Name: Sneha Narayanan
SAP ID: 80012100959
Course: MBA, 1st Year
Institute: NMIMS, Navi Mumbai
Problem Title:
To determine relationship of Nifty and Sundaram Finance Limited
Author: Sneha Narayanan
Introduction of Company:
Sundaram Finance was founded in 1954 with a paid-up capital of Rs. 2 lakhs and was sponsored by Madras Motor & General Insurance Company, which was one of India’s largest insurance businesses at the time before being nationalized in 1971.
The company began with the sole goal of funding the acquisition of commercial vehicles and has since evolved to become one of India’s most reputable financial services groups.
Sundaram Finance Limited now has a diverse presence in a wide range of financial services and products, including mutual funds, housing finance, general insurance, information technology, business process outsourcing, and retail distribution.
Objective:
To calculate beta of company and find its significance
Data Collection:
Data was collected from the NSE Website which comprises of historic data for the past 1 year. The Friday of each week of the year was taken into consideration. The resultant was calculated and regression was performed on the data.
Data Analysis:
We know Y= a +bx1
Where b is the beta value.
H0 – Null Hypothesis
H1 – Alternate Hypothesis
If the beta coefficient is significant, the interpretation is that for every 1-unit increase in the predictor variable, the outcome variable will increase by the beta coefficient value.
It was found that R Square is 93%, the regression Equation was found to be
Y= -1.02879 + 0.939X
Here Beta value is 0.939
Interpretations:
We can see that the R square value is 0.31314, which means that Nifty can explain 31.3 % of the weekly returns of Sundaram Finance Limited. Because the proportion is greater, we may deduce that Sundaram Finance Limited. follows the Nifty trend.
We can observe here that the Beta value is 0.939 meaning that 1 unit change in Nifty leads to 0.939 change in weekly returns of Sundaram Finance Limited. We also need to note that the value is beta is positive indicating the presence of a positive relationship between the two variables.
H0: Nifty is not influencing the weekly returns of Sundaram Finance Limited.
H1: Nifty is influencing the weekly returns of Sundaram Finance Limited.
Here as the F value is 20.0603 which is greater than 4, thus we can accept the alternative hypothesis and reject the null hypothesis, concluding that nifty is influencing the weekly returns of Sundaram Finance Limited.
Also, the Significance F value is 0.000052 which is more than .025 thus the model is significant.