Headline : Relationship of Vedanta with NIFTY
Author : Vidhi Nigam
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. With world-class strategic assets based across India, South Africa, Namibia and Liberia, we are rightly positioned to create long-term value with superior cash flows.
Objective : to calculate beta and find its significance
View and review : Vedanta, facing debt repayment challenges, is considering a strategic sale and demerger of its entities to remain liquid. This approach allows the company to choose what to sell and offers tax efficiency. However, splitting the debt among the operating companies may raise concerns for lenders. Vedanta Limited, the holding company, could experience a holding company discount and a decrease in dividend yield. While there may be a short-term bounce, long-term investors are advised to stay away from ..
Data collection : The data is collected from www.yahoofinance.com/ for the period 1-12-2022 to 30-11-2023.
Data analysis : VEDL SHARES = -0.718 + 1.348 NIFTY
n= 50, R square= 0.281, F=18.428
The above equation shows the relationship of VEDL with Nifty
If Nifty rises by 1, then VEDL will rise by 1.348 units
t stat for b is 4.292 and the p value is 8.754 which is more than 0.05, so b=0, which means nifty does not impact VEDL shares
R square is 0.28 meaning 28% of VEDL shared is explained by NIFTY, remaining 72% depends on other things like fundamentals
F = 18.42 and p value is more than 0.05 so the model is not statistically significant at 5% level.
Conclusion : As beta (1.348) which is more than 1 , so good for short term investments
References : https://www.nseindia.com/get-quotes/equity?symbol=VEDL