Title: Relationship of PNB with Nifty50
Author: Pushyami Tallam
Introduction: Punjab National Bank (abbreviated as PNB) is an Indian Public Sector Bank based in New Delhi. It was founded in May 1894 and is the third largest public sector bank in India in terms of its business volumes, with over 180 million customers, 12,248 branches, and 13,000+ ATMs.
PNB has a banking subsidiary in the UK (PNB International Bank, with seven branches in the UK), as well as branches in Hong kong, Kowloon, Dubai and Kabul. In Nepal, PNB owns 20% of Everest Bank which has 122 branches. PNB also owns 41.64% of JSC (SB) PNB Bank in Kazakhstan, which has four branches.
Objective: To calculate Beta and find its significance.
Views and Reviews: Punjab National Bank is a major public sector bank of India which plays an important role in the development of Indian financial system. Punjab National Bank is one of the oldest financial public sector companies and it’s highly required to do accept promotional strategy for banking product, retaining customer in bank, customer complaint or feedback cell is highly required because due to the intense competition in the financial market, Punjab National Bank should improve their strategies to attract more customers PNB needs an efficient and experienced marketing force which can improve its marketing share
Data collection: Data was downloaded from nseindia.com for Nifty as well as for PNB. All the columns were deleted for both the sheets except date and closing price and the Friday closing price were found for both of them. Returns for X and Y were calculate, X being Nifty and Y being PNB. Finally data analysis was done.
Data analysis: Equation
Return of PNB = -0.7067 + 0.9812(Return of Nifty 50)
(17.7817)(t-stat for b)
R Square = 0.8682
F = 316.189
The above equation shows the relationship between Nifty 50 and PNB. Return of PNB is dependent variable and Return of Nifty 50 is independent variable. Positive sign means if Nifty50 increases PNB also increases. If Nifty50 price rises by 1 unit, PNB share price will rise by 0.9812 and vice versa. No of observation are 50. Figure which is written in bracket that is (17.7817) is t- stat for b. The P value for which is 9.26E-23 which means Nifty 50 is statistically insignificant at 5% level. R square is 0.8682 which means 86.82% of variances in PNB share price are explained by Nifty 50 in other words 13.18% is error means 13.18% is due to the variables which are not in the model. F is 316.189. Overall model is statistically insignificant at 5% level.
Conclusion: Beta is -0.7067 which is less than 1, therefore it is good for long term investment.
References:
https://ijcrt.org/papers/IJCRT2101498.pdf
https://www.ijbmi.org/papers/Vol%286%291/Version-2/B0601020515.pdf