Analysis Specific IT Stocks through the CAPM Model

Abstract

In India, stocks are mainly traded on two important stock exchanges: the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). Most major companies in India are listed on both exchanges, offering various securities like equity shares, preference shares, debentures, warrants, bonds, and mutual funds. Investors use these platforms to buy and sell shares, aiming to earn extra income. Every investment involves two crucial elements: return and risk. Since there’s no completely risk free investment, a certain level of risk is investible. Smart investors seek the highest return with minimal risk. This paper analyzes the risk and return of selected stocks in the Indian IT sector using the Capital Asset Pricing Model (CAPM). The CAPM model is employed to forecast stock price movements, providing valuable suggestions for IT sector investors on whether to buy or sell securities at the current time based on the analysis.