Abstract
Purpose: Indian stock markets are channelizing financial resources for the economic progress of the country. The Indian Financial Services sector is the subset of the stock market which is playing a key role in stock trading. The Indian Financial Services industry is multifaceted and is growing rapidly both in terms of the robust growth of existing firms and the entry of new players playing a stellar role. This surge in growth of the Financial Services sector led many investors to divert their investment towards the financial services segment. To construct an attractive portfolio, the individual investor should perform a risk-return analysis well in advance. This will assist the investor in determining the risk-return relationship in various securities. Given this background, the study is undertaken to evaluate the risk-return patterns of the Indian Financial Services sector securities. Design/Methodology/Approach: The risk and return of sample group of companies belonging to the Indian Financial Services sector are analyzed to arrive at a monthly return by taking the monthly closing price of five financial investment companies belonging to the Standard & Poor’s BSE Finance Index for the period January 2020 to July 2021. To achieve the objectives various statistical tools such as descriptive statistics, correlation, and Beta are adopted. Also, a paired t-test is performed to check the validity of the hypothesis. Findings: The study has brought to light that India Infoline Finance Ltd (IIFL Finance) has provided the highest monthly returns with a high beta value. Further, the tested hypothesis reveals that there exists a significant difference in the monthly returns of the S&P BSE Finance Index and JSW Holdings. Originality/value: The study emphasizes the risk-return analysis of selected stocks of the Indian Financial Services sector. Potential investors will benefit from this equity analysis because it will enable them to make more intelligent and accurate investment decisions. Paper Type: A case study of the Indian Financial Services Industry
Highlights
The Indian capital market has captivated the attention of both domestic and international investors and is recognized as one of the most dynamic markets in the world
This study has primarily evaluated the risk and return of selected financial services companies listed on the S&P Bombay Stock Exchange (BSE) Finance Index
A paired t-test is performed to assess the relationship between the monthly return of the S&P BSE Finance Index and the sample group of companies
Summary
The Indian capital market has captivated the attention of both domestic and international investors and is recognized as one of the most dynamic markets in the world. Being an entity, it provides a platform for the various financial instruments to trade. Indian financial sector consists of the institutions such as Commercial Banks, Insurance Companies, Non-banking Financial Institutions, Cooperatives, Pension Funds, Mutual Funds, and other smaller financial institutions of different shades and colors. These financial intermediaries offer a diverse range of services and these services are regarded as financial services (Goyal, 2015) [1]. There are several types of risks, but the two major forms of risks in the investment are systematic and unsystematic risks (Sharma & Bodla, 2012) [3]
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