TITLE

Relationship of Sun Pharmaceutical Industry Limited with Nifty

 

AUTHORS

30 – Sachin Thorat

 

INTRODUCTION

Sun Pharmaceutical Industries Limited is an Indian multinational pharmaceutical company headquartered in Mumbai, Maharashtra that manufactures and sells pharmaceutical formulations and active pharmaceutical ingredients primarily in India and the United States

Sun Pharmaceuticals was established by Mr. Dilip Shanghvi in 1983 in Vapi, Gujarat

Today, it is the largest chronic prescription company in India and a market leader in psychiatry, neurology, cardiology, orthopedics, ophthalmology, gastroenterology and nephrology.

OBJECTIVE

The objective of this research is to calculate beta of Sun Pharmaceutical Industry limited and test its significance.

LITERATURE REVIEW

Sun Pharma enters pact with China Medical Systems to commercialize 8 generic products — Business Standard https://www.business-standard.com/article/companies/sun-pharma-announces-tie-up-for-china-foray-to-develop-8-generic-products-119081602084_1.html

 

Sun Pharma signs global licensing pact with CSIR-IICT for patents — Press Trust of India

https://www.business-standard.com/article/pti-stories/sun-pharma-inks-global-licensing-pact-with-csir-iict-for-patents-119081400757_1.html

DATA COLLECTION

Data for Sun Pharmaceutical Industry Limited has been downloaded from NSE website from date

1-Aug-2018 to 31-July-2019. Data has been manipulated for weekly Friday closing price. Then the weekly returns was calculated for both by using formula –
Weekly Return = (B3-B2)/B2*100

where, B3 is present week closing price and B2 is the previous week closing price.

This data of weekly return column for NIFTY50 was considered as “X” variable and the weekly returns column for Sun Pharmaceutical Industries Limited was considered as “Y” variable.

 

 

DATA ANALYSIS

Y = 0.446 X – 0.4400

 

N= 49,  =0.024, F = 1.16, p = 0.285, t stat for b = 1.08

 

 

From weekly returns of Nifty with Sun Pharmaceutical Industry limited and utilizing the Regression option in Microsoft Excel Data Analytics tool below values was obtained. Following equation was obtained

 

 

 

The above equation shows us the relationship between Weekly returns of Sun Pharmaceutical share price and nifty value

  1. When one unit of Nifty increases, 0.44 unit of Sun Pharmaceutical increases
  2. T stat value is 1.08 for b. The corresponding p value is 0.285 which is more than 0.05.

Hence Nifty is not statically significant at 5% level

  1. = 0.024 which means that 2.4% of trend in the Weekly Returns of Sun Pharmaceuticals Limited is explained by the weekly returns of NIFTY remaining is 97.6 %  is dependent upon Sun Pharmaceuticals fundamentals and policies.
  2. F = 1.16, p =0.2857 which is more than 0.05, which means overall model is not statistically significant

 

 Conclusion

  1. b is not statically significant
  2. Model is not statically significant

Equity for Sun Pharmaceuticals is statistically insignificant on indices of Nifty50. The regression analysis suggests that Sun Pharmaceutical Industries Limited is a not a model to invest in, as the investments will not fetch good results

REFERENCES

Historical Data of Nifty 50 and Sunpharma were taken from www.nseindia.com (National Stock Exchange website) for the time period 1st July, 18 to 30th June 2019.

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