Title: Relationship between Nifty 50 and Axis Bank Ltd.
Author: Akshar Rakesh Oza
Introduction: Axis Bank Limited, formerly known as UTI Bank (1993–2007), is an Indian banking and financial services company headquartered in Mumbai, Maharashtra. It is India’s third largest private sector bank by assets and fourth largest by Market capitalisation. It sells financial services to large and mid-size companies, SMEs, and retail businesses.
Objective: Calculate beta and find its significance.
Views and Reviews: The Securities Appellate Tribunal (SAT) quashed market regulator Sebi’s orders against lenders, including Axis Bank, HDFC Bank, ICICI Bank, IndusInd Bank and Bajaj Finance, prohibiting them from revoking the shares pledged by Karvy Stock Broking.
The tribunal has allowed Axis Bank to invoke the shares pledged in its favour and asked the Securities and Exchange Board of India (Sebi) to restore the pledge in favour of the other banks within four weeks and also compensate them.
Shares of Axis Bank gained 1.6 percent to Rs 1,150 per share on December 13 after around 3.1 crore shares worth Rs 3,465 crore changed hands in block deal at Rs 1,120 a share.
Money control could not ascertain who the buyers and sellers were, but reports suggested that entities associated with Bain Capital were eyeing to offload stake via a block deal. The sellers could include BC Asia Investments VII, BC Asia Investments III, and Integral Investments South Asia IV.
The offer floor price of Rs 1,120 a share, was at a discount of a percent to the December 12 closing price of Rs 1,131
Data Collection: Data was downloaded from the website nseindia.com. Data was extracted for the period 1-10-22 to 30-09-2023, and all the data except the data and closing price for the end of the week excluded. The returns were calculated with the previous week’s return as the base.
Weekly returns of Nifty = X
Weekly returns of Axis Bank Ltd. = Y
Linear Regression is conducted.
Data Analysis: Axis: -0.9214 + 0.983829 – Nifty 50
T-Stat: 31.24455
N: 50, R-square: 0.953135, F: 976.222, P-value: 1.48
The above equation shows the relationship between Nifty 50 and Axis Bank Ltd., Axis bank is dependent variable and Nifty 50 is independent variable. The positive sign shows that is Nifty 50 rises Axis Bank also rises and vice – versa.
If Nifty 50 rises by 1rs Axis Bank will increase 0.98 paisa. Income is statistical at 1% level.
No. of. Observers are 50. R-square is 0.95 which means 90% of Axis Bank depends on Nifty 50. In other words, 10% is error which may be due to other variables which are not taken in the model. F is 976.222 and P-value is 1.48 which means overall, the model is statistically significant at 1% level.
Conclusion: Beta is 0.98. Since Beta is 0.98 which is less than 1, it is advisable to invest for a long term as it is less volatile.
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