Optimum portfolio construction using markowitz model

Noted economist Harry Markowitz established the underpinnings for Modern Portfolio Theory-a framework for selection and construction of investment portfolios based on the maximization of expected portfolio returns and simultaneous minimization of investment risk. This paper presents a simplified approach of Markowitz's contribution to portfolio construction using closing prices of 15 chosen stocks of Nifty over a period of one year i.e. from 1st January 2015 to 31 December 2015. A total of 248 data points for each of the 15 stocks have been used in the computation of portfolio's return and risk using excel and solver function. Stocks were randomly chosen on the basis of positive excess daily return over yield on 91-daysTreasury bill to beta ratio. Result show that the optimum portfolio (objective was to minimise risk at a given level of risk) consists of five stocks.