Title: – Relationship of Nestle India Limited with Nifty 50 and to calculate Beta.
Author: – Naaz Shaikh
Introduction: – Nestle India is one of the largest players in India’s fast-moving consumer goods sector and has a long history in the country. Nestle India Limited was incorporated at New Delhi on 28 march 1959 and was promoted by Nestle Alimentana S.A. via a wholly owned subsidiary, Nestle Holdings Ltd., Nassau, Bahama Islands.
Objectives: – To calculate Beta of Nestle India Limited and see its significance.
Literature Review / view & Review: – 1) intercept: Intercept is -9123.36. This represent the estimated value of Nifty when the Equity is Zero. 2) Coefficient: coefficient for equity is 1.6314, says that on average, for every unit increase in the equity, nifty is expected to increase by 1.63 units.
Data collection: – The data for Nifty 50 and Equity has been taken for regression calculation.
Data Analysis:- Nestle shares = -9123.36+1.63nifty
N = 48, Rsquare = 0.68, f = 2.13
The above equation shows the relationship of Nestle with nifty
If nifty rises by one unit nestle will rise by 1.63 unit
t-stat for b is 10.12 and the p value is 2.13 which is more than 0.05 so meaning nifty does impact nestle shares
Rsquare is 0.68 meaning 68% of nestle share is explained by nifty, meaning 32% depends on other fundamental
F = 102.54, and p value is more than 0.05 so the model is statistically significant at 68% level
Conclusion: – AS Beta is (1.63) is more than 1, so good for short term investment.
Reference: –