COMPARISON OF PERFORMANCE OF STOCK RETURNS IN THE INDIAN STOCK MARKET USING CAPM

Capital Asset Pricing Model is developed by William Sharpe and John Lintner after understanding the various drawbacks in the Modern Portfolio Theory. Generally, investors do not consider the fundamentals and the strategies while investing and hence do not get the expected returns. The purpose of this study is to provide the judgements about the stock returns by comparing the performance of the stocks in the Indian stock market by applying the CAPM model. The study covered monthly data of Indian companies for 5 year period from 2017 to 2022. The year 2022 was not considered as it was abnormal and outlier year. Jensen’s Alpha was used to identify the best stocks. Actual and expected returns were compared to judge the securities and accordingly make the investment decisions. The study found that both the models gives similar results for the sampled stocks except for one. On the whole, the CAPM model could satisfactorily explain the risk-return relationship in the Indian Stock market