Relationship between Nifty 50 and BPCL
Author: Bhavi Shah
Introduction: Bharat Petroleum Corporation Limited (BPCL) is an Indian central public sector undertaking under the ownership of Ministry of Petroleum and Natural Gas, Government of India. It operates three refineries in Bina, Kochi and Mumbai. BPCL is India’s second-largest government-owned downstream oil producer, whose operations are overseen by the Ministry of Petroleum and Natural Gas. It was ranked 309th on the 2020 Fortune list of the world’s biggest public sector undertakings, and 792nd on Forbes’s 2021 “Global 2000” list.
Objective: To calculate beta of BPCL and its significance
Data Collection: Data of BPCL (Bharat Petroleum Corporation limited) from 01-12-2021 to 30-11-2022 downloaded from NSE website.
• Friday weekly closing prices has been found out
• Weekly Return have been calculated with the formula of (Y2-Y1)/Y1*100
• Weekly Return of Equity have been regressed on Weekly Return of Nifty
Data Analysis:
Weekly Return of BPCL= -0.283 + 0.036 Weekly Return of Nifty + E
• t-stat = 0.181
• R2 = 0.00069
• F = 0.033
• N = 49
The above equation tells us about the relationship between Weekly Return of BPCL and Weekly Return of Nifty. The negative sign means that there is a inverse relationship. If nifty rises, equity falls and if nifty falls, equity rises. The co-efficient of weekly return of nifty is 0.036, which means if nifty rises by 1 unit, Narayana Health will fall by 0.036 units and vice versa.
• Number of Observations are 49 and t-stat is 0.181
• P value is 0.858 , which is more than 0.05, means that b is statistically insignificant at 5%. Even it is more than 0.01, b is statistically insignificant at 1% level.
• R2 is 0.00069, which means that only 0.069% of Y (BPCL) is explained by X (nifty), balance of 99.91% is error. Error is due to the variables which are not in the model.
• F is 0.033 , the P value for which is 0.589167333 > 0.01, means overall the model is statistically insignificant.
Conclusion:
Since b = 0.035570239 is less than 1, it is statistically insignificant.
BPCL is not a good option for investment because for every increase in nifty there will a decrease in the equity of BPCL.