OPTIMUM PORTFOLIO CONSTRACTION AND EVALUATION

Abstract

The aim of this project is to construct effective portfolio for the large cap companies. This study enables to know the performance of Sensex thirty securities having larger market capitalization. The analysis given in this project is on the basis of risk & return using Sharpe index model. For portfolio selection this analysis suggests that stock having higher values of excess return to beta ratio be selected. For this the profile of companies included in BSE Sensex is presented. The stock price data being the average of opening and closing of the working day is selected and beta values of the companies for the past seven years collected for analysis. Risk free rate of return was return a government bonds, treasury bills were obtained. All the values obtained are interpreted and analyzed using Sharpe’s single index model. After constructing the portfolio the returns of selected portfolio is compared with the market portfolio so as to evaluate its performance.