Relationship between Sun pharma pvt Ltd and Nifty 50
Vivek sahu
MIM (KJ Somiaya college)

Sun pharma pvt Ltd is a leading multinational pharmaceutical and biotechnology company in India (headquartered in Mumbai) with its inception in 1935 and strong presence in more than 170 countries. The company strives in production and development of medicines with the aim of treating respiratory, cardiovascular problems, arthritis, diabetes and other medical conditions and promoting wellness in lifestyle of its people. The Nifty 50 index (National Index Fifty) is a stock market index for the Indian equity market and is considered as NSE’s benchmark.
To understand the relationship between weekly returns of Nifty 50 and SUN pharma pvt Ltd and calculate beta (b) of the company.
Data Collection
In order to meet the objectives, the historical index data was accessed from the NSE website which provided index wise open, high, low and closing values with shares traded and turnover and security wise price volume and deliverable data of security of the company.
The data of closing prices of the company and Nifty 50 was retrieved for a period from 1st January 2019 to 31st December 2019. Only the closing prices of Friday were used in order to obtain the weekly returns which were then regressed.
Data Analysis
By using regression Add-on in Microsoft Excel Data Analytics tool, results were obtained to understand the relationship between the company (Sun pharma pvt Ltd) and Nifty 50.
The regression line of weekly returns of Sun pharma pvt Ltd (dependent variable) on weekly returns of Nifty 50 (independent variable) is as follows:
Y = – 0.1953 + 0.367X + e
N = 51 R^2 = 0.06 F = 2.825
Intercept (a) = -0.1953 and Slope (b) = 0.367
a) The above equation shows the relationship between Sun (Y) and weekly returns of Nifty 50 (X). If weekly returns of Nifty 50 rise by 1%, weekly returns of Sun will rise by 0.37 %.
b) Positive sign means there is a positive relationship indicating if weekly returns of Nifty 50 rise, weekly returns of Sun rise and vice versa.
c) R^2 = 0.06, it means 6% of weekly returns of Sun is explained by weekly returns of Nifty 50.
d) T stat for b is 1.68, p value (0.09) for which is more than 0.01, so b is statistically ‘insignificant’ at 1% level.
e) F = 2.825, p value (0.09) for which is more than 0.01, thus overall regression is statistically ‘insignificant’.
With the use of regression analysis, it is observed that there exists a weak positive relationship between the company (Sun pharma pvt Ltd) and the Nifty 50. The value of R^2 indicates a moderate goodness of fit for the observations signifying the regression equation is a good fit to the given data. This model shows overall statistical insignificance as p value is more than 0.01. Thus, the risk factor of using this model for forecasting Sun Ltd weekly returns are very high.