Relationship of Nifty 50 with Mahindra & Mahindra
Author: Mohit Kumar
Introduction: Mahindra & Mahindra Limited (M&M) is an Indian multinational automotive manufacturing corporation headquartered in Mumbai. It was established in 1945 as Mahindra & Mohammed and later renamed Mahindra & Mahindra. Part of the Mahindra Group, M&M is one of the largest vehicle manufacturers by production in India. Its unit, Mahindra Tractors, is the largest manufacturer of tractors in the world by volume. It was ranked 17th on a list of top companies in India by Fortune India 500 in 2018.
Objective: To calculate beta and find its significance.
Views & Reviews: Mumbai-based automotive-to-technology major Mahindra & Mahindra has entered the World Index list of companies in the Dow Jones Sustainability Index (DJSI) 2021. The company says inclusion in these Indices is a recognition of Mahindra & Mahindra leadership in the ESG domain, the company has committed to be a carbon neutral company by 2040.
Data collection: Data is downloaded from https://www.niftyindices.com/reports/historical-data for 1-2-2023 to 31-1-2024.
Data Analysis: Return on M&M=0.0018+1.2773(Return on Nifty), R-squared=0.3059
4.5028 (t stat)
The above equation shows the relationship between Nifty 50 and M&M. M&M is a dependent variable and Nifty 50 is an independent variable. Positive sign means if Return on Nifty 50 rises, return on M&M also rises. If Nifty rises by 1, M&M will rise by 1.2773 & vice-versa. No of observation are 48. Figure in bracket 4.5028 is t test for b. The p value for which is 0.00 which means Return on Nifty 50 is statistically significance at 5% level. R square is 0.3059 which means 30.59% of variances in M&M are explained by Return on Nifty 50 in other words 69.41% is due to the variables which are not in the model. F is 20.27. P value for this is 0.00 which means overall the model is statistically significant at 5% level.
Conclusion: Beta is 0.0018 which means this is good for long-term investment.
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