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Rm- market return

Shri Shri (Professional) (629 Points)

21 July 2012

How to find market return of AXIS BANK (INDIA).

I want to calculate FROM 2005-2012. (7 yrs) kindly suggest me

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2 Replies

Jairam J (CA, B.COM(Hons.)) (382 Points)
Replied 21 July 2012

You can't calculate market return of stocks or at least Rm in CAPM actually means returns from market..

Market returns are quite simple

Take Base year 1-apr-1979 when Sens*x was at 100

Today's sens*x- 21 july-2012 is 17158.44

Sens*x multiple =current/base= 171.58

From 1-april-1979 to 21 july-2012 is total of 33.33 years (use excel for this)

Average market return= sens*x multiple^(1/n)=171.58^(1/33.33)= 16.69%

for returns of stock we need beta ...find last 7 years either yearly or monthly prices of both sens*x and Axis bank .. Then find returns % for these years eg. %returns(2006) =(price(2006)-price(2005))/Price(2005) *100

and so on..

After all this find slope intercept taking x as stock returns(dependent variable) and y as index returns(independent variable) ----------------use excel for all this...

we also need rf 'risk-free rate' which is 8.50% i think... after all this use CAPM formula...

That;s all