TITLE: RELATIONSHIP BETWEEN STEEL AUTHORITY OF INDIA LIMITED (SAIL) ANF NIFTY 50.
AUTHOR: Shreya Kapadia (MMS) 010010
INTRODUCTION:
SAIL jumped 4% on 17 March 2023: SAIL share price jumped sharply after the company declared an interim dividend of Rs. 1 per share with March 24 as the record date.
SAIL fell marginally on 28 March 2023: SAIL share prices eased marginally amid media reports of steel ministry looking to delay four projects worth Rs 2,338 crore.
OBJECTIVES: Calculate of Beta of the Steel Authority of India (SAIL) and its significance.
LITERATURE REVIEW:
1) Nifty 50 and Financial Sector Indices
The study aims to analyze the long-term and short-term relationships between the Nifty 50 and financial sector indices and identify the impact of global events on these indices. The study uses various statistical tools such as correlation analysis, Granger causality test, and cointegration test to analyze the data. The results indicate that there is a significant positive long-term relationship between the Nifty 50 and financial sector indices, which suggests that the performance of the financial sector has a significant impact on the overall stock market in India. The study concludes that investors need to consider the performance of the financial sector while making investment decisions in the Indian stock market.
(Bhuvaneshwari, 2021)
2) Nifty-fifty and sectorial indices of National Stock Exchange
The study investigates the relationship between Nifty 50 index and sectoral indices of the National Stock Exchange (NSE) in India using daily data from January 2011 to December 2019. The study applies the Granger causality test to determine the direction of causality between the Nifty 50 index and the sectoral indices.
The study concludes that there exists a bidirectional causality between the Nifty 50 index and the sectoral indices of the NSE, which means that they both have a significant impact on each other and move together. Furthermore, the study suggests that the banking and financial services sector have the highest linkage with the Nifty 50 index, followed by the IT sector. Therefore, investors interested in investing in the Indian stock market should closely monitor the movements of both the Nifty 50 index and the sectoral indices to make informed investment decisions. (Vinod & Kamaljit, 2020)
DATA COLLECTION:
Data was collected from the NSE site from Data and then the data was manipulated.
The Weekly return of Nifty50 is denoted as: X.
The Weekly return of SAIL is denoted as: Y.
DATA ANALYSIS:
SAIL returns: Y= 0.4446 + 1.7167 Nifty Returns
(6.718)
Bracket figure t stat: 6.718
N= 51 R^2= 0.48 F= 45.13
Variance of error= 13.708
TSS= 1290 ESS= 618.68 RSS= 671.69
The above equation shows a relationship between SAIL and Nifty 50, the positive sign means there is a direct relationship which means if Nifty (X) increases, SAIL (Y) also increases.
In this equation, b= 0.0446
If Nifty increases by 1 unit, SAIL will increase by 1.7167 unit.
Figure In the bracket is t-stat for b, it is more than the table value 2.0096, therefore b is statistically significant at 5% level.
H0 b= 0
H1 b≠ 0
As the calculated t-stat for b is more than the table value, reject H0 and accept H1.
R^2= 0.48, which means 48% of the variance of SAIL is explained by Nifty50 and the other 52% is an error due to other factors.
Similarly, F= 45.13 which is more than the table value 4.038, which means the overall model is Statistically significant at 5% level.
CONCLUSION: The beta is more than 1 which means it is good for short-term investment.
REFERENCE:
Dr. Bhuvaneshwari D. (2021). An Analytical Study of Nifty 50 and Financial Sector Indices. In Proceedings of the First International Conference on Combinatorial and Optimization, ICCAP 2021, December 7-8, 2021, Chennai, India (ICCAP, pp. 228-234). EAI.
Singh, K., & Kumar, V. (2020). Dynamic linkage between nifty-fifty and sectorial indices of national stock exchange. American Journal of Economics and Business Management, 3(2), 17-27.