Risk–Return Analysis of Selected Equity Stocks Listed in

Bombay Stock Exchange Using Capital Asset Pricing

Model

V Bheemeswara Reddy 1 & Harish. N2

1&2Associate Professor, Dept. of MBA

The Oxford College of Engineering, Bangalore- 560068.

Abstract. Investment in Stocks is considered the best alternative to earn higher

returns in form of dividends and capital appreciation. Two important ways to
investment in Stocks viz., Risk and Return. Indeed, each return on investment is
influenced by varying levels of risk. Investors consider Stocks which offer higher
returns at comparatively low risk levels. These stocks may be underpriced in the
market whereas stocks with less returns at higher risk level may be overpriced
and such stocks are eschewed by the investors. A wise investment decision re-
quires proper measurement of both returns and risk. Risks are of two types viz.,
systematic and unsystematic risks. Unsystematic risk can be eliminated by effi-
cient diversification of investment where systematic also called as market risk
cannot be removed through diversification. So, the investment decision should
be based on comparison of returns with systematic risk. CAPM helps the inves-
tors in identifying stocks best suited for their investment by measuring actual
returns, expected returns and Systematic risk. This study makes an endeavour to
employ the Capital Asset Pricing Model (CAPM) on a portfolio of 30 stocks
listed on the Bombay Stock Exchange, with the aim of identifying stocks that
might be undervalued or overvalued. When stocks offer returns additional than
expected, they are underpriced otherwise they are overpriced or fairly priced.
Underpriced stocks are seemly for long period investment as they offer high re-
turns in the long period. The study found that 15 out of 30 Stocks are considered
underpriced and potentially suitable for long-term investment viz., Axis Bank
Ltd., Bajaj Auto Ltd., Bajaj Finance Ltd., Hindustan Unilever Ltd., Housing De-
velopment Finance Corporation Ltd., Infosys Ltd., Kotak Mahindra Bank Ltd.,
Reliance Industries Ltd., Tata Consultancy Services., Tata Steel Ltd., Vedanta
Ltd., Yes Bank Ltd., HDFC Bank Ltd., IndusInd Bank Ltd., Maruti Suzuki India
Ltd.

Keywords: Bombay Stock Exchange, CAPM, Equity Stocks, Systematic risk,

Unsystematic risk, overpriced, underpriced.

© The Author(s) 2024

M. Rani Nimmagadda et al. (eds.), Proceedings of the 3rd International Conference on Reinventing Business
Practices, Start-ups and Sustainability (ICRBSS 2023), Advances in Economics, Business and Management
Research 277,
https://doi.org/10.2991/978-94-6463-374-0_33
376 V. Reddy and N. Harish

1 Introduction

Investors perceive the projected return on investment as the more probable outcome
based on presently accessible information. Historically, the returns on equity shares
have significantly surpassed those on debentures and corporate bonds. Nevertheless,
equity share investments exhibit greater volatility compared to returns on debt instru-
ments. Despite the elevated risk involved, equity shares investment offers the potential
for higher returns. Therefore, it is sensible to consider such investments to earn sub-
stantial returns while mitigating associated risks [11].
In the current competitive and globalized business landscape, every investment car-
ries inherent risk. Financial markets are not devoid of imperfections, leading to out-
comes that may deviate from initial expectations. In modern-day financial management,
the notion of risk management assumes significant significance when making invest-
ment decisions. The primary objective of financial investing is to achieve the utmost
profitability or return on investment. Investing involves risk, leading to the possibility
of profit or loss. The primary objective of investing is to maximize profits while mini-
mizing risks. This necessitates careful evaluation, diversification, understanding one's
risk tolerance, and adaptability to changing market conditions. The focus is on achiev-
ing long-term growth while effectively managing associated risks [19].
Prior to committing their wealth to an investment, it is crucial for any investor to
examine the associated risks. Risk is a distinct factor that pertains to the likelihood of
the actual result of an investment varying from its expected returns. Risk originates
from multiple sources, with the three primary ones being business risk, interest rate
risk, and market risk [2].

1.1 Capital Asset Pricing Model (CAPM):

Three researchers—William Sharpe, John Lintner, and Jan Mossin—are responsible

for the creation of the CAPM in the middle of the 1960s. Thus, the Sharpe-Lintner-
Mossin CAPM is the name given to the model. It is possible to think of the CAPM, as
an expansion of Markowitz's portfolio theory. The application of portfolio theory can
help individual investors build effective portfolios and make wise decisions. The
CAPM, which makes the assumption that every investor would act in accordance with
the rules of portfolio theory, provides a association between the expected return & risk
of specific securities and portfolios in the capital markets.
The link amongst risk and return is established by the CAPM, which is characterised
by a security market line. In essence, this relationship is a simple linear link. Investors
anticipate bigger returns because a higher beta value signals a security's higher risk. In
other words, every investments are anticipated to provide returns that are inversely cor-
related to their amount of risk as determined by. Regardless of how efficient or ineffi-
cient they are, this link holds for both individual securities and portfolios.
The expected earnings on any security/any portfolio be able to originate by the
CAPM formula as given below:
The expected earning of individual security is Ri =Rf + β[Rm – Rf]
The expected earning of the portfolio is Rp =Rf+ βp[Rm – Rf]
 Risk–Return Analysis of Selected Equity Stocks Listed 377

Where, Ri = security return

β = systematic risk
Rf = risk free return
Rm= market return

1.2 Pricing of Securities with CAPM

In fact, it is possible to assess the cost of securities by with the CAPM. It affords a
method for determining whether a security is fairly priced, overpriced, or neither. In-
vestors will find a security more alluring if it is predicted to offer additional returns
than the expected return. In contrast, a security loses appeal if its yields are less than
those anticipated. Investors can assess the appeal and potential worth of various invest-
ment options by comparing the expected returns with the estimated cost of securities
using the CAPM.
Assumptions of CAPM model:

• Investors base their investment decisions on risk-return analysis that take into ac-
count expected returns and return standard deviation.
• A security may be bought or sold in units that are infinitely divisible.
• An investor does not impact purchase and sales prices. Which means that there is
definite competition amount of investors in their actions.
• No transaction costs. Although transaction costs are very small, there are possibly
of very less importance in investment decision making, so they are ignored.
• No personal income taxes. Alternative tax rates on dividend income and capital
gains are the same, thus making the investor different from the return on investment
(dividends or capital gains).
• Investor can lend or borrow any amount of funds expected at a rate of interest equal
to the rate for riskless securities.
• Investor may sell short any kind of any shares.
• Investors share homogeneity of expectations. Similar assumptions are made by in-
vestors with the same decision period and decision inputs. Investors are presumed to
have the same holding periods as well as the similar expectations for expected re-
turns, expected return variances, and covariances across all security pairs.

2 Review of Literature

[20] examined the risk-return characteristics of the stocks was the goal to study the
performance analysis of BSE-SENSEX equities using SML approach. The SML model
was also used in the study to determine if the stocks were overpriced or underpriced.
The researchers wanted to determine if the stock prices accurately reflected their risk-
return profiles by using the SML model. [13] argued that a crucial area of the research
in realm of finance is the influence of annual performance on the fluctuation in share
price. The object of this study was to conclude whether businesses from various indus-
378 V. Reddy and N. Harish

tries could generate value for their shareholders. Economic Value Added (EVA), a per-
formance analysis metric based on CAPM model, was applied to subset of equities in
the banking, information technology, and automobile industries in this study. This
method was used in this study to determine whether these sector companies were ef-
fective at creating value for their shareholders. [8] emphasized the difficulties investors
experience in making wise judgments as a outcome of the extreme volatility seen in
financial markets. By applying the CAPM model, it seeks to clarify the complexities of
risk and return while investing in businesses from various industries represented by the
BSE-SENSEX. Six businesses from the automotive, metal, consumer goods, IT, phar-
maceutical, and financial industries were selected for the study in order to examine their
risk-return profiles. The results show that, compared to equities from other sectors,
TATA Motors, HDFC, and Coal India saw lower stock returns because of higher levels
of volatility and systematic risk. [17] compared the returns and risk using both the Mar-
kowitz model and Sharpe's Single Index Model. The study goals to determine the level
of deviance in returns when comparing these two models. By utilizing the measurement
of beta, which quantifies the systematic risk connected with a specific investment, the
study gives reliable information for all investors. The study focuses on stocks listed in
the S&P BSE SENSEX and concludes that, there is no significant deviation in returns
between the two models.
[14] contended that risk and return analysis is a crucial element in the investment
decision-making process. The primary objective of this study is to analyze the risk and
return profiles of certain stocks from the FMCG, healthcare, banking & finance, tele-
com, and energy sectors. The risk-return relationship is examined throughout the article
using metrics such as the mean and standard deviation. The projected return of stocks
is calculated using the CAPM. The study's outcome show that Alphageo India Ltd.,
Dwarikesh Sugar Industries Ltd., Strides Shasun Ltd., ITI Ltd., and IndusInd Bank Ltd.
all have high predicted returns. According to excess returns to beta value, the top five
companies are Britannia Industries Ltd., Lupin Ltd., ICICI Bank Ltd., Reliance Com-
munications Ltd., and Aban Offshore Ltd. [7] purported that Individuals use risk-return
analysis extensively while making decisions. According to this study, who examines
the relationship between risk and return, investors should be prepared to take on more
risk if they want to earn higher returns. It reveals that low-risk investments tend to offer
lower returns, while high-risk investments have the potential for higher returns. In par-
ticular, the study finds that the banking and automobile sectors exhibit high risk and
low returns, whereas the fast-moving consumer goods and pharmaceutical sectors offer
higher returns with lower risk.
[5] delves into the examination of the risk-return association within the construction
of CAPM in the Dhaka Stock Exchange (DSE) market. The primary motive of this
research was to explore the applicability of the CAPM in the DSE context. Through
conducting an empirical analysis of individual stocks, it was discovered that the inter-
cept of the CAPM significantly deviates from zero, and the slope of the CAPM is not
equivalent to the market portfolio. As a outcome, the results of this paper conclude that
the CAPM is not a flawless tool for assessing Bangladesh stocks during the examined
period.
 Risk–Return Analysis of Selected Equity Stocks Listed 379

[10] looked at the risk and return correlations between the banking sectors of the
Sensex and the BSE. For the aim of this research, the risk-return trade-off with the
Sensex was computed using the banks ICICI, HDFC, Axis, and SBI. In the study, only
the secondary data were thought to be significant. This study sought to ascertain
whether there was a risk reward trade-off in Indian equity markets. [6] focused on uti-
lizing the CAPM to estimate the cost of capital for projects while making capital budg-
eting decisions. According to this study, CAPM fails to meet investors' expectations
because stock returns were lower than anticipated. Therefore, using CAPM betas and
project returns, our goal is to develop a novel technique for calculating their projected
return. Conferring to the study's findings, CAPM provided information on the risk pre-
mium on primitive goods.
[1] argued that understanding volatility in the stock market in Asia and establishing
whether there is a relationship between volatility and stock returns is the significance
of this study. When examining the KSE 100, BSE Sensex, Hong Kong, and Shanghai
Stock Exchanges, KOSPI shares are taken into consideration. They found that during
past stock markets, stocks had larger correlations and more volatility. The study's out-
comes show that KOSPI (Seoul, South Africa) has the best average annual return
(12.67%), followed by the BSE (11.62%), KSE (9.35%), and KSE 100 (2.88). The most
volatile country is Hong Kong (3.09). [3] focused on evaluating and contrasting the
risk-return characteristics of the chosen FMCG stocks. The study's goal is to encourage
investors to buy particular companies that are related with the FMCG industries. They
discovered that while HUL, Dabur India, and Tata Global had low average returns, ITC
Ltd., Nestle, and Colgate Palm had strong average returns. Conferring to the study's
findings, investors pick long-term investments and invest in equities with strong aver-
age returns.
[15] studied the relationship between equity-based mutual funds' risk and return.
This essay's goal was to analyze equity-based mutual funds' performance. Using the
CAPM, an overall analysis of all equity-based mutual funds was conducted. According
to their data, UTI and Kotak are among the best performing corporations, whereas SBI
is the poorest performing bank. [16] analysed the process through which investors in-
vest in assets and securities is known as portfolio management. After accounting for all
risk factors, investors can earn substantial returns by investing in portfolio securities.
The study's goals include determining the weights of the portfolio, return risk, and cor-
relation between particular stocks. According to this analysis, TCS, BAJAJ AUTO, and
HDFC bank have excellent returns, and there is a good association between TCS &
AUTO and HUL, AUTO. The study's findings recommend that investors should com-
prehend maximum returns, optimum returns, safety, etc. before investing in a portfolio.
380 V. Reddy and N. Harish

3 Research Methodology

3.1 Statement of The Problem

The prominence of this study lies in its role in shaping the portfolio based on both
anticipated and realized returns achieved by investors in chosen firms. In recent times,
equity markets have gained significant prominence. The valuation of equities is a key
concern addressed by scholars and researchers within the capital markets domain, uti-
lizing diverse perspectives. Concurrently, professionals engaged in stock trading have
been deciphering various hints and insights.
Several accounting factors have been employed to elucidate equity value and equity
return. These encompass book value, diverse forms of profitability metrics, operational
assets, earnings per share (EPS), residual value, and growth in EPS. Additionally,
measures such as overall company growth, dividend per share (DPS), and growth in
DPS are utilized, alongside concepts like real options for growth and real options for
abandonment, all contributing to the explanation of equity valuation.
Earnings play a crucial role in inducing the market value of equity shares. When a
business achieves success and starts accumulating reserves, it often explores expansion
opportunities to enhance profitability. When a business begins to generate attractive
earnings, there will be a greater demand for equity shares, increasing their market value.
Investors typically strive to reduce risk while increasing yield on their investment.
Equity or individual stock investors have a tendency to be more active and adventurous.
The possibility for exceptionally large profits over a much shorter to longer time hori-
zon exists with equity stocks. Stock investing can be challenging, and it's typically done
by people who have a thorough knowledge of the market. Finding the correct stocks at
the right moment enables investors to achieve higher returns than anticipated. As a re-
sult, CAPM is used in this study to discover the stocks that have the potential to yield
large returns and are thus appropriate for investment.

3.2 Objectives of The Study

• To determine expected and concrete returns on selected stocks

• To ascertain risk accompanying with each selected stock
• To identify over or undervalued stocks
• To offer valuable suggestions grounded on the study for investment

3.3 Scope of The Study

The analysis exclusively encompasses equity stocks traded on the Bombay Stock Ex-
change (BSE). The necessary criteria for each stock are calculated over a five-year du-
ration, spanning from April 1, 2015, to March 31, 2019.
 Risk–Return Analysis of Selected Equity Stocks Listed 381

3.4 Limitations of The Study

• The portfolio is formulated solely based on Capital Asset Pricing Model (CAPM).
• The portfolio construction solely relies on a 5-year dataset.
• The study is confined only to top 30 stocks of BSE Sensex.
• The recommendations provided are entirely grounded in the examination of second-
ary data.

3.5 Data Collection

The exploratory nature of the study requires the utilization of secondary data, which is
sourced from a diverse range of websites, publications, newspapers, and magazines.
The information about stock prices and index values was gathered from the Money
Control and Bombay Stock Exchange websites. The study focuses on the range of the
top 30 companies from the BSE Sensex.
Statistical tools used for the research:
Components of CAPM such as:
• Beta

βi = covariance of stock, market/variance market

βi = Σ (Ri-Ri’)(Rm-Rm’)/ Σ(Rm-Rm’)^2
• Variance

(Rm-Rm’) ^2/n-1
• Co-variance

(Ri-Ri’)(Rm-Rm’)/n-1, CAPM = Rf+{βi[Rm-Rf]}

4 Data Analysis

Table 1. No 1. Actual Return and Expected Return on 30 BSE Stocks

SL. NAME Ri Rf Beta Rm Rf+ Over-

NO THE {βi[Rm- priced
COMPANY Rf]} or un-
der
priced
1 Axis 27.48 7.33 2.86 12.2 21.26 Under
Bank Ltd. priced
382 V. Reddy and N. Harish

2 Bajaj 7.71 7.33 -0.5 12.2 4.89 Un-

Auto Ltd. der-
priced
3 Bajaj Fi- 77.96 7.33 1.16 12.2 12.98 Under
nance Ltd. priced
4 Bharti 4.22 7.33 0.92 12.2 11.81 Over-
Airtel Ltd. priced
5 Coal In- -2.73 7.33 1.00 12.2 12.2 Over-
dia Ltd. priced
6 HCL 10.19 7.33 1.19 12.2 13.12 Over-
Technolo-
priced
gies Ltd.
7 HDFC 25.90 7.33 0.93 12.2 11.86 Under
Bank Ltd. priced
8 Hero Mo- 3.92 7.33 - 12.2 6.31 Over-
toCorp Ltd. 0.21 priced
9 Hindu- 24.74 7.33 1.03 12.2 12.35 Under
stan Unile-
priced
ver Ltd.
10 Housing 19.54 7.33 1.66 12.2 15.41 Under
Develop-
priced
ment Fi-
nance Cor-
poration Ltd.

11 ICICI 14.76 7.33 1.75 12.2 15.85 Over-

Bank Ltd.
priced
12 IndusInd 31.65 7.33 1.44 12.2 14.34 Under
Bank Ltd. priced
13 Infosys 14.11 7.33 0.45 12.2 9.52 Under
Ltd. priced
14 ITC Ltd. 5.75 7.33 0.20 12.2 8.30 Over-
priced
15 Kotak 29.94 7.33 1.62 12.2 15.22 Under
Mahindra
priced
Bank Ltd.
 Risk–Return Analysis of Selected Equity Stocks Listed 383

16 Larsen & 13.35 7.33 1.86 12.2 16.38 Over-

Toubro Ltd.
priced
17 Mahindra 6.97 7.33 0.23 12.2 8.45 Over-
& Mahindra
priced
Ltd.
18 Maruti 34.60 7.33 1.86 12.2 16.38 Under
Suzuki India
priced
Ltd.
19 NTPC 7.39 7.33 1.00 12.2 12.2 Over-
Ltd. priced
20 Oil & -3.70 7.33 1.04 12.2 5.06 Over-
Natural Gas
priced
Corporation
Ltd.
21 Power 2.65 7.33 - 12.2 7.13 Over-
Grid Corpo-
0.04 priced
ration Of In-
dia Ltd.
22 Reliance 51.05 7.33 1.89 12.2 9.20 Under
Industries
priced
Ltd.
23 State 15.17 7.33 2.22 12.2 18.14 Over-
Bank Of In- priced
dia
24 Sun Phar- 2.35 7.33 2.05 12.2 17.31 Over-
maceutical
priced
Industries
Ltd

25 Tata Con- 14.52 7.33 0.70 12.2 10.74 Under

sultancy Ser-
priced
vices
26 Tata Mo- -7.80 7.33 1.29 12.2 13.61 Over-
tors – DVR
priced
Ordinary

27 Tata Mo- -9.33 7.33 1.52 12.2 14.73 Over-

tors Ltd. priced
384 V. Reddy and N. Harish

28 Tata Steel 9.71 7.33 - 12.2 5.92 Under

Ltd. 0.29 priced

29 Vedanta 24.56 7.33 2.96 12.2 21.74 Under

Ltd. priced
30 Yes Bank 34.02 7.33 2.19 12.2 17.99 Under
Ltd. priced

Table No. 1 shows the calculated values of market risk (Beta) of 30 stocks listed on
the BSE, actual returns (Ri), expected returns (E(Ri)) according to CAPM, market re-
turn (Rm=BSE Sensex), and risk-free rate (Rf). When a stock's actual returns surpass
its anticipated returns, it is assumed to be overpriced; alternatively, as stated in the re-
marks, it is underpriced.

Table 2. No. 2. Risk Associated with Evaluated Stocks and Comparison with Actual Returns

SL. COMPANY Ri S.D Beta Unsys-

NO NAME tematic risk

1 Axis Bank Ltd. 27.48 44.03 2.86 41.17

2 Bajaj Auto Ltd. 7.71 10.30 -0.5 10.80

3 Bajaj Finance Ltd. 77.96 30.15 1.16 28.99

4 Bharti Airtel Ltd. 4.22 19.96 0.92 19.05

5 Coal India Ltd. -2.73 17.75 1.00 16.75

6 HCL Technologies 10.19 17.03 1.19 15.84

Ltd.
7 HDFC Bank Ltd. 25.90 13.10 0.93 12.17

8 Hero MotoCorp Ltd. 3.92 17.65 - 17.86

0.21
9 Hindustan Unilever 24.74 21.97 1.03 20.95
Ltd.
10 HDFC Ltd. 19.54 24.01 1.66 22.35
11 ICICI Bank Ltd. 14.76 25.65 1.75 23.90
 Risk–Return Analysis of Selected Equity Stocks Listed 385

12 IndusInd Bank Ltd. 31.65 30.06 1.44 28.62

13 Infosys Ltd. 14.11 20.17 0.45 19.72

14 ITC Ltd. 5.75 16.13 0.20 15.93

15 Kotak Mahindra 29.94 24.41 1.62 22.79

Bank Ltd.
16 Larsen & Toubro 13.35 26.47 1.86 24.62
Ltd.
17 Mahindra & Mahin- 6.97 10.92 0.23 10.69
dra Ltd.
18 Maruti Suzuki India 34.60 45.65 1.86 43.79
Ltd.
19 NTPC Ltd. 7.39 17.46 1.00 16.46

20 Oil & Natural Gas -3.70 21.48 1.04 20.44

Corporation Ltd.
21 Power Grid Corpo- 2.65 23.71 - 23.75
ration Of India Ltd.
0.04
22 Reliance Industries 51.05 36.80 1.89 34.91
Ltd.
23 State Bank Of India 15.17 34.32 2.22 32.10

24 Sun-Pharmaceutical 2.35 43.40 2.05 41.35

Industries Ltd
25 Tata Consultancy 14.52 18.22 0.70 17.52
Services
26 Tata Motors – DVR -7.80 44.55 1.29 43.26
Ordinary
27 Tata Motors Ltd. -9.33 36.22 1.52 34.70

28 Tata Steel Ltd. 9.71 28.08 - 28.38

0.29
29 Vedanta Ltd. 24.56 104.08 2.96 101.13

30 Yes Bank Ltd. 34.02 49.47 2.19 47.28

386 V. Reddy and N. Harish

Table No.2 The study presents the computed values for Systematic Risk (Beta), To-
tal Risk (Standard Deviation), and Unsystematic Risk (Total Risk minus Systematic
Risk). Moreover, it conducts a comparative analysis of the risks and actual returns
across 30 equities listed on the Bombay Stock Exchange. A stock's risk is considered
higher than the market when the beta value exceeds 1, and conversely, it is lower than
the market when the beta value is less than 1.

5 Results and Discussion

According to the survey, the following firms have returns of 20% or more: Axis Bank
Ltd., Bajaj Finance Ltd., HDFC Bank Ltd., Hindustan Unilever Ltd., IndusInd Bank
Ltd., Kotak Mahindra Bank Ltd., Maruti Suzuki India Ltd., Reliance Industries Ltd.,
Vedanta Ltd., and Yes Bank Ltd. The following stocks are underpriced: Axis Bank Ltd.,
Bajaj Auto Ltd., Bajaj Finance Ltd., HDFC Bank Ltd., Hindustan Unilever Ltd., Hous-
ing Development Finance Corporation Ltd., IndusInd Bank Ltd., Infosys Ltd., Kotak
Mahindra Bank Ltd., Maruti Suzuki India Ltd., Reliance Industries Ltd., Tata Consul-
tancy Services., Tata Steel Ltd., Vedanta Ltd., and Yes Bank Ltd.
The following stocks are overpriced: Bharti Airtel Ltd., Coal India Ltd., HCL Tech-
nologies Ltd., Hero MotoCorp Ltd., ICICI Bank Ltd., ITC Ltd., Larsen & Toubro Ltd.,
Mahindra & Mahindra Ltd., NTPC Ltd., Oil & Natural Gas Corporation Ltd., Power
Grid Corporation of India Ltd., State Bank of India., Sun Pharmaceutical Industries
Ltd., Tata Motors- DVR Ordinary., Tata Motors Ltd.
There are 10 stocks with high returns and high risk, including Axis Bank., Bajaj
Finance Ltd., HDFC Bank Ltd., Hindustan Unilever Ltd., IndusInd Bank., Kotak
Mahindra Bank Ltd., Maruti Suzuki India Ltd., Reliance Industries Ltd., Vedanta Ltd.,
and Yes Bank Ltd.

6 Conclusion

This study serves as a valuable tool for evaluating diverse risks connected with stock
investment and assists in the identification of stocks that offer robust returns while
maintaining an acceptable level of risk. Several investors often neglect factors alike
systematic risk (Beta) and unsystematic risk, instead relying on market rumors, booms,
or yield potential. Consequently, this research focuses on stock investments driven by
a thorough examination of risk and return, utilizing the CAPM model. The model effi-
ciently encompasses numerous variables of return and risk, both systematic and unsys-
tematic. According to the analysis, businesses listed on the BSE, such as Axis Bank.,
Bajaj Finance Ltd., HDFC Bank Ltd., Hindustan Unilever Ltd., IndusInd Bank., Kotak
Mahindra Bank Ltd., Maruti Suzuki India Ltd., Reliance Industries Ltd., Vedanta Ltd.,
and Yes Bank Ltd., exhibit exceptional returns with relatively low risk. Consequently,
investments made in these stocks are expected to yield greater rewards over the long
term.
 Risk–Return Analysis of Selected Equity Stocks Listed 387

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