Investment and Trading Strategies in Indian Stock Market

The paper explores the investment and trading strategies for the Indian stock market using daily data for the CNX 100 companies over the period 01 April 2009 to 31 March 2014. The paper sets up the argument for beta and debt-equity ratio as the important variables for explaining the investment and trading strategies for Indian stock market. Following mean reversion principle without advocating for it, we also develop the strategy for trading in the stock market. The study uses data analysis techniques and arrives at the findings that long term investment in the stocks with low beta and low debt-equity ratio provide higher return, though short term trading the stocks with high beta and high debt-equity ratio provide high return in the short time period. The financial service sector shows that service sector provides very high return in the short time period and low return in the long run as compared to returns from the average stocks.