RISK AND RETURN ANALYSIS OF BSE SMALL, MEDIUM & LARGE CAPITALIZATION INDICES

Abstract

In the current economic scenario interest rates are falling and fluctuation in the share market has put investors in confusion. One finds it difficulties to take decision on investment. This is primarily, because of investment are risky in nature and investors have to consider various factors before investing in investment avenues. These factors include risk, return, volatility of shares and liquidity. The main objective of our research is risk and returns analysis of different indices of BSE(S&P) like large cap, midcap, and small cap and also to evaluation of best indices/stock for investment. In our research we have taken historical data for last four year for finding out Risk & Return on monthly basis by comparing large cap to mid cap, large cap to Small cap and Midcap to Small cap Most of the risk-averse investors allocate money in large cap funds to avoid huge volatility and uncertainty. This large cap stocks carries low risk as well as low return and compared to mid and small cap stocks. While the small and mid cap companies are highly volatile and risky but have potential for higher returns if invested in fundamentally good company.