Volume : 3, Issue : 4, April - 2014

A Study on Practical Evaluation of Portfolio Creation Using Nifty

K. S. Nemavathi, Dr. V. R Nedunchezhian

Abstract :

The main purpose of this paper is to construct an optimal portfolio by using Sharpe\'s single-index model. For this purpose the monthly closing prices of 164 companies listed in Dhaka Stock Exchange (S&P CNX NIFTY) and S&P CNX NIFTY all share price index for the period of July 2007 to June 2012 have been considered. The proposed method formulates a unique cut off point (Cut off rate of return), selects stocks having excess return to beta ratio surpassing this cut off point, and determines the percentage of investment in each of selected stocks. The optimum portfolio consists of ten stocks selected out of 50 stocks, giving the moderate return. The findings of this paper will be useful for policy makers, all kinds of investors, corporations and other financial market- participants.