Statistical Analysis of Average Weekly Returns for NIFTY50 and Syngene International Ltd

Submitted By:
Swaraj Bhattacharya
ITM Executive MBA Batch 1 (2015-2017)

 

Introduction

Syngene is a leading custom research and manufacturing organization, which supports R&D programs from lead generation to clinical supplies. This company was incorporated in 1993 as a subsidiary of Biocon Limited.

Syngene has a strong corporate governance framework with a focus on client satisfaction, quality, safety, ethics and integrity. Syngene has state-of-the-art research facilities certified with ISO 9001:2008, ISO 14001:2004, and OHSAS 18001:2007.

Over the last 20 years, they have successfully offered there services to more than 250 clients including start-up companies, large pharma/ biotech, agrochemical, chemical, nutrition and animal health companies in the USA, Europe and Asia Pacific including Japan.

 

Objective:

To determine if there is any difference between average weekly returns of Nifty 50 and Syngene International Ltd

 

Views and Reviews:

Syngene Q4 Profit rose to Rs.66 crore in the fiscal fourth quarter, from Rs.56 crore in the year-ago period. The profit was notched up on a 28% increase in revenue to Rs.334 crore from Rs.254 crore.

Syngene has set a sales target of $250 million by end of this financial year and its client base increased to 256 from 221 a year ago.Syngene has also cleared three US Food and Drug Administration (FDA) inspections of its facility in Benguluru during the fourth quarter.

“This momentum, combined with our extensive capital investment plans, puts us on-track to achieve our mid-term revenue target for FY18 and deliver excellent returns for our investors,” said Jonathan Hunt, chief executive of Syngene.

 

Research Methodology:

The closing price data of Nifty50 and Syngene International Ltd was taken from www.nseindia.com (National Stock Exchange) for the time period 2nd May 2015 to 30th April 2016.

From the available data, the closing rates of all the Fridays in the year was sorted to find out weekly returns for both Nifty as well as Syngene. Then the weekly returns was calculated for both by using formula

Weekly Return =(X2-X1)/(X1*100)
where, X2 is present week closing price and X1 is the previous week closing price.

Post this we calculate Average weekly returns and standard deviation as per below formula:

Average weekly returns = ∑ X1/N

Standard Deviation = √ (∑(X1-X2) ^2/N

 

Data Analysis:-

Null Hypothesis: H0 = There is no difference in weekly returns of NIFTY and Syngene International Ltd
Alternate Hypothesis: H1 = There is a difference in weekly returns of NIFTY and Syngene International Ltd

As per the calculation and using the mentioned formula’s, we acquired below values:-

Nifty Average weekly returns = -0.059092396
Nifty Standard deviation = 2.612238153 (S1)

Syngene Average weekly returns = 0.695448863
Syngene Standard deviation = 4.206284734 (S2)

Actual Difference = Average Weekly Returns of Syngene – Average Weekly Returns of Nifty = 0.754541259

Now, Combined Standard Deviation = √ ((S1^2/N1) + (S2^2/N2)) = 0.82733888

Therefore,
Upper range = 0+1.96*(0.82733888) = 1.621584205
Lower range = 0-1.96*(0.82733888) = – 1.621584205

 

Conclusion:-

Since the actual difference of Nifty & Syngene average weekly returns is 0.754541259 which in turn lies within the range (i.e. ± 1.621584205), we accept our Null Hypothesis (H0).

Therefore, we can conclude that there is no difference between the weekly returns for Nifty and Syngene International Ltd.