Author: Ritika Jagtap
Introduction: Reliance Industries Limited (RIL) is one of India’s largest conglomerates, with interests spanning across various sectors such as petrochemicals, refining, telecommunications, and retail. Reliance is the largest public company in India by market capitalisation and revenue and the 100th largest company worldwide. It is India’s largest private taxpayer and largest exporter, accounting for 7% of India’s total merchandise exports. The company has relatively little free cash flow and high corporate debt.
Objective: To calculate β and find its significance
: To assess the correlation between the stock price of Reliance Industries and movements of the Nifty 50.
Views and Reviews: Reliance Industries’ performance in 2021-22 demonstrated resilience and adaptability amid a dynamic business environment. While the conglomerate faced scrutiny on certain fronts, particularly regarding the execution of its ambitious green initiatives and potential risks, the overall sentiment remained positive. The company’s strategic moves and ability to navigate challenges will likely shape its trajectory in the coming years.
Data Collection: Data downloaded from NSEIndia.com
: Period under consideration – 1 Dec 2022 to 30 Nov 2023
Data Analysis:
Reliance Industries (Y) = 2773.10 – 0.0178 X
- R2 is 0.0175 which means 1.75% of variances in Nifty50 can be explained by variation in Reliance Industries.
- F= 0.8551, t-stat is -0.925 and p-value for this is 0.3597, we can say that overall, the model is statistically insignificant.
- β = -0.0178
a negative sign means if Nifty50 falls, the value of Reliance Industries does not fall.
- Therefore, the relationship between Reliance Industries and Nifty 50 may not be statistically significant.
Conclusion: β<1; it is good for long term investment.
References:
- NSE India: www.nseindia.com
Reliance Ind Details: https://en.wikipedia.org/wiki/Reliance_Industries