Nifty 50 stocks Beta value

Beta is the volatility factor of stocks, markets or indices.
It is comparing the movement of particular scrip price to the general market price movement.
Beta  1 would mean the Stock price movement would be equal to market movement.
Lesser Beta number would mean lesser movement, and Higher number indicates higher movement.
A stock with more than 1 beta value would give higher returns than the market returns on Index on move up,
and more down movement than market index down moves on corrections.

The chart and table below indicates the 

Beta values of Nifty constituents 50 scrips:

Beta value of a stock can take one of the following forms.

1. Negative Beta – This is rare. Happens when the stock moves opposite to the market.
2. Zero (0) Beta – This means the value of the stock stays same irrespective of market movement. Again rare. From investment or trading angle it will not help, anyway.
3. Beta between 0 and 1 – This means the stock price swing less compared to market movements. Many blue chip company stocks and high-liquidity stocks have beta less than one. In a long-term prospective these stocks fall under low-risk low-profit category.
4. Beta of 1 – This means the stock price moves in the same relation with the market. This can be the case with many index-related products. [ETFs etc]
5. Beta greater than 1 – This means the stock price swings more compared to market movements. Many growing companies and technology companies have beta greater than one. Most of these stocks fall under high-return high-risk category. Also remember, beta at very high levels probably indicates high price volatility because of low-liquidity.

The category 3, 4 and 5 are presented in the chart table above.

Therefore Beta is a measure of volatility of a scrip in correlation with its index.

When Beta is 1 the stock price moves in perfect correlation with its index.

When Beta is more than 1, the stock price movement is more and faster than the market of the index.

When Beta is less than 1, the stock price movement is less and slower than the index.

The farther away the number from 1, the stronger its effect.

High Beta is high risk, since returns as well as risk is higher than the index.

It suits aggressive portfolios.

Low Beta is low risk, and thus is conservative for a slower steadier pace.

The Beta can be used as a measure for choosing a stock for trading or investment depending on the risk appetite.

Some strategies can be, 

- to park the funds in Low Beta stocks as defensive when the market corrects,

- encash while bottoming out,

- and switch to High Beta to make hay while the market shines and rallies.

- to profit-book at plateauing phase.

High Beta mostly are seasonals, policy or news based ones, market or issue sensitive scrips.

eg: Realty, Controlled items, Interest sensitive items, Agri related cyclicals, 

Low Beta mostly are Stuck-to-bottom blue chips, Heavy industries, Pharma, FMCG and such.

Beta status can change when market evolves.

eg: Pharma, which was dormant before, has become reactive now, may be due to exposure to globalization.

So it is imperative to use latest Beta value for assessment.

Thanks, Alphabet1, for reminding an important concept. Have a great weekend!