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| Year | 2015 50 Downloads |
| Volume/Issue/Review Month | Vol. - VIII | Issue II | July - December |
| Title | P/E Ratio Effect on the Stock Returns in the Banking Industry – An Empirical Study in National Stock Exchange, India |
| Authors | Radhakrishna Mishra , Dr. Rashmita Sahoo |
| Broad area | P/E Ratio Effect on the Stock Returns in the Banking Industry – An Empirical Study in National Stock Exchange, India |
| Abstract | Economists around the world have always tried to find out the presence of anomalies in the stock market. With a view to earn a quick buck in the market, investors always search for alternatives. An investment strategy based on purchasing low price-earning stocks is said to help in beating the index. This so called price-earning effect is such an anomaly. The purpose of this study is to verify the impact of price-earning ratio on the stock returns in the banking industry. This paper tries to find out answer to the question “Whether one can make abnormal returns by taking advantage of price-earning ratio effect in the banking industry? The stock returns are calculated and compared by using certain statistical tools. The stocks are divided into three categories based on price-earning ratio (i.e. Low = 0 to 10, Mid = 10 to 20 and High = More than 20). After this all the three portfolios are compared by using ANOVA and Correlation analysis to study the presences of the P/E ratio effect in the banking industry in Indian stock market (i.e. National Stock Exchange). However, the result of the study reveals the absence of P/E ratio effect on the stock returns in the banking industry |
| DOI | During the last decade, the Indian stock market has shown metamorphic changes. This has motivated academicians and practitioners to find out ways to get more return from the market. Certain studies have shown the presence of anomalies in the stock market |
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