Are Betas Stable?

Beta is defined as the sensitivity of security returns to the market returns. Beta is one of the hotly debated issues in the finance literature. While Fama and French have argued that betas are no more relevant in the capital market, it is one of the prominent concepts used by the finance professionals worldwide. This paper tests whether betas of a company remain stable or change over a period of time. We use ordinary least square technique on Nifty index based company share prices and the Nifty index to assess the beta stability for different time periods.