Research Methodology Report
Relationship of Nifty50 with Kotak Mahindra Bank
Author: Krutik Naik | Roll no: 21230023204 | Batch: Operations & Supply Chain Management
Company Introduction:
Kotak Mahindra Bank is a leading private sector Indian bank headquartered in Mumbai, Maharashtra. It offers a wide range of banking and financial services products to corporate and individual customers, including personal finance, investment banking, life insurance, and wealth management. The bank has a presence in over 600 cities and towns across India and has a strong international presence. It is one of the most valued financial institutions in India.
Objective: To calculate beta of Kotak Mahindra bank and its significance.
View And Reviews:
- Kotak Mahindra Bank teams up with 83:The bank has partnered with the makers of the movie “83” to launch a special themed range of debit and credit cards celebrating India’s historic 1983 Cricket World Cup victory
- Uday Kotak resigns as MD and CEO:As you may be aware, Uday Kotak stepped down from his role as Managing Director and CEO of the bank in September 2023. Dipak Gupta is currently serving as the interim CEO.
- Foreign holding in Kotak Mahindra Bank dips: The foreign ownership of Kotak Mahindra Bank has fallen to 41.22% in the March 2023 quarter, opening up the potential for increased weightage in the MSCI index and attracting more foreign investments.
Data Collection:
Data has been downloaded from nseindia.com for 01/02/2023 to 31/01/2024 for Nifty50 and Kotak Mahindra. Friday closing price are considered and return values are calculated for both. Kotak Mahindra Bank is the dependent variable and Nifty50 is the independent variable. Data analysis was done to find the dependency of Y (Kotak Mahindra Bank) on X (Nifty50).
Data:
|
Date |
Return 1 |
RETURN 2 |
|
X |
Y |
|
|
10-Feb-23 |
0.0137224 |
-0.463405 |
|
17-Feb-23 |
0.4911377 |
-0.7223272 |
|
24-Feb-23 |
-2.666043 |
-3.521387 |
|
03-Mar-23 |
0.7360098 |
3.16384847 |
|
10-Mar-23 |
-1.031297 |
-2.9525985 |
|
17-Mar-23 |
-1.796657 |
-0.3648561 |
|
24-Mar-23 |
-0.90643 |
-0.0561101 |
|
31-Mar-23 |
2.4473224 |
2.40522412 |
|
21-Apr-23 |
1.5224874 |
9.27951063 |
|
28-Apr-23 |
2.5019788 |
2.34467827 |
|
05-May-23 |
0.0221423 |
-0.4824437 |
|
12-May-23 |
1.3603409 |
1.65396381 |
|
19-May-23 |
-0.608251 |
-0.9665409 |
|
26-May-23 |
1.6257952 |
0.1751088 |
|
02-Jun-23 |
0.1878444 |
-0.3238991 |
|
09-Jun-23 |
0.158087 |
-3.44294 |
|
16-Jun-23 |
1.4146115 |
-0.7799145 |
|
23-Jun-23 |
-0.852544 |
-1.5532465 |
|
30-Jun-23 |
2.8049074 |
0.98438654 |
|
07-Jul-23 |
0.7439138 |
0.37637757 |
|
14-Jul-23 |
1.2037162 |
0.83625573 |
|
21-Jul-23 |
0.9225894 |
5.41466025 |
|
28-Jul-23 |
-0.50114 |
-4.7380977 |
|
04-Aug-23 |
-0.656875 |
-2.0433173 |
|
11-Aug-23 |
-0.454476 |
-2.5591515 |
|
18-Aug-23 |
-0.608133 |
-2.2691116 |
|
25-Aug-23 |
-0.229672 |
1.60212474 |
|
01-Sep-23 |
0.8797974 |
-0.4356747 |
|
08-Sep-23 |
1.9791308 |
1.24781209 |
|
15-Sep-23 |
1.8789149 |
1.15436092 |
|
22-Sep-23 |
-2.565823 |
-3.1672088 |
|
29-Sep-23 |
-0.182726 |
-1.1813601 |
|
06-Oct-23 |
0.0773998 |
0.47243187 |
|
13-Oct-23 |
0.4963493 |
1.03790355 |
|
20-Oct-23 |
-1.055134 |
0.43132804 |
|
27-Oct-23 |
-2.534968 |
-3.7805154 |
|
03-Nov-23 |
0.9626062 |
1.7942092 |
|
10-Nov-23 |
1.0127089 |
0.70387999 |
|
17-Nov-23 |
1.5775778 |
1.09713827 |
|
24-Nov-23 |
0.3187748 |
-1.1674034 |
|
01-Dec-23 |
2.3905389 |
0.37270642 |
|
08-Dec-23 |
3.4611381 |
5.02427878 |
|
15-Dec-23 |
2.3236239 |
0.66088281 |
|
22-Dec-23 |
-0.499845 |
0.53496163 |
|
29-Dec-23 |
1.7892775 |
2.55845203 |
|
05-Jan-24 |
-0.094794 |
-3.1706934 |
|
12-Jan-24 |
0.846353 |
-0.7766833 |
|
19-Jan-24 |
-1.243003 |
-3.76108 |
Data Analysis:
Regression equation: Return of Kotak Mahindra Bank = -85.07+0.00189 * (Return of Nifty50)
t-stat of b = 0.924
P-value of b = 0.360
R Square = 0.0182
F = 0.854
Level of Significance = 5%
The regression analysis conducted on the returns of Kotak Mahindra Bank with respect to the returns of Nifty50 yielded some interesting insights. The equation generated from the analysis suggests that the return of Kotak Mahindra Bank can be estimated by multiplying the return of Nifty50 by 0.00189 and subtracting 85.07. (- ve Sign in equation implies opposite relationship) This implies that for every unit decrease in the return of Nifty50, there is a corresponding increase of 0.00189 units in the return of Kotak Mahindra Bank, holding other factors constant. However, it’s crucial to note that the coefficient for the return of Nifty50 has a t-statistic of 0.924 and a p-value of 0.360, indicating that it is not statistically significant at the 5% level.
Moreover, the low value of the R-squared statistic, which stands at 0.0182, suggests that only a small proportion of the variability in the return of Kotak Mahindra Bank can be explained by the return of Nifty50 according to this model. The F-statistic, with a value of 0.854, further reinforces this notion, indicating that the overall fit of the model is weak.
Considering a significance level of 5%, the beta coefficient of 1.18 is notably higher than 1, indicating that Kotak Mahindra Bank tends to be more volatile compared to the market represented by Nifty50.
Conclusion: Beta is 1.18, which is more than 1, therefore it is good for short-term investment. The model is statistically insignificant at 5% level.
Beta is 1.18, which is more than 1, therefore it is good for short-term investment. The model is statistically insignificant at 5% level.
References:
https://www.nseindia.com/market-data/live-market-indices
https://www.kotak.com/en/home.html
https://www.thehindubusinessline.com/topic/Kotak-Mahindra-Bank/
