Beta

Beta of 1 means the stock moves roughly in line with the market.

Beta above 1 means the stock is more volatile than the market. Amplifies both gains and losses.

Beta below 1 means the stock is less volatile. Steadier but with smaller moves.

In India, Beta is always calculated relative to the Nifty 50 index. A stock like Bajaj Finance with a Beta of around 1.3-1.5 moves significantly more than the Nifty on both up and down days. On a day when Nifty rises 2%, Bajaj Finance might rise 3%. But on a 2% Nifty fall, it could drop 3% or more.

Defensive sectors like FMCG and pharma tend to have low Betas. ITC and Hindustan Unilever typically have Betas between 0.5 and 0.8, meaning they move less than the Nifty. This is why conservative investors and retirees prefer these stocks, they provide stability during market crashes on NSE and BSE.

Beta is especially useful when building a portfolio with a target risk level. If you want your portfolio to be less volatile than the Nifty, pick stocks with Betas below 1. If you are young and can handle volatility, adding high-Beta stocks like Tata Motors or banking stocks can boost your returns during bull markets.

You can find the Beta of any stock on screener websites or on your broker's app (Zerodha Kite shows it under the stock's fundamentals section). Keep in mind that Beta is calculated using historical data, typically over 1-2 years, so it can change over time as a company's business profile evolves.