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September 12, 2025Economic ConsultantOpen Access

Testing the Waters: Evaluating the Validity of the Capital Asset Pricing Model in India’s Dynamic Market

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Authors

TMTazeentaj MahatCRC. Rahul

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Overview

This analysis tests the capital asset pricing model's predictive ability in India's market, suggesting inefficiencies. Findings indicate a weak relationship between beta and expected returns.

Key Points

  • The analysis shows a weak relationship between beta and returns, indicating CAPM's limited validity.
  • In empirical tests, high-beta stocks often underperform while low-beta stocks sometimes yield positive alphas based on the study.
  • Utilizing historical stock data from 2019 to 2024 for NIFTY-listed firms, regression analysis and alpha calculations were employed.
  • These findings imply that CAPM does not fully capture market dynamics, suggesting adaptation for emerging markets.

Cite This Study

Mahat et al. (2025) studied this question.

synapsesocial.com/papers/68d44b2231b076d99fa53fd9https://doi.org/10.46224/ecoc.2025.2.2
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