Project Name: Relationship of Nifty and HDFC BANK
Submitted By: Harshit Singhal
Introduction
HDFC Bank Limited is an Indian banking and financial services company headquartered in the city of Mumbai, India.
It is India’s largest private sector bank by assets and world’s 10th largest bank by market capitalisation as of April 2021. It is the third largest company by market capitalisation of $122.50 billion on the Indian stock exchanges. It is also the fifteenth largest employer in India with nearly 120,000 employees.
HDFC Bank provides a number of products and services including wholesale banking, retail banking, treasury, auto loans, two-wheeler loans, personal loans, loans against property, consumer durable loan, lifestyle loan and credit cards. Along with these various digital products are Payzapp and SmartBUY.
OBJECTIVE: To calculate Beta Value of HDFC BANK and find its significance.
DATA COLLECTION: The data of NIFTY and HDFC BANK was collected through NSE Website and was downloaded from 1-March-2021 to 28-February-2022 in an excel sheet. The closing prices were found out. The data was filtered on weekly basis and then weekly returns of both NIFTY and HDFC BANK was calculated. The company returns have been regressed on nifty’s returns.
DATA ANALYSIS:
Predicted Y = -0.02109 + 0 X
N=46, R Square= 0.000333, F= 0.014659
Tstat(beta)= 2.62641
Tstat (0.05,45) = 2.0141
The above regression equation tells us the relationship between X and Y. Where X is NIFTY’s weekly returns and Y is HDFC BANK’s weekly returns.
The positive sign of Beta tells us the that there is a positive relationship between NIFTY and HDFC BANK’s weekly returns.
From the equation, it can be seen that if X rises by 1 unit, Y will rise by 0.096034 units.
T calculated is more that T tabulated which means, β is statistically significant at 5% confidence level.
R^2 is 0.000333 which means 0.3% of Y (HDFC BANK) is explained by X. And the balance is explained by error.
F is 0.014 which is more than table value which means model is statistically significant at 0.5% level.
CONCLUSION:
β is statistically significant in case of NIFTY and HDFC BANK. Also, it can be concluded that HDFC BANK is a low beta share. Since it is less than 1.