Economics, Econometrics and Finance
5 years ago

Revolutionizing Stock Selection: Optimal Portfolio Construction Made Simple with Single Index Model

Indian Journal of Research in Capital Markets
Construction of an Optimal Portfolio Using the Single Index Model : An Empirical Study of Nifty50 Stocks
Prakash Basanna, Namita P. Konnur

Paper Summary

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The researchers used the Single Index Model to build an optimal portfolio with 50 Nifty stocks. They simplified the process by relating stock returns to a market index. Out of 50 stocks, only eight were chosen for the portfolio, mainly from consumer non-durables, finance, consumer durables, and agro-based sectors. Consumer non-durables and finance companies were the most selected sectors.