International Journal of Scientific Research and Engineering Development

This study examines the construction of an optimal equity portfolio using Sharpe's Single Index Model (SIM) with daily price data of fifty constituent stocks of the NSE Nifty 50 index drawn from the trading records maintained by Karvy Stock Broking Ltd, Hyderabad. The Single Index Model simplifies the Markowitz portfolio framework by linking each security's return to the return of a single market index, dramatically reducing the number of inputs required to construct an efficient portfolio. The study computes mean returns, variance, beta, systematic and unsystematic risk for each stock; ranks securities on the basis of the excess-return-to-beta (ERB) ratio; determines the cut-off point (C*); identifies stocks qualifying for inclusion; and finally derives the absolute (Zi) and relative (Xi) proportions of investment. Out of fifty stocks analysed, six were found to qualify for the optimum portfolio. The empirical results show that an investor following the Single Index Model could achieve a higher risk-adjusted return than a naive equal-weighted portfolio. A short investor-awareness survey conducted at the Karvy branch confirms that retail investors continue to under-utilise scientific portfolio-construction techniques. The paper concludes that the Single Index Model offers a practical, data-light and transparent framework that brokers like Karvy can deploy to advise retail clients.

Shabad Nithin, Mrs. Gugulothu Sravanthi,"A Study on Construction of Optimal Portfolio Using the Single Index Model at Karvy Stock Broking Ltd, Hyderabad" International Journal of Scientific Research and Engineering Development, V9(3): Page(2857-2865) May-June 2026. ISSN: 2581-7175. www.ijsred.com. Published by Scientific and Academic Research Publishing.