TITLE: Relationship Between Nifty & Adani Total Gas ltd Equity
AUTHOR: ABHIJEET PATIL
INTRODUCTION OF COMPANY:
Adani Total Gas is developing City Gas Distribution (CGD) Networks to supply the Piped Natural Gas (PNG) to the Industrial, Commercial, Domestic (residential) and Compressed Natural Gas (CNG) to the transport sector. Natural Gas is a convenient, reliable and environment friendly fuel that allows consumers to enjoy a high level of safety, convenience and economic efficiency. The company has already set up city gas distribution networks in Ahmedabad and Vadodara in Gujarat, Faridabad in Haryana and Khurja in Uttar Pradesh. In addition, the development of Allahabad, Chandigarh, Ernakulam, Panipat, Daman, Dharwad, and Udhamsingh Nagar gas distribution is awarded to consortium of Adani Total Gas Ltd and Indian Oil Corporation Ltd.
OBJECTIVE: To Calculate Beta and its Significance
VIEWS/REVIEWS:
According to Anurodh Yadav, Stock Market Trader, As per the economic condition, we have seen the low outcomes of many companies.Recently, the gas distribution company Adani Gas is merged with the giant Energy Company – TOTAL. And both the companies will spread their business of Gas Distribution in India.And Adani Gas is on its way to build a formidable network of CGD ( City Gas Distribution) across the nation.Adani Gas posted a 60.27% year on year rise in consolidated net profit at 121.41 Cr. for the quarter ended March 31. Shares of the company traded nearly 4 per cent up at Rs 108.15 after the quarterly results, while the benchmark BSE Sensex traded 0.91 per cent higher at 31729 at around 2.20 pm IST
According to Vedant Mahajan, Adani group is not strong fundamentally at all. Also, the sentiments for this stock are not so positive in the market.
So, if you want to save your money, DO NOT INVEST in Adani stocks. According to me, Adani stock will fall to atleast ₹200–600 till February 2022 or even in the late 2021’s. The reason for Adani group’s share price rising is that some foreign companies are investing heavily in the stock. In fact, 90% of their portfolio is Adani group. Now, their accounts have been freezed because they did not comply with some rules and regulations. If courts decide to seize their assets, you know what will happen.
DATA COLLECTION:
- Firstly, I visited the NSE website.
- Then I clicked on the Historical data option under the Data and Reports section.
- I downloaded the data of Adani Total Gas ltd and nifty 50 index from 1st October,2022 to 31st November 2023 in excel format.
- In the end, I sorted the data in excel for Analysis.
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 and b is the slope.
In our case, Adani Total Gas ltd is the dependent variable and Nifty 50 is the independent variable.
Intercept, a = 0.00336
Slope, b = 0.0268
So, the regression equation is given by-
Y (Adani Total Gas ltd) = 0.00336 + 0.0268*X (Nifty50)
The above equation shows us the relationship between Adani Total Gas ltd and Nifty. Positive sign indicates that if the Nifty rises then the price of Adani Total Gas ltd will also rise and vice versa. If Nifty rises by 100 Points, then Adani Total Gas ltd shares will rise by only 2.68%
T-stat for b(Co-efficient of Nifty) is 1.4974 and the P value is 0.14095 which means that the coefficient of Nifty is not significant at the 0.05 level, as the p-value is more than 0.05. This implies that Nifty has no significant effect on Adani Total Gas ltd and the relationship between them is very weak.
The number of observations is 49. R^2 is 0.04553 which indicates that the model explains 4.55% of the variation in the price of Adani Total Gas ltd. This means that the model is not good for the data, and there are other factors that affect the price of Adani Total Gas ltd.
Conclusion:
Beta(β): for our case is 0.0268.
A beta of 0.0268 for the above Nifty and Adani Total Gas ltd regression model indicates that the price of Adani Total Gas ltd is less Volatile than the price of Nifty 50. It means that for every 1% change in Price of Nifty 50, the price of Adani Total Gas ltd will change by 0.0268%. It also means that Adani Total Gas ltd has higher risk and expected low return. So, an investor can invest in Adani Total Gas ltd for long term.
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