TITLE: Relationship Between the Nifty and STATE BANK OF INDIA

AUTHOR: SANIKA MAHIMKAR

INTRODUCTION:
State Bank of India (SBI) is an Indian multinational public sector bank and financial services statutory body headquartered in Mumbai, Maharashtra. SBI is the 49th largest bank in the world by total assets and ranked 221st in the Fortune Global 500 list of the world’s biggest corporations of 2020, being the only Indian bank on the list. It is a public sector bank and the largest bank in India with a 23% market share by assets and a 25% share of the total loan and deposits market.
The roots of State Bank of India lie in the first decade of the 19th century when the Bank of Calcutta later renamed the Bank of Bengal, was established on 2 June 1806. The Bank of Bengal was one of three Presidency banks, the other two being the Bank of Bombay (incorporated on 15 April 1840) and the Bank of Madras (incorporated on 1 July 1843). All three Presidency banks were incorporated as joint stock companies and were the result of royal charters. These three banks received the exclusive right to issue paper currency till 1861 when, with the Paper Currency Act, the right was taken over by the Government of India. The Presidency banks amalgamated on 27 January 1921, and the re-organised banking entity took as its name Imperial Bank of India. The Imperial Bank of India remained a joint-stock company but without Government participation.

OBJECTIVE:
To calculate the Beta and its Significance.

DATA COLLECTION:
Data for Equity & Nifty has been downloaded from NSE Site for the period from 1st January 2022 to 31st December 2022. The data was edited and manipulated to get Friday closing price, weekly returns were found out of Nifty was considered as “X” and weekly report of Equity were considered as “Y”.

DATA ANALYSIS:
Demand (Y) = 0.437+1.099 Niftyrtn + e
t-stat = 7.952
Observation (N) = 48
R2 (R square) = 0.578
F = 63.236
t-stat of b is shown is 7.952
The P-value for this is 3.48 x 10-10 which is less than 1% i.e., 0.01 meaning b is significant at 1% level.
N=48
R2 is 0.578 which means 57.8% of Y is explained by X, remaining 42.2% is unexplained that is error.
F=63.236
P-value for this is 3.4798 x 10-10 which is less than 0.01 which means overall model is statically significant at 1% level.
The above equation tells us about the relationship between Nifty and Equity returns. Positive (+) sign shows direct relationship which means if market goes up share price goes up.

CONCLUSION:
As beta value is more than 1 (β>1) it is good for investment for short term whereas if beta (β<1) it is good for long term investments.

REPORT BY:
SANIKA MAHIMKAR
OPERATION AND SUPPLY CHAIN MANAGEMENT 2022-24
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