Title- Relationship of JK tyres Limited with Nifty 50
Author–
Junaid Sheikh
Batch: F3
Roll No:21230023584
Introduction-
About JK Tyres &Industries Limited–
The flagship company of JK Organisation, JK Tyre & Industries Ltd is one of India’s foremost tyre manufacturers and is also among the top 25 manufacturers in the world.
Vision of JK Tyres &Industries Limited –
Be a Green and Trusted Mobility Partner.
Products-
Different types of tyres for two as well as four-wheeler vehicles.
The objective of the report-
To calculate beta and find its significance.
Views and Reviews–
- The company made a lot of improvements in the product mix… The results were supported by the product mix. Lower raw material prices also support profitability: Sanjeev Agarwal, CFO, JK Tire & Industries
Data Collection–
- To analyze the relationship between JK Tyres &Industries Limited and Nifty 50’s performance, data on their weekly closing prices was collected from the NSE India website for the period between 1st October 2022, to 31st September 2023.
- Their Friday closing price is calculated.
- Subsequently, returns were calculated for both JK Tyres &Industries Limited and Nifty 50 by expressing the change in their weekly closing prices as a percentage of the previous week’s value.
- Finally, a regression analysis was conducted to investigate how the returns of JK Tyres &Industries Limited (dependent variable, y) are influenced by the returns of Nifty 50 (independent variable, x).
- This approach allows us to quantify the extent to which JK Tyres & Industry’s limited performance is linked to the broader market movement represented by Nifty 50 and to decide whether to invest in the long term or not.
Data Analysis-
The mathematical relationship between JK Tyres &Industries Limited (Y) and Nifty 50’s returns (X) is expressed as:
Return of JK Tyres &Industries limited = 0.6206 + 1.86262 * (Return on Nifty 50)
(t stat = 2.884319)
Number of Observations (N): 49
R-Square: 0.150387
F-Statistic: 8.319298
P-Value: 0.005902
Interpretation-
- The above equation shows the relationship between the return of the nifty 50 index and the return of JK Tyres & Industries Limited.
- Return of JK Tyres & Industries limited being the dependent variable and Return of Nifty 50 index being the independent variable.
- Positive sign means if nifty 50 index rises, JK Tyres & Industries limited share also rises.
- If Nifty 50 rises by 1 unit or 1 rupee, Eicher Motors Limited’s share will rise by 1.86262 Units and vice-versa.
- The number of observations is 49.
- T-stat for beta (coefficient of return on nifty 50) is 884319. The p-value for this is 0.005902 which means the return of Nifty 50 is statistically significant for the return of, JK Tyres & Industries Limited at a 5 % level.
- R square is 150387 which means approx. 15% of the variance in the return of, JK Tyres & Industries limited share is explained by the return of Nifty 50 meaning 85% is the error due to the variables which are not in the model.
- F is 319298& P value0.005902 for this which means overall the model is statistically significant at a 5% level.
Conclusion-
As beta is more than 1, It is good for short-term investment.
References-
https://www.nseindia.com/reports-indices-historical-index-data
https://www.nseindia.com/get-quotes/equity?symbol=JKTYRE