Research Methodology Report
On
The correlation and regression relation between Weekly closing
returns of NSE NIFTY 50 index and Suzlon Energy LTD.
Submitted on the fulfilment of Research and Analysis.
Author: Saurabh Lad
Roll no.: 21230023185
Under the guidance of
Prof. J.K. Sachdeva
Research Methodology
ITM Navi Mumbai, Kharghar
Institute of Technology & Management (ITM) Business School
Kharghar, Navi Mumbai, Maharashtra
Financial Management-1
Batch of 2023-25
Declaration
I, declare that this written submission represents my ideas in our own words and where other’s ideas or words have been included, I have adequately cited and referenced the original sources. I also declare that we have adhered to all principles of ethics, honesty and integrity and have not misrepresented or fabricated or falsified any idea/data/fact/source in our submission. I understand that any violation of the above will be cause for disciplinary action by the Institute and can also evoke penal action from the sources which have thus not been properly cited or from whom proper permission has not been taken when needed.
Saurabh Lad
Financial Management-1
Date: 26/12/2023
Place: Kharghar, Navi Mumbai, Maharashtra.
Introduction to Suzlon Energy LTD.
Suzlon Energy Limited is an Indian multi-national wind turbine manufacturer headquartered in Pune, India.
It was formerly ranked by MAKE as the world’s fifth largest wind turbine supplier. Suzlon crossed 11,000 megawatts of cumulative installations in India. Suzlon has cumulatively added over 11000 megawatts of wind power capacity for over 1,700 customers in India across 40 sites in eight States. Suzlon accounts for nearly one-third of the country’s total wind installations. Suzlon’s over 27 years in providing renewable energy solutions and deep knowledge of wind energy has helped it to become of the world’s largest and leading producers of wind turbines in the world.
Objective of the report
To calculate the value of Beta and determine the significance of Suzlon Energy Ltd. with respect to NSE Nifty 50.
Reviews
Procedure for Data collection
I decided to collect the data from NSE official website.
So for Nifty 50, I logged into the NSE website and then clicked on to historical data and then I selected Custom Data Selection. From the dropdown menu, I selected the data from date 01 November, 2022 to 31 October, 2023. Then, date wise each day opening, closing stock Price were displayed. I downloaded the .csv file of the same duration. I cleared the opening stock and other columns and then I selected all the Friday closing stock prices by using weekday formula of excel.
The formulas was =weekday(date,2) where 2 represented “Tuesday”, 3 represented “Wednesday”, etc. likewise. I kept only the data of “Friday”.
Then I calculated the weekly returns of each week in the excel sheet for Nifty 50 as well as Suzlon Energy Ltd. Then I denoted,
Weely Return of NSE= (X)
Weely Return of Suzlon Energy Ltd= (Y)
Following the above notations I regressed “Y” on “X”. Then from the Data Tab> Data Analysis, I displayed the ANOVA Table of the Given data.
Formulas
- Day calculation: =weekday(date,2)
- Weekly returns: (Current closing value – previous week closing value)/ previous week closing value*100.
- 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.
Data analysis on basis of Beta
Hence on making the above calculations we get the beta for the company =-0.65 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 -0.064 which indicates there is a slightly negative relation between the movement of price of stock and market movements. Similarly, we obtained the F value and P value to be 0.197 and .6586 respectively.