Empirical Analysis of Volatility in Indian Pharma Stocks
Keywords:
Pharma Stocks, Volatility, Sensex, Defensive, Bombay Stock Exchange.Abstract
Long term investors in equity markets continuously seek to invest in the undervalued stocks which have the potential of growth over the period of time. Due to the recent fall in stock prices pharma stocks have become attractive investment opportunities for investors. This study deals in identifying whether the pharma stocks have actually been better performers than the sensex stocks or whether the pharma stocks are riskier than sensex pre recession. The risk and returns were compared based on different parameters. This study reveals that pharma stocks outperformed the sensex in terms of monthly returns while the total risk associated with pharma stocks is lesser than the sensex stocks as well. The returns from Pharmaceutical stocks are independent of market conditions while in case of sensex stocks significantly depend upon the market conditions. In case of sensex stocks, the perception of investor about expected return from stock in these sectors at the given level of risk are highly correlated, that is investors' expectation of returns from these stocks is higher for the higher level of risk. Also dependence expected return of Pharmaceutical stocks on changes in market returns is very less as compared to sensex stocks.Downloads
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