Relationship of Kotak Mahindra Bank with Nifty 50

Title: Relationship of Kotak Mahindra Bank with Nifty 50.

     Author: Khushal Pandya. Roll no:21230023050. Finance Management (F3).

 

Introduction: Kotak Mahindra Bank Limited is an Indian banking and financial services company headquartered in Mumbai. It offers banking products and financial services for corporate and retail customers in the areas of personal finance, investment banking, life insurance, and wealth management. It is India’s third largest private sector bank by market capitalization after HDFC Bank and ICICI Bank. As of 31 March 2023, the bank has a national footprint of 1,780 branches and 2,963 ATMs’ 2023, Kotak Mahindra Bank acquired microfinancier Sonata Finance for ₹537 crore (US$67 million.

Objectives: Calculation of Beta and its Significance of the Equity stock of Kotak Mahindra Bank.

Views And Reviews:

Paytm founder Vijay Shekhar Sharma on equated former Kotak Mahindra Bank MD and CEO, Uday Kotak, to JP Morgan Chase CEO Jamie Dimon, and called Kotak a ‘True legend of Indian Banking.

Harsh Goenka, the chairman of RPG Group, praised Kotak Mahindra Bank’s CEO Uday Kotak for bringing ₹55,000 crore into the system.

Ashneer Grover, co-founder of fintech BharatPe, heaped praise on banker Uday Kotak, calling him a legend said the banker was a legend. “I had the fortune of starting my career in Kotak – 7 years – and can tell you no one understands or does finance better in India.

 

Data Collection: The data has been collected from NSE INDIA website. Data of Friday closing prices have been found out for the period of 1 year.

The weekly returns of Kotak Mahindra bank are followed.

The weekly returns of Nifty50 are considered as “X” variable, and the weekly returns of Kotak Mahindra bank are considered as “Y” variable.

Data collection is done from 1st October 2022 to 30th September 2023.

Weekly report of Nifty50 = X

Weekly report of Kotak Mahindra bank= Y

Linear Regression was carried out.

 

Data Analysis:

The Regression Equation is Kotak Mahindra bank= 1400.004 + 0.018* Nifty50.

The above Equation shows the relationship between Kotak Mahindra Bank ltd weekly closing return and Nifty50 weekly closing return.

R-Square=3.61

There will be 3.61% change in Kotak Mahindra Bank due to the Nifty50.

Beta= 0.018228629

Intercept=1400.004357

P-Value= 0.19

F=1.76

T-Stat=1.33

Nifty50 rises by 1 rupee then equity will rise by 1.8 paisa. T-stat for B (Co-efficient of nifty 50) is 1.33 and P-Value is 1.26, meaning nifty is statistically significant for equity at 19% level.

Number of Observation is 49. R-square is 0.03, which means that 97% is significant and 3% is the error due to the variable, which are not included in the model. In this case, approximately 3.61% of the variability in Kotak Mahindra Bank equity share can be explained by Nifty 50.

he F-statistic tests the overall significance of the regression model.

F: 1.7609

Significance F (p-value): 0.1909

0.1909 – This p-value indicates that the overall regression model may not be statistically significant at conventional significance levels

Coefficients:

Intercept: 1400.0044 – When Nifty 50 (X) is zero, the estimated value of Kotak Mahindra Bank equity share (Y) is 1400.0044. The intercept is statistically significant (<0.001p<0.001).

X Variable (Nifty 50): 0.0182 – For each one-unit increase in Nifty 50, the estimated change in Kotak Mahindra Bank equity share is 0.0182. The coefficient for Nifty 50 is not statistically significant (p=0.1909)

 Interpretation: The model suggests a weak positive relationship between Nifty 50 and Kotak Mahindra Bank equity share, but this relationship is not statistically significant given the high p-value for the coefficient of Nifty 50.

The R-squared value is low (0.0361), indicating that only a small proportion of the variability in Kotak Mahindra Bank equity share is explained by Nifty 50.

The p-value for the F-statistic suggests that the model may not be statistically significant.

Conclusion: The beta of the following regression is less than 1 that is (0.018228629), It is advisable to invest for a long term as it is less volatile.

 

 

Reference:

 

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