Relation between Nifty 50 and Asianpaints
AUTHOR: – Aditya K Mishra
Roll. No.: 21230023687
Introduction: –
The company has come a long way since its small beginnings in 1942. It was set up as a partnership firm by four friends who were willing to take on the world’s biggest, most famous paint companies operating in India at that time. Over the course of 25 years, Asian Paints became a corporate force and India’s leading paints company. Driven by its strong consumer-focus and innovative spirit, the company has been the market leader in paints since 1967. Asian Paints manufactures a wide range of paints for decorative and industrial use and also offers Wall Coverings, water proofing, adhesives and services under its portfolio. The company is also present in the Home Improvement and Decor segment and offers bath and kitchen products. The company also introduced lightings, furnishings and furniture in its portfolio.
Objective: –
To Calculate Beta(β) and its significance of the equity stock of ASIANPAINT
Views: –
Deepak Satwalekar, Chairman:-
“I must acknowledge the tremendous efforts of the entire management team at Asian Paints which continued to execute the business plans against the backdrop of a very dynamic business environment and made progress on the priority of driving sustainable growth.”
Amit Syngle, MD& CEO:-
“Our main focus is to support the customers in every step of the way on their homemaking journey, making the process joyous and as smooth and efficient as possible.”
Data Collection: –
Data from finance.yahoo.com covering the period from 1st February, 2023 to January 31, 2024, was acquired for Nifty and Asianpaints. Subsequently, all columns, except for date and closing price, were removed from both datasets. The closing prices on Fridays were identified for Nifty and Asianpaints The weekly returns for Nifty (denoted as X) and Equity (denoted as Y) were then computed. A linear regression analysis was performed on the weekly returns of Nifty (X) and Asianpaints (Y).
Data Analysis: –
The regression equation has the form:
Y = a + b*X
Where, Y is the dependent variable,
X is the independent variable,
a is the intercept,
b is the slope.
In our case Asianpaints is the dependent variable and Nifty 50 is the independent variable.
Intercept, a =0.277380087
Slope, b = -1.008005395
R Square = 0.06683077
F = 3.294381464
So, the regression equation is –
Y (Asianpaints) =0.277380087 –(1.008005395) *X (Independent Variable)
The above equation shows the relationship between Nifty50 and Asianpaints. Return of Asianpaints is dependent variable and return of Nifty50 is independent variable. Negative sign implies a inverse relation, i.e. if Nifty50 increases, Asianpaints will decrease. If Nifty50 return rises by 1 unit, Asianpaints return will decrease by 1.008 and vice versa. Number of observations are 48. R square implies 6.68% of variances in Asianpaints returns are explained by Nifty50 returns, in other words 93.32% error is due to other factors which are not in mentioned.
-1.815043102 is t- stat value of b and the P-value of it is 0.076040327, which is more than 0.05 which implies that returns of Nifty50 is statistically insignificant at 5% level. F is 3.294381464. Overall model is statistically insignificant at 5% level.
Conclusion: –
Beta is -1.008005395 which is less than 1, it means Asianpaints is better for long-term investment.
Reference: –
https://finance.yahoo.com/