Abstract:
The study attempts to analyse the return generated by BSE Sensex for the past 24 years
and the risk associated with investments in different periods. The study also explores
the relationship between valuation ratios and Sensex returns. For this purpose, Sensex
data (Index value, Price-earnings ratio, Price-to-book value) for 24 years (1998 to
2022) is taken. The data is analysed using Compounded Annual Growth Rate (CAGR)
for different time periods along with standard deviation to assess the return and risk.
The association between valuation ratios and index return is analysed using
correlation analysis and ANOVA. The results show that risk of investment can be
substantially reduced by increasing the holding period of security. The study also
reveals that index returns will vary based on the valuation ratio at the point of entry.
