedge against the movement in Equity and Bond market.

( - Represents a green issuance)


Corporate Bonds (Domestic)

ISIN	Issuer	Rating (CRISIL)	Tenor (Yrs)	Maturity	Coupon (%)	Face	Clean Price	Dirty Price	YTM (%)	Amount (₹ Lakh)
INE733E07JP6	NTPC	AAA	10	25/03/25	8.49	12.5	13.13	13.57	6.584	30
INE733E07JW2	NTPC	AAA	20	05/10/35	7.62	1000	1255.9	1281.30	4.910	15
INE053F07835	IRFC	AAA	15	21/12/30	7.53	1000	1180	1182.72	4.771	20

G-Secs

ISIN	Issuer	Rating (CRISIL)	Tenor (Yrs)	Maturity	Coupon (%)	Face	Clean Price	Dirty Price	YTM (%)	Amount (₹ Lakh)
IN0020210244	Gov	AAA	10	17/01/32	6.54	100	95	95.545	7.261	15
IN0020220029	Gov	AAA	14	25/05/36	7.54	100	100.02	100.64	7.538	5

SGB

ISIN		Issuer	Rating (CRISIL)	Tenor (Yrs)	Maturity	Coupon (%)	Face	Clean Price	Dirty Price	YTM (%)	Amount (₹ Lakh)
	IN0020210053	Gov	AAA	8	21/05/29	2.5	4777	4724.5	4737.43	2.676	40

Corporate Bonds (Offshore)

ISIN	Issuer	Rating (CRISIL)	Tenor (Yrs)	Maturity	Coupon (%)	Face ($)	Clean Price ($)	Dirty Price ($)	YTM (%)	Amount (₹ Lakh)
XS1854172043	Adani Green (ESG	AAA	5	30/05/24	6.25	100	96	96.52	8.509	35

Money Market Securities (10%)

Money market securities offer liquidity to the portfolio in case of exigencies of our investor. As this security is to protect the urgent needs of our investor, we have decided to put 10% of our allocated capital in money market securities. Most commercial papers and certificate of deposits have higher face values at which they are issued we decided to not invest in them. Instead, we decided to invest in 6 month and 1 year T-bills.

ISIN	Security Description	Tenor (Days)	Maturity	LTP (₹)	LTY (%)	Amount (₹ Lakh)
IN002021Y510	182 DTB 01092022	182	01/09/22	99.1387	4.955	10
IN002021Y544	182 DTB 22092022	182	22/09/22	98.8263	5.1	10
IN002022Z127	364 DTB 22062023	364	22/06/23	94.2414	6.23	30

Derivatives (0.15%)

Adani Green Bond is listed in SGX and the semi-annual coupon payments will be in dollars, to protect the capital of our investor from exchange rate fluctuations we have taken position is USD/INR futures. The contract will expire on last Thursday of coupon payment month and the contract must be renewed for the next coupon payment.

Security	Lot Size	Value of futures	Coupon Payment ($)	Invested Amount (₹)	No of lots required	Amount (₹)
USDINR Nov FUT	50	79.86	6.25	2500000	20	78125

References:

• 
  BSE and NSE India
  
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  Screener
  
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  Crisil Research
  
• 
  Yahoo Finance
  
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  RBI
  
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  Money Control
  
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  Trendlyne