Relationship between Nifty & Nestle India
Introduction –
Nestlé India Limited is the Indian subsidiary of Nestlé which is a Swiss multinational company. The company is headquartered in Gurgaon, Haryana. The company’s products include food, beverages, chocolate, and confectioneries.
The company was incorporated on 28 March 1959 and was promoted by Nestle Alimentana S.A. via a subsidiary, Nestle Holdings Ltd. As of 2020, the parent company Nestlé owns 62.76% of Nestlé India.The company has 9 production facilities in various locations across India.
NESTLÉ India set up its first manufacturing facility at Moga (Punjab) in 1961 followed by its manufacturing facilities at Choladi (Tamil Nadu), in 1967; Nanjangud (Karnataka), in 1989; Samalkha (Haryana), in 1992; Ponda and Bicholim (Goa), in 1995 and 1997, respectively; and Pantnagar (Uttarakhand), in 2006. In 2012, Nestlé India set up its 8th manufacturing facility at Tahliwal (Himachal Pradesh).
The 4 Branch Offices located at Delhi, Mumbai, Chennai and Kolkata help facilitate the sales and marketing activities. The NESTLÉ India’s Head Office is located in Gurgaon, Haryana.
Objective
To calculate β & find its significance
Data collection
The data was gathered from a secondary source, the NSE’s official website. Data on the NSE’s daily closing stock price & the Nestle India has been gathered. The data has been narrowed down to the weekend (Friday) closing price only.
Data Analysis
Regression Statistics
Multiple R 0.842170836
R Square 0.709251718
Adjusted R Square 0.708069814
Standard Error 575.4416442
Observations 248
Interpretations:
Here, we can observe that the R square value is 0.842170836, which means that 84.21% of weekly returns of Nestle India Industries can be explained by Nifty.
We can infer that to the given extent Nestle India does follow the Nifty trend.
Interpretations:
H0: Nifty is not influencing the weekly returns of Nestle India
H1: Nifty is influencing the weekly returns of Nestle India
Here as the F value is 600.0927 which is more than 4, thus we reject the null hypothesis & accept the alternate hypothesis, concluding that nifty is influencing the weekly returns of Nestle India
Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Lower 95.0% Upper 95.0%
Intercept 739.2919 68.1186838 10.853 1.12E-22 605.1217 873.4622 605.1217 873.4622
X Variable 1 0.015951 0.004119612 3.87201 0.000138 0.007837 0.024065 0.007837 0.024065
Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Lower 95.0% Upper 95.0%
Intercept 5639.552149 521.4661511 10.8148 1.48162E-22 4612.44417 6666.660132 4612.444167 6666.660132
X Variable 1 0.769179825 0.031399209 24.49679 6.20192E-68 0.70733424 0.831025409 0.707334241 0.831025409
Interpretations:
We can observe here that the Beta value is 66.66660 meaning that 1 unit change in Nifty leads to 66.66 change in weekly returns of Nestle India. Also, the value of beta is positive indicating the presence of a positive relationship between the two variables.
The P value is 1.48162E-22 which is less than 0.05, thus the model is significant at 95% confidence interval.