Author: Falguni Kesaria
Introduction: Federal Bank Limited is an Indian private sector bank headquartered in Aluva, Kochi, Kerala . The bank was named Federal Bank Limited on 2 December 1949, after completing the formalities of Banking Regulation Act, 1949. It is considered as one of the major Indian commercial banks in the private sector having more than thousand branches and ATMs spread across different States in India. The bank is also listed in the Bombay Stock Exchange, National Stock Exchange of India and London Stock Exchange and has a branch in India’s first International Financial Services Centre (IFSC) at the GIFT City.
Objective: To calculate beta of Federal bank Limited and find out its significance.
Views & Reviews: Shyam Srinivasan took charge as the Managing Director & CEO of Federal Bank on 23rd September 2010. He joined Federal Bank, equipped with the experience of leading multinational banks in India, Middle East and South East Asia, where he gained significant expertise in retail lending, wealth management and SME banking.
Siddhartha Sengupta is a seasoned banker with rich experience and has worked in various leadership positions in India and abroad He has over 36 years of banking experience with State Bank of India. He was the Chairman of the Board of 5 overseas subsidiaries of SBI The last position he held in SBI was Deputy Managing Director – International Banking He represents 551, Risk Management and Banking sectors on the Board of Federal Bank.
Data Collection: Data for this period has been downloaded from the NSE India site and only Friday closing price are taken. Has find weekly return “X” and weekly return “Y”.
Data Analysis: Y=25.2725-1.1271Xi
(-1.1293)
N=50 , R²=0.03, F=1.2755
The above equation shows the relationship between price(x) and demand (Y),
The Negative sign means Negative relationship, meaning if X rises Y falls and vice versa. If X rises by one unit Y falls by 1.1271 units. N means there are 50 observations. Figure in bracket is T stat for B. So, B is statistically significant at 5% level. R² is 0.03 which means 3% of Y is explained by X balance 97 is error due to the variables which are not in model. F is 1.27 which is more than the table value so overall the model is statistically significant at 5% level.
Conclusion: Beta = -1.1271, as Beta is less than 1 so Federal bank ltd. is good for Short term. This is because b>1.