CALCULATION OF BETA OF POWER GRID CORPORATION OF INDIA LIMITED AND ITS SIGNIFICANCE

NAME OF THE AUTHOR: POOJA SHUKLA

INTRODUCTION
Power Grid Corporation of India Limited (PowerGrid), is a Schedule ‘A’, ‘Maharatna’ Public Sector Enterprise of Govt. of India which was incorporated on 23rd Oct 1989 under the Company Act, 1956. PowerGrid is a listed Company, with 51.34% holding of Government of India and the balance is held by Institutional Investors and public.

OBJECTIVES
To calculate beta of Power Grid Corporation of India Limited and its significance

DATA COLLECTION
Data of Power Grid Corporation of India Limited from 01-12-2021 to 30-11-2022 from NSE website
• Friday weekly closing prices has been found out
• Weekly Return have been calculated with the formula of (Y2-Y1)/Y1*100
• Weekly Return of Equity have been regressed on Weekly Return of Nifty
DATA ANALYSIS
Weekly Return of Power Grid Corporation = 1.240 + 1.150 Weekly Return of Nifty + E
• t-stat = 1.41065
• R2 = 0.805
• F = 198.5383
• N = 50
The above equation tells us the relationship between Weekly Return of Power Grid Corporation and Weekly Return of Nifty. The positive sign means that there is a direct relationship. If nifty rises, equity rises and if nifty falls, equity falls. The co-efficient of weekly return of nifty is 1.150, which means if nifty rises by 1 unit, Power Grid Corporation will rise by 1.150 units and vice versa.
Number of Observations are 50 and t-stat is 1.41065.
P value is 0, which is less than 0.05, means that b is statistically significant at 5%. Even it is less than 0.01, b is statistically significant at 1% level.
R2 is 0.805, which means that 80.5% of Y (Power Grid Corporation) is explained by X (nifty), balance of 19.5% is error. Error is due to the variables which are not in the model.
F is 198.5383, the P value for which is 0 < 0.01, means overall the model is statistically significant.

CONCLUSION
Since b = 1.150 is greater than 1, it is statistically significant.
Power Grid Corporation Limited is a good option for investment because for every increase in nifty there will an increase in the equity of Power Grid Corporation.