Title:- Regression Relationship between weekly returns of Nykaa and
Nifty50
Author:- Neha Gujar
Introduction:-
Nykaa is an Indian e-commerce company, founded by Falguni Nayar in 2012 and headquartered in Mumbai. It sells beauty, wellness and fashion products across websites, mobile apps and 100+ offline stores. In 2020, it became the first Indian unicorn start up headed by a woman.[5]
Nykaa sells products which are manufactured in India as well as internationally. In 2015, the company expanded from online-only to an omnichannel model and began selling products apart from beauty. As of 2020, it retails over 2,000 brands and 200,000 products across its platforms.
Objective:- Calculations of beta of Nykaa and its significance
Literature Review:-
1. Investment sensitivity and managerial decision making behavior of Indian firms
They examine the interrelation ship between the concerns for valuation and investment sensitivity and used a sample statistics of selected listed firms that represent the CNX Nifty Index and test for the dependence of the investment behavior of the firm. We find that the surpise in accounting earnings announcements is negatively associated with abnormal stock returns and the investment decisions taken by the firms are negatively sensitive to changes in investment opportunities. (Pankaj Kumar & Jasjit, 2013)
2. Does Spot Nifty Fluctuate with Macroeconomic Indicators?
The goal of this research is to examine the relationship between Spot Nifty the current price of Nifty which comprises fifty shares acquainted by the national stock exchange of India and selected macroeconomic variables which immensely affect the execution of the financial market with reference to the Indian financial market. Data from 2003 to 2018 have been used to determine the clear picture of pre- and post-crisis 2008. The ADF test has been applied to test the stationary of the data. The research implies that there is a positive association between certain macroeconomic factors and spot Nifty. (Shweta & Archana 2019)
Data Collection:
Data was collected from yahoo finance for the time period 1st April 2022 to 31st March 2023, then using Excel it was manipulated by finding the Friday closing price. weekly returns for nifty and Nykaa was calculated by formula ((C3-C2)/C2*100) which was written as X and Y respectively . by doing regression through data analysis fit the regression model i.e. Nykaa weekly Returns= a+b*(Nifty weekly returns)
Data Analysis:
Regression model for data is,
Nykaa weekly Returns= -1.103+1.375Nifty weekly Returns
(t-stat-3.04)
N=50
R^2=0.01614
F=9.24
Significance=0.003822
P-value=0.0038
The above equation shows the relationship between X and Y (As b is positive) means there is a direct relationship which implies that if X rises, Y Also rises and vice versa. In this equation b=1.37,
That is if X rises by 1 unit, Y will rise by 1.37 unit.
t-stat for b is greater than critical value Hence b is statistically significant at 5% level of significance level.
R^2=0.016 which means only 1% of Y i.e. Nykaa company weekly returns is explained by X i.e. Nifty returns
Similarly F=9.24 Which is also greater than table value.
And P-value is less than 0.05 so overall model is statistically significant at 5% level of significance
Conclusion :-
Since it can be seen that value of beta (b=1.375) is more than 1 which implies Nykaa company is good for short term investment
Reference :
Pankaj Kumar Gupta & Jasjit Bhatia, 2013. “Investment sensitivity and managerial decision making behaviour of Indian firms,” Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 61(7), pages 2157-2162.
Shweta Ahalawat & Archana Patro, 2019. “Does Spot Nifty Fluctuate with Macroeconomic Indicators?,” Asian Journal of Empirical Research, Asian Economic and Social Society, vol. 9(7), pages 175-187