Possible Investment Strategies in Indian Stock Market

Abstract

This chapter explores the presence of possible and profitable investment strategies in the Indian stock market. The exploratory factor analysis used in Chap. 2 explored the presence of a distinct latent structure in the Indian stock market. Given the latent structures in the BSE and NSE, it is indeed possible for investors to design profitable investment strategies. Both risk-averse and risk-loving investors might find portfolios suitable for them based on different indicators such as return, risk-adjusted return, systematic, and unsystematic risk. The nature of such portfolios, however, has changed over time. The financial crisis of 2007–2008 has affected some sectors adversely, while some have been able to avoid the impact of the crisis. Some defensive sectors have emerged out of the crisis with an aggressive tenor. Portfolios in BSE and NSE moreover have some characteristics in common. Such discernable patterns in portfolio choice, however, will put Efficient Market Hypothesis on trial.