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A Study on Usage of Sharpe’s Single Index Model In Portfolio Construction With Reference To Cnx Nifty

A Study on Usage of Sharpe’s Single Index Model In Portfolio Construction With Reference To Cnx Nifty

Ms Apurva A Chauhan

Journal Title:GLOBAL JOURNAL FOR RESEARCH ANALYSIS
Abstract


Portfolio management is the crucial decision for any investor. It is important to decide where to invest and how much to invest. The present study focuses on constructing the optimal portfolio with the help of Sharpe Single Index model. Sharpe Single index model uses various inputs such as excess return to beta ratio, unsystematic risk, market return and variance etc to construct the optimal portfolio. In present study, portfolio is constructed from stocks of CNX nifty. Data is collected from top ten companies of CNX nifty based on their weights for the time period of August 2014. Out of 10 stocks, 4 stocks are selected for investing namely State Bank of India, Tata Motors Ltd, Housing Development Finance Corporation Ltd, Reliance Industries Ltd. Sharpe model suggest investors to invest major portion of their money (54.14%) in State Bank of India.

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