To calculate beta value of Sundaram Finance Limited company and find its significance

Problem Title:
To determine RELATIONSHIP OF Nifty and Sundaram Finance Limited

Author – Swati Gupta

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 value of Sundaram Finance Limited 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.
The above regression equation tells us the relationship between X and Y. Where X is NIFTY’s weekly returns and Y is Sundaram Finance Limited’s weekly returns.
The positive sign of Beta tells us the that there is a positive relationship between NIFTY and Sundaram Finance Limited’s weekly returns.

Observations:
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

CONCLUSION:
β is statistically significant in case of NIFTY and Sundaram Finance Limited. Also, it can be concluded that Sundaram Finance Limited is a low beta share. Since it is less than 1.

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