Assistant Professor in Jagannath Institute of Management Studies, Ph. D from Jagannath University, M. Com from Delhi University and MBA from Delhi University, India
Online published on 31 October, 2017.
Capital Asset Pricing Model (CAPM) is one of the widely used measures of calculating the expected stock return. Investors in National Stock Exchange (NSE)also use it extensively. This study aims to find the applicability of CAPM in NSE and to establish risk and return relationship for individual securities. In this paper it is also tried to find whether the individual securities are overvalued or undervalued using CAPM so as to help the investors to take their buy and sell decision. Closingprices of top 10 different companies on the basis of their market capitalization from 2012 to 2016 have been considered. Thebasic model developed by William Sharpe (1964) and other authors in different times issued to serve the purpose. The research finds no applicability of CAPM in NSE as thedifference between expectations and the actual results is very high at normal risk level.
CAPM, Market Capitalization, NSE
