AN EVALUATION OF INDIAN STOCK MARKET PERFORMANCE – A CAPITAL ASSET PRICING METHOD APPROACH
Keywords:
CAPM, Annualized Return, Beta, Required ReturnAbstract
The current study proposed to examine the validity of the capital asset pricing model in the Indian stock market with a special reference to National Stock Exchange (NSE, Nifty stocks). The article also clearly explains the objectives of the study and find the association between stock beta and required return. Furthermore, the study also found the overvalued and undervalued stocks and suggested buy or sell decisions to the investor. An analytical method was used in this study to evaluate the stock performance. The data was collected during the pandemic period from September 2021 to September 2022. There are 38 stocks identified from Nifty 50, and the collected data have been analyzed to find the annualized return, and excess return to beta ratio. The present study used treasury bill rate as the risk-free rate of return to find the excess return to beta. The results are filled in the CAPM equation to identify the overvalued and undervalued stock. There are 23 stocks identified as undervalued, and 15 stocks are overvalued. As per the theoretical concepts, the undervalued stock are the potential stocks for an investment.
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Copyright (c) 2023 Praveen Kumar, Indu Unnikrishnan , A.Ananth (Author)
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
