Title– Relation of Reliance Industries Limited with Nifty Fifty and to calculate Beta
Author– Rasika R. Gurav
Introduction– Reliance Industries Limited (RIL) is one of the largest and most prominent conglomerates in India, playing a significant role in various sectors of the economy. Founded by Dhirubhai Ambani in 1966, the company has grown to become a powerhouse with diversified business interest spanning petrochemicals, refining, oil and gas exploration, retail, telecommunications and more.
Objectives– To calculate Beta of Reliance to see its significance.
Literature Review–
- Reliance Industries Limited engages in hydrocarbon exploration and production, oil and chemicals, textile, retail, digital, material and composites, renewables, and financial services businesses worldwide. The company produces and markets petroleum products, such as liquefied petroleum gas, propylene, naphtha, gasoline, jet/aviation turbine fuel, kerosene oil, diesel, Sulphur, and petroleum coke. It also provides petrochemicals, including high-density and low-density polyethylene (PE), linear low-density PE, polyester fibers and yarns, polypropylene, polyvinyl chloride, purified terephthalic acid, ethylene glycols and oxide, paraxylene, ortho xylene, benzene, linear alkyl benzene and paraffin, poly butadiene rubber, styrene butadiene rubber, butyl rubber, and polyethylene terephthalate [1].
- Reliance Industries Ltd is India`s largest private sector enterprise, with businesses in the energy and materials value chain. The company works under different business segments: Exploration and Production, Petroleum Refining and Marketing, Petrochemicals, Textiles and Retail. Products and brands offered by the company includes: Crude oil and natural gas, LPG, Propylene, Naphtha, Gasoline, Jet/Aviation Turbine Fuel, Superior Kerosene Oil, High Speed Diesel, Sulphur, Petroleum Coke, Polypropylene, High Density Polyethylene, Low Density Polyethylene, Linear Low Density Polyethylene, Polyvinyl Chloride, Poly Olefin, Suiting’s ,Shirting’s, Readymade Garments , Furnishing fabrics, Day curtains, Automotive upholstery, Suiting’s, Ready-to-stitch, Take away fabric, Fleet management services, Highway hospitality services, Vehicle care services, Linear Alkyl Benzene, Paraxylene, Purified Terephthalic Acid, Mono Ethylene Glycol, Staple Fiber, Filament Yarn, Texturized yarn, Twisted yarn, Moisture management yarn, Quality certified sleep products & Polyethylene terephthalate [2].
Data Collection–
The data for Nifty and Equity of Reliance has been from nseindia.com and yahoo finance.com from 1st November,2022 to 31stOctober, 2023.Data was manipulated to calculate the Friday Closing Price.
Data Analysis–
Reliance Share=3775.07+0.6nifty
n=48, R square=0.31, F=20.73
The above equation shows the relationship of Reliance with Nifty. If Nifty rises by 1 unit, Reliance will rise by 0.6unit.
t-stat for b is 4.55 and the p-value is 0, indicates that the coefficient for Nifty is statistically significant, meaning Nifty does impact Reliance.
R square is 0.31, meaning 31% of Reliance share is explained by the movement in Nifty, meaning 69% depends upon other things like fundamentals F=20.73, and p-value is less than 0.05, so the model is significant at 5% level.
Conclusion–
As Beta is (0.6) is less than 1, so good for long term investments.
References–
(1) https://www.moneycontrol.com/india/stockpricequote/refineries/relianceindustries/RI
(2) https://finance.yahoo.com/quote/RELIANCE.NS?p=RELIANCE.NS&.tsrc=fin-srch