Portfolio Optimization for CNX IT (NSE) on the Basis of an Event Study

Abstract

Portfolio Optimization involves financial assets. Identifying an optimum portfolio requires the investors to understand the various financial instruments that constitute the financial assets. These instruments operate in market asymmetry. It is operated by the investors and borrowers. In general; the companies belong to borrowing sector while the individuals are presumed to be the lenders of money. This financial commitment is represented and explained in the Balance Sheet data. Market is a sensitive space. Any and every second it operates as a dynamic hot seat for the lenders and borrowers. On a public event date such as the 2014 Election date for Chennai (i.e. April 24) the implication of it is sought for in the immediate weeks – before and after. How the investors and markets react? What expressions do they use? The social media provides a plethora of information for analysing the market trend. One can either use data mining or use textual mining for capturing the mood of the market. The textual mining is done using data collected from twitter using R Studio. The focus sector is NSE – IT sector. As most of the IT industry's companies are based out of the country, an analysis on the behavioural impact is studied on the portfolio of stocks held; to identify the best stocks to buy, hold or sell – which would pave the way to achieving the objective of maximizing returns, minimizing risk or both.