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Monte Carlo Simulation

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“MONTE CARLO SIMULATION OF VARIOUS EQUITY PORTFOLIOS AND ESTIMATION OF THE FUTURE VALUE OF THE INVESTMENT”

Abstract
In this paper the Monte Carlo simulation has been used to assess probable future value of an investment in equity portfolios. Three different equity portfolios have been considered in this paper, portfolio from IT industry consisting of equity from Infosys Ltd, Wipro Ltd, MphasiS Ltd, HCL Technologies Ltd and Cyient Ltd; portfolio from FMCG industry consisting of equity from Hindustan Unilever Ltd, Procter and Gamble Ltd, Marico Ltd, Nestle India Ltd and ITC and the Last portfolio from automobile sector consisting of equity from Maruti Suzuki India Ltd, Hero MotoCorp Ltd, Bajaj Auto India Ltd, Mahindra and Mahindra Ltd and Tata Motors Ltd.
Keywords: Monte Carlo Simulation, Future Value, Portfolio
I. Introduction
Return on an investment is a possibility and not a certainty, the first criteria
…show more content…
Review of Literature

III. Research Design
Scope of Study: We have considered three equity portfolios from three different growing industries to run the simulation-
IT Industry Portfolio FMCG Industry Portfolio Automobile Industry Portfolio Infosys Ltd Hindustan Unilever Ltd Maruti Suzuki India Wipro Ltd Procter and Gamble Hero Motor Corp HCL Technologies Ltd Marico Ltd Bajaj Auto India MphasiS Nestle India Mahindra and Mahindra Cyient ITC Tata Motors

The target investors are youth aged between 22-25 years with a low investment capability of a lump sum Rs.1 Lakh with a monthly cash flow of Rs.100 for a lock in period of 10 years
Statement of Problem: Making an investment decision is always difficult. There is always an uncertainty in the possible return or future value of an investment which makes investment decision difficult. Thus in this paper by using the Monte Carlo simulation we are trying to estimate a range of possible returns from portfolios to conclude as to which investment provides the best returns on the same value of

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