Title: Relationship between Nifty 50 and Vedanta Ltd
Author: Vidhi Shukla ITM Business School
Batch: Finance 2 Roll no. 21230023534
Introduction:
Vedanta Limited is a global powerhouse of minerals, power & energy companies with nearly 100,000 employees across world-class assets in India and Africa.
Formerly a FTSE 100 company and headquartered in London, Vedanta uniquely covers traditional and new-age businesses. Vedanta Resources Limited is the holding company for Vedanta Limited and Konkola Copper Mines. These businesses in turn have multiple subsidiaries with a portfolio comprising operations in Oil & Gas, Zinc, Lead, Silver, Copper, Iron Ore, Steel, Nickel, Aluminium, Power, and Glass substrates and foraying into semiconductors and display glass.
Vedanta has a strong global presence. Our corporate goal is to create sustained shareholder value through continuous improvement, research & development, strategic acquisitions, and sustainable development & efficient utilisation of natural resources.
Objectives:
To Calculate Beta and find Its Significance.
View And Reviews:
Vedanta’s announcement on demerging of its businesses into six listed companies, on 3rd October 2023 a host of brokerages believe the process would simplify the corporate structure, enhance the risk mitigation framework, ensure autonomy, and improve transparency at the Anil Agarwal-led firm.
Motilal Oswal said the debt positions at both Vedanta and Holding company Vedanta Resources would remain unchanged.
PhillipCapital does not expect any meaningful downside on the counter from current levels. It kept its target unchanged at Rs 290.
Data Collection:
Data was downloaded from nseindia.com for 01/10/2022 to 30/09/2023 for Nifty as well as for Vedanta Ltd. All the columns were deleted for both the sheets except the date and closing price and the Friday closing price were found for both. Returns for X and Y were calculated, X being Nifty 50 and Y being Vedanta. Finally, data analysis was done.
Data Analysis:
Equation: Return on Vedanta = 0.9747 + 1.4111 Return on Nifty 50
t-stat for b = 4.1682
R Square = 0.26989
F = 17.3736
The above equation shows the relationship between Nifty 50 and Vedanta Ltd. Return of Vedanta is dependent variable and Return of Nifty 50 is independent variable. Positive sign means if Nifty 50 increases Vedanta Ltd also increases. If Nifty 50 price rises by 1 unit, Vedanta Ltd share price will rise by 1.4111 and vice versa. No of observation are 49. Figure which is written in bracket that is (4.1682) is t- stat for b. The P value for which is 0.04712 which means Nifty 50 is statistically significant at 5% level. R square 0.26989 is which means 26.989% of variances in Vedanta Ltd share price are explained by Nifty 50 in other words 0.7301 is error means 73.01% is due to the variables which are not in the model. F is 17.3736. Overall model is statistically significant.
Conclusion:
Beta is 1.4111 which is more than 1, therefore it is good for Short Term Investment.
References: