and risk are inseparable in most of the investments, and
it is importantto determine how much risk is appropriate
to attain the required rate of return by investing in any
stock that an investor might be considering. Even though
every investment involves risk, it is higher in equity investments.
Every investor in stock market puts his money in anticipation
of returns, in terms of price appreciation and dividend
with minimized risk. The risk is composed of systematic
risk (market risk) and unsystematic risk (company-specific).
Systematic risk includes currency, inflation, foreign investment,
political and regulatory measures, interest rate, economic,
and terrorist risks. Even bad weather risk can affect certain
market sectors such as retailers, agriculture, forest products,
insurance, airlines and tourism. Systematic risk can not
be eliminated by diversification within a given market.
It captures the reaction of individual stocks or portfolios
to general market swings. In case of unsystematic risks,
the factors are specific, unique and related to a particular
industry or company.
daily open, close, high and low prices of NSE Nifty, Nifty
Junior and their IT sector components Infosys Technologies,
Wipro, Satyam Computers, CMC, Moser Baer and Polaris and
NSE IT index for the period 1999-00 to 2006-07 have been
used in the study. The daily open, high, low and close prices
of stocks and indices were taken from the official website
of National Stock Exchange of India Limited. The Company
Polaris was listed only on November 24, 1999 and the prices
were taken for the study only from that date.