Title: Relation of GICRE with Nifty.
Author: Gaurang Vijay Patel
Roll No: 21230023479
Batch: F3
Introduction:
The entire general insurance business in India was nationalised by General Insurance Business (Nationalisation) Act, 1972 (GIBNA).
The Government of India (GOI), through Nationalisation took over the shares of 55 Indian insurance companies and the undertakings of 52 insurers carrying on general insurance business.
General Insurance Corporation of India (GIC) was formed in pursuance of Section 9(1) of GIBNA.
It was incorporated on 22 November 1972 under the Companies Act, 1956 as a private company limited by shares.
GIC was formed for the purpose of superintending, controlling and carrying on the business of general insurance.
As soon as GIC was formed, GOI transferred all the shares it held of the general insurance companies to GIC.
Simultaneously, the nationalised undertakings were transferred to Indian insurance companies.
After a process of mergers among Indian insurance companies, four companies were left as fully owned subsidiary companies of GIC.
Objective: Calculation of Beta and its Significance.
Views and Reviews:
- Building long term mutually beneficial relationship with business partners.
- Practicing far business ethics and values.
- Applying “state-of-art” technology, processes including enterprise risk management and innovative solutions.
- Developing and retaining highly motivated professional team of employees.
- Enhancing profitability and financial strength befitting the global position.
By Shri Ramaswamy Narayanan
Chairman and Managing Director
Data Collection:
Data is carried from the NSE India site.
Friday closing prices of Nifty50 are followed.
The weekly returns of GICRE are followed.
The weekly closing returns of Nifty50 are considered X variable, and the weekly closing returns of GICRE are considered Y variable.
Data collection is done from 1st October 2022 to 30th September 2023.
Weekly returns of Nifty = X
Weekly returns of GICRE Equity = Y
Linear Regression was carried out.
Data Analysis:
The Regression equation is GICRE = 1.02 + 1.17Nifty50
The above equation shows the relationship between GICRE weekly closing return and Nifty50 weekly closing return.
The correlation between GICRE and Nifty 50 is 29.84%
R-Square = 8.90%
There will be a 8.90% change in GICRE due to Nifty50.
Beta= 1.17
P-Value= 0.037
F= 4.59
T-Stat= 2.14
Nifty rises by one rupee then Equity will rise by 117 paise. t-stat for b (co-efficient of Nifty) is
2.14 and the p-value is 0.00, meaning Nifty is statistically significant for Equity at a 3.72% level. Number of observations are 49. R squared is 0.089, which means 9% of the change in Equity is explained by Nifty, which means 91% is the error due to variables, which are not included in the model. F is 4.59 and the p-value is 0.037, which means the overall model is statistically significant at a 3.72% level.
Conclusions:
Beta is 1.17
Since Beta is 1.17 which is more than 1, it is advisable to invest for a short time as it is more volatile.
Reference:
https://gicre.nic.in/annual-report-2022-23
https://gicre.nic.in/corporate-profile
https://www.nseindia.com/reports-indices-historical-index-data
https://www.nseindia.com/get-quotes/equity?symbol=GICRE