Title: Relationship of VEDL with Nifty 50 to calculate Beta.
Author: Vanshita Uchil
Introduction: Vedanta Limited is one of the world’s foremost natural resources conglomerates, with primary interests in aluminium, zinc-lead-silver, oil and gas, iron ore, steel, copper, power, ferro alloys, nickel, semiconductor and glass. Vedanta’s business operations are present in multiple geographies across the globe. We are committed to our vision of driving positive change in the environment and in the lives of people.
Objectives: To calculate Beta of VEDL and see its significance.
Literature Review:
“I believe that our journey to an Atmanirbhar Bharat is truly underway.”- Anil Agarwal- Chairman, Vedanta Group. India’s rise as an economic superpower will be the headline of the next decade. Our natural resources and human resources are its foundation. At Vedanta, we will make in India for the world while achieving sustainability for society and Mother Earth. An exciting future is unfolding. Let us all play our part in it.
“HoldCo has $3.1 billion of debt maturing in FY25, including $2 billion bonds. The recent arbitration case in favour of VEDL will reduce payout to the government by $20 million per quarter in the oil and gas vertical. Vedanta would also receive Rs 1,000 crore per quarter over the next five quarter, which will increase the cash flow of the vertical,” Motilal Oswal said.
Data Collection: Data for Nifty and equity for VEDL has been downloaded for the use of the date 1st November 2022 to 31th October 2023. The data was manipulated to find out Friday closing prices of Nifty 50 and VEDL , as weekly returns of Nifty 50 was termed as X and weekly returns of VEDL was termed as Y. They were regressed and a relationship between the two was plotted.
Data Analysis:
VEDL SHARES = -0.899 + 1.251NIFTY
n= 48, R square= 0.2908, F=19.2763
The above equation shows the relationship of VEDL with Nifty
If Nifty rises by 1, then VEDL will rise by 1.251 units
t stat for b is 4.390 and the p value is 6.38E which is more than 0.05, so b=0, which means nifty does not impact VEDL shares
R square is 0.28 meaning 3% of VEDL shared is explained by NIFTY, remaining 97% depends on other things like fundamentals
F = 19.27 and p value is more than 0.05 so the model is not statistically significant at 5% level.
Conclusions:
As beta (1.251) which is more than 1 , so good for short term investments
References:
https://www.nseindia.com/get-quotes/equity?symbol=VEDL
