A Comparative Study on the Performance of Stock Market and Mutual Funds During Bullish and Bearish Period

Abstract

India is one of the top five economies in the world in terms of market potential and is placed above countries like France, Italy, Russia and the United Kingdom. India is also ranked as the third biggest economy in Asia in terms of gross domestic product. All these make investment in India a lucrative option for the investors across the world. The investment market in India offers many possibilities for the investors as the level of purchasing power is improving over time. The investors stand to gain in each and every areas of business in India. However, the response from the outstation investors has been lukewarm as compared to other countries like China. This study analyses the performance of Stock Market and Balanced Mutual Funds and Income Mutual Funds during bullish and bearish periods. Investors have a common perception that the Stock Market performs better during the bullish period whereas, Mutual Funds perform better during the Bearish period. This study also tries to analyze whether this perception of the investors is true. The bullish period chosen for study is from January 2007 to December 2007, and the bearish period chosen for study is from January 2008 to February 2009. The stock market performance is evaluated by means ofrate ofreturn given by NIFTY index. The performance of Balanced Mutual Funds and Income Mutual Funds is analyzed with the help of rate of return given by the best mutual funds in the market. Best mutual funds are selected based on the rating by Business World magazine. Along with rate of return, some other tools are also used for performance evaluation. The findings from this study will be helpful for the investors to know the performance of Stock Markets and Mutual Funds. This will help them to know whether mutual funds or stock market performs better during bullish and bearish period. This study would also help them to compare the performance of Balanced Mutual Funds and Income Mutual Funds during bull run period and bear run period.