Stock Market Performance of Fintech Companies in India: A Comparative Risk-Return Analysis

Abstract

Abstract: India's fintech sector has witnessed exponential growth, driven by technological innovation and changing consumer behavior. This rapid expansion has attracted significant investor interest, yet there remains a gap in structured analysis comparing the stock market performance of these new-age companies to traditional market benchmarks. This study aims to evaluate and compare the stock market performance of five major listed Indian fintech companies—Paytm, PolicyBazaar, HDFC Bank, Jio Financial Services, and Bajaj Finance—against the Nifty 50 index over a three-year period. Employing a quantitative event study methodology, we analyze key metrics including monthly returns, average return, alpha, beta, correlation, standard deviation, and the Sharpe ratio. Our findings reveal that while certain fintech stocks showed instances of high returns, the overall period was marked by market weakness, with negative average returns across the board. Fintech stocks exhibited high correlation with the market (beta ~1) and amongst themselves, offering limited diversification benefits. Critically, all selected securities posted negative Sharpe Ratios, indicating poor risk-adjusted performance during the study timeframe. The study concludes that despite their innovative business models, the selected fintech companies did not consistently outperform the broader market on a risk-adjusted basis, highlighting the sector's susceptibility to broader market trends and challenging economic conditions.