RESEARCH METHODOLOGY ASSIGNMENT
Relation between Nifty and SBI bank.
AUTHOR: – Sakshi Mehta (FINANCE- 1)
Roll. No.: – 21230023906
Introduction: –
The State Bank of India (SBI) stands as one of the largest and oldest financial institutions in India. Established in 1806 as the Bank of Calcutta, it later transformed into the Bank of Bengal. Over the years, it merged with other banks like the Bank of Bombay and Bank of Madras, forming the Imperial Bank of India in 1921. Finally, in 1955, it was nationalized and rebranded as the State Bank of India.
SBI’s widespread network comprises thousands of branches, both domestically and internationally, making it a pivotal player in the Indian banking sector. Its services span from retail banking to corporate and investment banking, wealth management, insurance, and more. SBI plays a vital role in the nation’s economy, offering various financial products and services to individuals, businesses, and government institutions.
Objective: –
To Calculate Beta(β) and its significance of the equity stock of SBI BANK.
Reviews: –
Ratan Tata: The Chairman Emeritus of Tata Sons and a renowned industrialist and philanthropist, expressed his admiration for SBI and its chairman Dinesh Kumar, for their efforts to support the small and medium enterprises (SMEs) and startups in India, especially during the COVID-19 pandemic. He also appreciated SBI for its social responsibility and environmental sustainability initiatives.
Sachin Tendulkar: The legendary cricketer and a brand ambassador of SBI, endorsed SBI as a trusted and reliable partner for all the financial needs of the people of India. He also encouraged the youth of India to avail the various schemes and opportunities offered by SBI, such as education loans, skill development loans, and entrepreneurship loans.
Data Collection: –
Data was downloaded from nseindia.com for 01/11/2022 to 31/10/2023 for Nifty as well as for SBI Bank. All the columns were deleted for both the sheets except date and closing price and the Friday closing price were found for both. Returns for X and Y were calculated, X being Nifty and Y being SBI Bank. Finally, data analysis was done.
Weekly returns of Nifty = X
Weekly returns of SBI Bank Equity = Y
Linear Regression was carried out.
Data Analysis: –
The regression equation has the form:
Y = a + b*X
Where, Y is the dependent variable,
X is the independent variable,
a is the intercept,
b is the slope.
In our case SBI Bank is the dependent variable and Nifty 50 is the independent variable.
Intercept, a = -0.229
Slope, b = 1.468
R Square = 0.409
F = 32.597
So, the regression equation is given by-
Y (SBI BANK) = -0.229 + 1.468 X (Nifty)
The above equation shows us the relationship between SBI Bank and Nifty. The positive sign indicates that if Nifty rises then the price of SBI Bank shares will also rise and vice-versa. If Nifty rises one unit i.e., Nifty rises by one rupee then Equity will rise by 146.83 and vice versa. t-stat for b (co-efficient of Nifty) is 5.709383 and the p-value is 0 , statistically significant for Equity at 95% level. The number of observations is 49.
Conclusion: –
Beta is 1.468356894, which is greater than 1, it means SBI Bank is good for short term investment.
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