Title: Relationship of Nifty 50 and NATCO PharmaLimited
Author: Nandni Handa
Introduction of Company:
Natco Pharma is an Indian multinational pharmaceutical company based in Hyderabad, which makes finished dosage formulations and active pharmaceutical ingredients. It is a major producer of branded oncology medicines and hepatitis C drugs.
Natco Pharma Limited was incorporated in Hyderabad in the year 1981 with an initial investment of INR 3.3 million. With a modest beginning of operations as a single unit with 20 employees, Natco today has seven manufacturing facilities spread across India with dedicated modern research laboratories, capabilities in New Drug Development, etc.
Natco family currently consists of around 5000 employees, we are consistently ranked among fastest growing pharmaceutical companies in India. Natco is well recognized for its innovation in Pharmaceutical R&D.
Objective: To calculate the beta of NATCO Pharma and find its significance.
View and Reviews:
• Natco Pharma gains 9% as firm launches generic version of Revlimid in US
• Natco Pharma gains 9% as firm launches generic version of Revlimid in US
• NATCO Pharma’s (NSE:NATCOPHARM) Shareholders Will Receive A Bigger Dividend Than Last Year
Data Collection:
• The data of the company and Nifty 50 (index) has been downloaded from nseindia.com.
• The Friday returns were then calculated as per the weekday.
• The data of the company was then regressed with Nifty 50 by using data analysis technique.
• The company data is independent variable (Y) whereas the Nifty 50 data is dependent variable (X).
Data Analysis:
Y^= 0.223953 – 0.11233X
Where Y = NATCO Pharma
In the data, n= 47; R^2= 0.002879; F-stat= 0.129937
The above regression equation tells us the relationship between X and Y, where Y= NATCO Pharma and X= Nifty 50 prices.
The negative sign tells us there is indirect relationship between them, if the price rises of Nifty 50 then the price of NATCO Pharma decreases and vice versa.
R^2 is 0.002879 which means 2.879% of Y is explained by X and the balance is error.
F= 0.129937 which is more than the table value, which means overall the model is statistically significant at 5% level.
Conclusion:
Based on the research methodology and data analysis performed we can conclude that only 2.879% of NATCO Pharma can be explained by Nifty 50 and the remaining is attributed to the fundamentals and the policies of NATCO Pharma.
Since F value is greater than the table value, b value is significant. The model can be relied upon to analyse the risk factors and the analysis can depend on this model