Sensex And Return Comparative Analysis

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ANALYSIS AND INTERPRETATION The process of the collection, organization, and interpretation of mathematical data, especially the analysis of population features by extrapolation from sampling is known as Data Analysis and Interpretation. After studying the data and tools in the research design it is practically applied here to solve the research problem. Quantitative data is used for the study and tools like comparative analysis, standard deviation and Compounded Annual Growth Rate are used. Comparative analysis of returns is made and aided by graphs. Standard deviation helps understand the volatility of returns and hence the risk of the investment. CAGR is calculated to find out the return of the investment over the investment horizon. 3.1 COMPARITIVE ANALYSIS Annual closing value of the BSE Sensex and returns calculations: Date Close Annual returns Percentage returns 31st March 2009 17473.45 - - 31st March 2010 20509.09 3035.64 17.37 31st March 2011 15452.92 -5056.17 -24.65 31st March 2012 19426.71 3937.79 25.71 31st March 2013 21170.68 1743.97 8.97 Table3.1 showing annual closing value of the BSE Sensex index and returns calculations Graph 3.1 showing returns on Sensex over the years. Interpretation: the returns on stock markets are quite sporadic. There is a return of 17.37% in 2010 but there is a dip of 24.65% in the next year. Stock markets are not preferred due the sporadicity and unpredictability of share prices though there is a good return during 2010 and 2012. In 2011 most IPOs failed and the investors saw negative returns. The overall sentiment was negative and people were reluctant to invest in the stock market. Annual closing price of gold (pe... ... middle of paper ... ... COMPUNDED ANNUAL GROWTH RATE Calculation of Compounded Annual Growth Rate • For returns on stock market CAGR = [(ending value / beginning value) ^ 1/ no of years] -1 = [(21170.68/17473.45) ^ ¼] -1 = (1.211^.25) -1 = 1.048 -1 =0.048 CAGR =4.8% • For returns on gold CAGR = [(ending value / beginning value) ^ 1/no of years] -1 = [(77818.6/47387.48) ^ ¼] -1 = (1.642 ^ 0.25) – 1 = 1.131-1 = .131 CAGR = 13.1% Table comparing the CAGR of Sensex and Gold Tool Sensex Gold CAGR 4.8% 13.1% Table 3.7 showing the CAGR of Sensex and Gold Interpretation: the returns for gold are much higher over the period i.e.13.1% than the return on index (Sensex). The return on gold over the horizon of the investment is almost three times more than that of Sensex.

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