COMPARISON OF SENSEX AND NIFTY EQUITIES USING MARKOWITZ THEORY

Portfolio is collection of bonds, warrants, future contracts, stocks, ETFs, real estate etc., where an investor wants to invest. In this paper we shall see how an investor should go about selecting the one best portfolio to meet his needs. Or, more explicitly, how should an investor go about selecting securities to purchase and deciding how many dollars to invest in each. For the comparison of Sensex portfolio with Nifty portfolio famous Markowitz‟s Modern Portfolio Theory (MPT) has been used. For the performance evaluation of both of these portfolios Sharpe Index has been used. This paper presents a simplified perspective of Markowitz‟s contributions to Modern Portfolio Theory. It is to see the effect of duration of historical data on the risk and return of the portfolio and to see the applicability of risk-reward logic.