NAME – RACHIT MAHESHWARI
SAPID – 80012100044
DIVISION A
Relation between NIFTY and RBL Bank
Introduction:
RBL Bank is one of India’s leading private sector banks with an expanding presence across the country. The Bank offers specialized services under five business verticals namely: Corporate & Institutional Banking, Commercial Banking, Branch & Business Banking, Retail Assets and Treasury and Financial Markets Operations. It currently services over 10.66 million customers through a network of 500 branches; 1,424 business correspondent branches (of which 274 banking outlets) and 407 ATMs spread across 28 Indian states and Union Territories.
RBL Bank is listed on both NSE and BSE (RBLBANK).
Objective:
To calculate the Beta value and 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 and the RBL bank has been gathered. The data has been narrowed down to the weekend (Friday) closing price only.
Data Analysis:
Regression Statistics
Multiple R 0.77582638
R Square 0.60190658
Adjusted R Square 0.59219698
Standard Error 15.0529401
Observations 43
Interpretations:
Here, we can observe that the R square value is 0.60190658, meaning that the 60.19% of weekly returns of RBL Bank can be explained by Nifty, which is comparatively higher than most industry trends. We can conclude that RBL Bank does follows the Nifty trend.
ANOVA
df SS MS F Significance F
Regression 1 14046.5804 14046.5804 61.9909001 9.92E-10
Residual 41 9290.23123 226.591006
Total 42 23336.8116
Interpretations (Hypothesis):
H0: Nifty is not influencing the weekly returns of RBL Bank
H1: Nifty is influencing the weekly returns of RBL Bank
Here as the F value is 61.9909001 which is more than 4, thus we reject the null hypothesis and accept the alternate hypothesis, concluding that nifty is influencing the weekly returns of SBI.
Also, the Significance F value is 9.92E-10 which is less than 0.05 thus the model is significant.
Coefficients Standard Error t Stat P-value Lower 95% Upper 95%
Intercept -130.22193 34.1358695 -3.8148123 0.00045123 -199.16072 -61.3
Closing price of NIFTY 0.01621322 0.00205923 7.87343001 9.92E-10 0.01205451 0.02
Interpretations:
We can observe here that the Beta value is 0.01621322 meaning that 1 unit change in Nifty leads to 0.01621322 change in weekly returns of RBL Bank. Also, the value of beta is positive indicating the presence of a positive relationship between the two variables.
P value is 0.00045123 which is less than .05 thus the model is significant at 95% confidence interval.