Relationship between nifty 50 and power grid
Author: preet shah

The Power Grid Corporation of India Limited was incorporated on 23 October 1989 under the Companies Act, 1956 with an authorized share capital of Rs. 5,000 Crore (subsequently enhanced to Rs. 10,000 Crore in Financial Year (FY) 2007–08) as a public limited company, wholly owned by the Government of India with 51.34% stake in the company as on 31 December 2020 and as principal electric power transmission company for the country.
To calculate the beta of the Power Grid and its significance

Data Collection:
• Data of Power Grid from 01-01-2022 to 31-12-2022 was downloaded from the NSE website.
• Friday’s weekly closing prices have been found out.
• Weekly Return have been calculated with the formula of
• (Y2-Y1)/Y1*100
• The Weekly Return of Equity has been regressed on the Weekly Return of Nifty

Data Analysis:
• Weekly Return of Power Grid= 0.283+0.206 Weekly Return of Nifty
• t-stat = 0.826604
• R2 = 0.014035088
• F = 0.683274
• N = 50

The above equation tells us about the relationship between the Weekly Return of the Power Grid & Weekly Return of Nifty 50. The positive sign means that there is a direct relationship. If nifty 50 rises, equity rise, and, if nifty 50 falls, equity fall. The co-efficient of the weekly return of nifty is 0.20, which means if nifty rises by 1 unit, Power Grid will rise by 0.20 units and vice versa.

The number of Observations is 50 and the t-stat is 0.826604
The p-value is 0.615908, which is more than 0.05, which means that b is statistically insignificant at 5%. Even if it is more than 0.01, b is statistically insignificant at 1%.
R2 is 0.0140, which means that 1.4% of Y (Power Grid) is explained by X (nifty), and the balance of 98.6% is error. Error is due to the variables which are not in the model.
F is 0.683274, the P value for which is 0.615908< 0.01, which means overall the model is statistically significant.

Since b = 0.206139713 is less than 1, it is statistically insignificant.
The power grid is not a good option for investment because, for every increase in nifty, there will be an increase in the equity of the power grid.