Sunday, February 3, 2013

Sensex and Nifty High Beta Stocks

Now that we have understood that stock investments have inherent risk which can be broadly classified as systematic risk and unsystematic risk (and under extreme circumstances systemic risk). We also know how to quickly calculate Value at Risk (VaR) of a stock investment or portfolio. Sometimes, taking on a higher risk in stock investment appears to be a good idea; especially when the markets are expected to perform well and macro factors are favorable. In such situations, investors should look to allocate some portion of their portfolio for high beta stocks.

What is beta in stocks?
Beta is a statistical term derived using regression analysis. As usual, this parameter in stock/risk analysis is also derived using historical data by statistical methods. Beta measures volatility in a stock. It is the measure of systematic risk or more specifically, market risk of a stock investment. Beta is used in theoretically pricing an investment (stock etc.) using Capital Asset Pricing Model (CAPM). The market has a Beta of 1. For making analysis easier, an index can be considered as representative of the entire market. Therefore, Sensex and Nifty can be said to have a beta of 1. The stock which are more volatile than Sensex/Nifty are said to have a higher beta. The ones which exhibit lesser volatility are said to have lower beta.
To explain further, if a stock has a beta of 1.5 then if the market (Sensex/Nifty) goes up by 10%; historically this stock would go up by 15%. On the downside, if market drops by 5%; the stock drops by 2.5%. However in case of low beta stocks, if market goes up by 10%; a stock with beta of 0.8 would go up by 8%. It would lose lesser value than the market on the downside.




High beta stock of NSE and BSE
nifty and sensex high beta stocks 2013, calculate value at risk, var analysis, stock risk,  high beta stocks , stocks with high beta , stock to buy now , high beta stock list , list of high beta stocks , high yield stocks , high beta stock definition , what is high beta stocks , stocks with high betas , high beta stocks 2012 , high beta companies , high risk stocks , best stocks to buy , stock with high beta , stocks to buy now , hot stocks to buy , beta value for stocksIndian markets may experience increased participation and can be expected to course higher levels. In such a scenario, high beta stocks can find place in portfolios. Thankfully, there is no need to calculate betas of stocks (which would be a tedious process). Both Sensex and Nifty stocks’ beta value can be gathered from respective websites:
Nifty Beta Values – Click here
Sensex Beta Values – Click here
Please note these beta values are computed using trailing twelve months data. The High beta stocks as on February 1, 2013 are:
 
high beta stocks in nse, high beta stocks 2013, february 2013 high beta,  Adani Enterprises Ltd. , Adani Power Ltd. , Arvind Ltd. , Axis Bank Ltd. , Bajaj Hindusthan Ltd. , Century Textile & Industries Ltd. , DLF Ltd. , Delta Corp Ltd. , Dena Bank , GMR Infrastructure Ltd. , GVK Power & Infrastructures Ltd. , Godrej Industries Ltd. , Hindalco Industries Ltd. , Housing Development and Infrastructure Ltd. , ICICI Bank Ltd. , IDBI Bank Ltd. , IDFC Ltd. , IFCI Ltd. , IRB Infrastructure Developers Ltd. , IVRCL Ltd. , Indiabulls Real Estate Ltd. , IndusInd Bank Ltd. , JSW Energy Ltd. , JSW Steel Ltd. , Jaiprakash Associates Ltd. , Jindal Steel & Power Ltd. , Kotak Mahindra Bank Ltd. , Lanco Infratech Ltd. , NCC Ltd. , PTC India Ltd. , Pantaloon Retail (India) Ltd. , Power Finance Corporation Ltd. , Punj Lloyd Ltd. , Reliance Capital Ltd. , Reliance Communications Ltd. , Reliance Infrastructure Ltd. , Reliance Power Ltd. , Rural Electrification Corporation Ltd. , Sesa Goa Ltd. , Shree Renuka Sugars Ltd. , Sintex Industries Ltd. , Steel Authority of India Ltd. , Suzlon Energy Ltd. , Tata Motors Ltd. , Tata Steel Ltd. , UCO Bank , Unitech Ltd. , Voltas Ltd. , Welspun Corp Ltd. , Yes Bank Ltd.



NSE has introduced a CNX High Beta Index which constitutes of stocks exhibiting a high beta within the largest 300 stocks (by free float market cap) over the trailing twelve months. The latest constituents of this index can be downloaded here. This offers a wider range of options than the Nifty50 stocks.
 
P.S. – It is necessary to value the risk being undertaken when taking position in a high beta stock. Please run a VaR analysis before making and investment and make sure the exposure is within your risk limits.

Read more: Beta explanation at Investopedia.

1 comments:

Hi,

The sensex beta values link doesn't seem to work. Any idea what's the current url for the same?

Thanks

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