Description of relation between BSE SENSEX INDEX AND TECH MAHINDRA LIMITED

AUTHOR:      VISHESH TIPLE ( FINANCE- 1)      

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INTRODUCTION:    Tech Mahindra is an Indian multinational information technology services and consulting company. Part of the Mahindra Group, the company is headquartered in Pune and has its registered office in Mumbai. Tech Mahindra is a US$6.0 billion company with over 148,000 employees across 90 countries. The company was ranked  in India’s IT firms and overall No. 47 on Fortune India 500 list for 2019. On 25 June 2013, Tech Mahindra announced the completion of a merger with Mahindra Satyam. Tech Mahindra is one of the top Big Tech (India) companies. Tech Mahindra has 1,262 active clients as of June 2022.

 

OBJECTIVE OF THE  REPORT –

To Calculate Beta and its significance of the equity stock of TECH MAHINDRA LIMITED.

 

VIEWS  and REVIEWS :

The tagline of Tech Mahindra is “CONNECTED WORLD. CONNECTED EXPERIENCES.”

 

ANAND MAHINDRA The CEO of Tech Mahindra left us with following sayings which indicate the core values of the company

  • “My aspiration is that M&M become one of the most customer-centric organizations in the world. If we focus on understanding our customers, we will be able to develop customer-centric innovations.”

 

  • “Anyone who makes time frames beyond tomorrow probably isn’t pushing himself hard enough.”

PROCEDURE FOR DATA COLLECTION

First I logged on to BSE official website www.BSEindia.com. Then I clicked on historical data via (https://www.bseindia.com/Indices/IndexArchiveData.html). Then I selected the period from 01st  Nov 2022 to 31st Oct 2023 then clicked apply and downloaded the CSV file of the price of the BSE index.

Similar procedure is followed for obtaining the data of data of Tech Mahindra limited for the period 01st  Nov 2022 to 31st Oct 2023.

 

After downloading the CSV  Files of both the  BSE index and Tech Mahindra share price I proceeded to calculate beta of the stock of Tech Mahindra limited.

 

PROCEDURE FOR DATA ANALYSIS

For calculating the weekly returns of the stock and the bse index, I selected the closing price of every last day of the trading week i.e. Friday

For arriving at the last day of the week I applied the formula =Weekday(cell value,2) then it returns the days signifying: 1  for Monday 2 for Tuesday likewise 6 for Friday , I kept only the no 6 denoting Friday and deleted the rest useless data for the purpose.

 

On performing the above mentioned procedure, we are left with three columns first being date column 2nd  being closing prices of the stock and 3rd being closing price of the BSE index.

 

Now we will calculate the corresponding return for each week from the stocks by applying the formula = {(Closing value – Opening Value)/ Opening Value*100}.

 

Formula used ,

for calculation of Beta = COVARIANCE ( RETURN ON STOCK,RETURN ON MARKET INDEX)/VARIANCE OF MARKET

 

Beta= COV(Ri, Rm)  

          VAR (Market)

 

={Ri – Mean of Ri}{Rm- Mean of Rm}/No of items

{(Rm- mean of Rm )^2}/No of items

Hence on making the above calculations we get the beta for the company =.7371 which is less than 1, that indicates that the company is less volatile in nature hence it is suitable for long term investments.

 

By applying the anova on the above data obtained we obtained the correlation between the stock and market return .26506 which indicates there is positive relation between the movement of price of stock and market movements.

Data Analysis:

Equation: Y=.2685115+0.73708x

Interpretation:

 The above equation shows the relation between BSE SENSEX and Tech mahindra  ltd .

The regression equation is in the form of Y = mx + b, where:

  • Y represents the dependent variable.
  • X represents the independent variable.

Interpreting the coefficients:

  • The coefficient is 2685 is the intercept of regression line.
  • The coefficient 0.73708 is the slope of the regression line. It indicates the change in Y for a one-unit change in X. In this case, for every unit increase in X, Y is expected to increase by 0.73708 units.
  • Number of observations are 49.
  • .4857 is the t-stat for Y, the p-value for which is .62941.
  • R square is 0.070209. This value indicates that approximately 02% of the variability in the dependent variable can be explained by the independent variables in the model.
  • The ANOVA table shows the analysis of variance. The regression has a significant F .06577 with a very low p-value .62941. This implies that the overall regression model is statistically insignificant in explaining the variability in the dependent variable.

Conclusion: Beta is 0.7370 which is less than 1, it means that Tech Mahindra  is good for long term investment.

 

 

References:

http://www.yahoofinance.com/

https://www.techmahindra.co

 

                                         

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