Relationship of Nifty 50 with the Kotak Mahindra bank equity
Author- Kirti Vyas
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 capitalisation after HDFC Bank and ICICI Bank. As of 31 March 2023, the bank has a national footprint of 1,780 branches and 2,964 ATMs.
Objective– to calculate beta of Kotak Mahindra Bank Limited and its significance.
View and Reviews-
“I look at Kotak as a constant confluence of river waters, collaborating to build a sustainable ocean, aspiring to live in perpetuity.” – Uday Kotak Managing Director & CEO
“I would like us to pursue the Indian dream of a USD 30 trillion economy and unshackle the financial sector in a nuanced manner towards optimum regulation.” – Uday Kotak Managing Director & CEO
Data Collection– Data has been downloaded of the time period starting from 1st Feb’2023- 31st Jan’2024 from NIFTY 50 and equity.
Where, Kotak Equity is a dependent variable and NIFTY 50 is an independent variable.
Data Analysis:
The equation for the data is:
Kotak Mahindra bank= ( -0.1992) + (-0.5477) = (-0.7469)
Where, x(nifty)= (-0.5477) and y(equity) = ( -0.1992)
N=48, R Square=0.08988, F value= 4.5429914
- The above equation shows the relationship between Nifty 50 and equity of Kotak Mahindra bank. Where, Equity of Kotak Mahindra bank is a dependent variable and Nifty50 is an independent variable.
- The negative sign in the equation means that there is an inverse relationship between Nifty 50 and Equity of Kotak Mahindra bank. i.e. If the return of Nifty50 increases then the return of Kotak Mahindra bank will decrease and vice-versa.
- The number of observations is 48.
- R-Square= 0.08988.
Which means 9% of Kotak Mahindra bank is explained by Nifty 50. 91% are errors due to factors which are not in order.
- Figures in brackets is the t-stats for b and the p value of it is 0.03842. It is less than 0.5 which means Nifty 50 is statistically significant at 5% level.
- F is 4.5429914 and the P value is 0.03842 which is also less than 0.05 which means that overall, the model is statistically significant at 5% level.
Conclusion: The beta is less than 1, therefore, we should invest for long term purpose.