Description between relation between BSE SENSEX INDEX AND NCL INDUSTRIES

 

TITLE :         Description between relation between  BSE SENSEX INDEX AND NCL INDUSTRIES

 

AUTHOR:      NINAD SALUNKHE ( FINANCE- 1)

21230023427

 

 

INTRODUCTION:    The Genesis of NCL Industries Limited can be traced to the Golden Era of entrepreneurial development in Andhra Pradesh (pre-bifurcation) of the early 1980’s. This period marked the emergence of a number of individual entrepreneurs whose fledgling enterprises evolved into well-established industrial groups.

Nagarjuna Cement Limited, as the Company was known then, established a mini cement plant at Mattapalli in Nalgonda (now Suryapet) District to augment the supply of scarce cement with relatively low investment. This turned out to be a resounding success. The cement produced under the brand name ‘Nagarjuna’ established a premium image in the coastal districts of Andhra Pradesh. The company expanded the capacity of the cement plant in stages. Starting with a modest capacity of 200 TPD, the company has now grown to a level of >8000 TPD, spread over two locations.

OBJECTIVE OF THE  REPORT –

To Calculate Beta and its significance of the equity stock of NCL INDUSTRIES LIMITED.

 

VIEWS  and REVIEWS :

  • Mr K. Ramachandra Raju was the original promoter of the company. He is considered to be a pioneer in the mini-cement industry in India.
  • Ramachandra Raju had a penchant for introducing innovative products in building materials.
  • First among many such products was “Bison Panels”, the cement bonded particle boards, established with technical collaboration from Bison Werke, Germany.

 

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 NCL Industries limited for the period 01st  Nov 2022 to 31st Oct 2023.

 

After downloading the CSV  Files of both the  BSE index and NCL Industries share price I proceeded to calculate beta of the stock of NCL Industries 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 =.43486 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 .13644 which indicates there is positive relation between the movement of price of stock and market movements.

Data Analysis:

Equation: Y=0.35928+0.43044x

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 3598 is the intercept of regression line.
  • The coefficient 0.43044 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 0.43044 units.
  • Number of observations are 50.
  • .5784 is the t-stat for Y, the p-value for which is .5656.
  • R square is 0.01878. This value indicates that approximately 87% 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 .034312 with a very low p-value .56562. This implies that the overall regression model is statistically insignificant in explaining the variability in the dependent variable.

Conclusion: Beta is 0.4348 which is less than 1, it means that NCL Industries  is good for long term investment.

 

 

References:

 https://nclind.com

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