Evaluating The Effectiveness Of The Piotroski F-Score In The Indian Equity Market : Evidence From Nifty100(2007–2024)

Abstract

This study explores the effectiveness of the Piotroski F-score as a valuation and screening tool for companies within India’s Nifty 100 index over the period 2007 to 2024. The Piotroski F-score, which ranges from 0 to 9, measures a firm’s financial strength by combining signals from profitability, leverage, liquidity, funding decisions, and operational efficiency. In simple terms, a higher score reflects stronger financial health and resilience, while a lower score can be seen as an early warning sign of potential distress. By analysing nearly two decades of historical data, the study finds that firms with higher F-scores not only delivered stronger returns over time but also provided a cushion during market downturns when broader indices underperformed. This suggests that the F-score is not just a measure of value but also a practical tool for managing risk and identifying robust companies in uncertain environments. The findings reinforce the importance of continuously tracking the F-score to capture early distress signals while uncovering attractive investment opportunities in the Indian equity market.