Impact of Sectoral Indices’ Fluctuation on SENSEX.

Abstract

In the last few years performances of Indian exchanges are satisfactory. Last 5-6 years witnessed a massive growth in SENSEX and NIFTY. But a growth in stock indices may not provide profit to the investors unless and until they read it much before. Nobody knows when the Black swan kind of situation comes. In this backdrop, an attempt is made to analyze the correlation among all the sectors of BSE and performances of all these sectors, which may help the investors and portfolio managers to construct the portfolio by selecting the right kind of sectors. This analysis is going to exhibit risk (standard deviation and Beta) associated with all sectors and the correlation among them. Objective of the study: The main objective of the study is to find the performance of the indices and correlation among them, so that it will be an aid to the investors for selecting appropriate sectors to be involved in a particular portfolio. Research Methodology: The data collected for the analysis is from secondary sources. Kumar D. B., Sophia S,and Jucunda E. M. Suggested that there is a significant relationship of stock market with lok sabha election and from the last five years after formation of new Govt. in India, the indices like NIFTY and SENSEX are in an upward trend. So data collected for last five years. Sharpe and and Treynor ratio are used to calculate the performance of all the sectors. To get the correlation among the indices Pearson’s correlation is used. Findings: Most of the existing researches explained the relationship among different indices by selecting some of the indices. So this study got the fuel to involve the most active 7 indices to correlate with the oldest index of Asia. Pearson’s Correlation is one of the most trusted tool used by current researchers. Limitations of the Study: The data used in this study is of five years and to get the correlation Pearson correlation is used