Vol. 7, Issue 1, Part I (2025)

The financial services sector is a key component of the Indian economy, making it essential to assess its risk-adjusted performance for better investment decisions. This study evaluates the performance of selected financial services stocks in India using the Treynor Ratio, which measures the excess return per unit of systematic risk. By analysing historical mean returns, beta values, and a fixed risk-free rate (6.69%), the study ranks stocks based on their risk-adjusted returns. The results indicate that HDFL and BJFN achieved the highest Treynor Ratios, suggesting superior performance with relatively lower systematic risk. In contrast, MCEI and MUTT recorded negative Treynor Ratios, reflecting inefficient risk-return trade-offs. The analysis further highlights that moderate-beta stocks tend to provide better risk-adjusted returns, whereas higher beta stocks do not necessarily outperform in terms of the Treynor Ratio. This research offers insights for investors, financial analysts, and policymakers, aiding them in making informed decisions within the Indian financial sector. The findings emphasize the significance of systematic risk evaluation and provide a structured approach to assessing financial stocks based on risk-adjusted performance.