Relationship between nifty 50 and kansai nerolac paints
Author – Kunika Agrawal
Batch – F3
Roll no – 21230023904
Introduction : Kansai Nerolac Paints Limited (formerly known as Goodlass Nerolac Paints Ltd) is the largest industrial paint and third largest decorative paint company of India based in Mumbai. It is a subsidiary of Kansai Paint of Japan. As of 2015, it has the third largest market share with 15.4% in the Indian paint industry. It is engaged in the industrial, automotive and powder coating business. It develops and supplies paint systems used on the finishing lines of electrical components, cycle, material handling equipment, bus bodies, containers and furniture industries,
Objective: To find out Beta and its significance.
Views & Reviews: Kansai is the global leader in industrial coatings (automotive). However, in the last 10 years, it has increased its decorative paint mix to 55% of its total topline. Currently, Kansai is the third largest decorative paint player in India.
Strong distribution network of ~28,000 dealers across the country with 75-80% penetration of tinting machine
In the last two years, KNL has increased its total paint manufacturing capacity by 28% to 5.3 lakh tonnes at an investment of ~₹ 1100 crore.
Data Collection: The closing prices of equity were collected from NSE India Index and Kansai nerolac paints for the period 01/10/2022 to 30/09/2023 considering their weekly close rates calculated the returns and formed the regression analysis.
Data Analysis:
The regression equation is as follows-
Y= -0.72301 + 0.1830X
The above equation shows us the relationship between weekly returns of Nifty 50 and weekly returns of Kansai nerolac Paints.
The Weekly returns of Nifty 50 is independent variable, and the weekly returns of Kansai Nerolac Paints is dependent variable. The positive sign shows that if weekly returns of Nifty 50 rises, weekly returns of Kansai Nerolac Paints also rises and vice versa.
It implies that if the weekly returns of Nifty 50 (X) increase by 1 unit, the weekly returns of Kansai Nerolac Paints (Y) is expected to increase by approximately 1.064777 units.
The number of observations is 49 and R square is 0.00261, which means 42% of weekly returns of Kansai Nerolac Paints depends upon weekly returns of Nifty 50. In other words, 0.26% is error which may be due to other variables which are not taken in the model.
F is 0.123 and P-value is 0.33 which means that the overall model is statistically significant at 1% level.
Conclusion:
Since the Beta is more than 1, It is more volatile than the market and hence, Kansai Nerolac Paints is good for short term investment.
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