A Study on Risk & Return analysis of Automobile industry in India (2004-2007)

Abstract

Automobile Industry is a symbol of technical marvel by humankind. Automobile industry is considered to be one of the fastest growing sectors in any developing and even in a developed country. Due to its deep forward and backward linkages with several key segments of the economy, the automobile industry is having a strong multiplier effect on the growth of a country and hence is capable of being the driver of economic growth. Even automobile industry plays a major role as a catalyst in developing the transport sector in one hand and helps industrial sector on the other thereby even facilitates in the growth of the economy and increases the employment opportunities. The risk and return analysis linked with any  industry reveals the intricacies involved with the particular industry. A close watch on these values throws light on a clear understanding and facilitates in decision making about the investment in securities. While making the decisions regarding investment and financing, one seeks to achieve the right balance between risk and return, in order to optimize the value of the firm. Risk and return go together in investments. Everything an investor (be it the firm or the investor in the firm) does is tied directly or indirectly to return and risk. The objective of any investor is to maximize expected returns from his investments, subject to various constraints, primary risk. Return is the motivating force, inspiring the investor in the form of  rewards, for undertaking the investment. The importance of returns in any investment decision can be traced to the factors: it enables investors to compare alternative investments in terms of what they have to offer the
investor, it helps in measuring of historical returns which enables the investors to assess how well they have done, it facilitates in measuring of the historical returns also helps in estimation of future returns.