Relationship of Dr. Reddy’s Laboratories With Nifty 50
AUTHOR: Dikshita Dabholkar_MBA_FINANCE

OBJECTIVE: The objective of the study is to find out the relationship between Dr. Reddy’s Laboratories and Nifty and to see its significance.

LITERATURE REVIEW:
Dr. Reddy’s Laboratories is an Indian multinational pharmaceutical company located in Hyderabad.Dr Reddy’s Laboratories Ltd (DRL) is an integrated global pharmaceutical company, committed to providing affordable and innovative medicines for healthier lives. Through its three businesse – Pharmaceutical Services Active Ingredients, Global Generics and Proprietary Products – Dr. Reddy’s offers a portfolio of products and services including Active Pharmaceutical Ingredients (APIs), custom pharmaceutical services, generics, biosimilars and differentiated formulations.During December 2020, the company entered into a definitive agreement with Glenmark Phannaceuticals Ltd. to acquire, certain brands in various Emerging Market countries for a total consideration of Rs 1,516 million. The said transaction was accounted for as an acquisition of product related intangibles.

DATA COLLECTION:
Data has been googled and has been downloaded from Nifty 50 of the company name Dr.Reddy Laboratories.
Data was collected from NSE site And Friday closing prices and the weekly returns were calculated.

DATA ANALYSIS:
Equation: DRREDDYALLN Shares = -0.2401301499+ 0.562090398NIFTY
N=47, RSQUARE =0.0970079, F = 4.941754

The above equation tells the relationship between Dr Reddy laboratories share (Y) and nifty 50 (X).
If Nifty 50 rises Dr Reddy laboratories share price falls and if nifty 50 falls Dr Reddy’s laboratories share price rises.

As b is 0.56209 if nifty 50 rises by one unit Dr Reddy laboratories share prices will fall by 0.56209 units and vice versa.

t-stats for b is 2.2230 and the P-value is less than 0.05 rather it is less than 0.15 which means b is statistically significant at 1% level

R2 is 0.0970 Which means 10% percent variance of Dr Reddy laboratories share is explained by nifty-fifty

F is 4.94175 and the P value is also less than 0.021 which means overall this model is statistically significant at 1% level

The beta is calculated by using regression analysis
Beta = covariance(X,Y)/ variance(Y)

Conclusion:
The beta of the Dr Reddy laboratories companie is 0.17 as beta of the company is less 1.0 it indicates a stock with lower volatility. The model is statistically significant at 1% level.