Relation between Nifty and NESTLE India
AUTHOR: – Nidhi Talashilkar (Financial Markets)
Roll. No.: 21230023228
Introduction: –
Nestlé India, established in 1959, is a subsidiary of the world’s leading food and beverage company, Nestlé. With a rich heritage of over six decades in India, they’ve earned the trust of consumers by offering a diverse portfolio of high-quality and delicious food and beverage products. From iconic brands like Maggi and Nescafé to local favorites like Milkmaid and Kit Kat, Nestlé India caters to various needs and dietary preferences. They are committed to sustainability and social responsibility, striving to enhance the quality of life for individuals and communities, making them a true partner in India’s growth story.
Objective: –
To Calculate Beta(β) of Nestle India and its significance.
Views: –
Suresh Narayanan, Chairman and Managing Director, on strategy: “Nestlé India is committed to ‘Make in India’ and we are increasing our capacities, both greenfield and brownfield. Our intent is to cater to the Indian consumer with locally manufactured products.2022 was an extraordinary year, where adversities were plethora, yet your Company displayed ‘Consistency in the face of storm’, combating volatilities, through thoughtful strategies and execution, that kept the growth engine robust. It was a year, where we grew responsibly together through resonant performance, strong brands, inspired people, empowered communities and with a strong commitment to sustainability.”
Nestle India Director’s statement on sustainability: “As a company, we have always believed that our long-term success is linked to the overall well-being of the planet and its inhabitants. We will continue to work towards reducing our environmental footprint, in line with Nestle’s global commitment to achieving net-zero emissions by 2050.”
Data Collection: –
Data has been downloaded from NSE website for which the Closing of Friday prices were taken into consideration and were compared with Nifty 50 Closing of Friday Price. The data was collected for a period ranging from 1st February 2023 to 31st January 2024. 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 Nestle (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 NESTLE India is the dependent variable and Nifty 50 is the independent variable.
Intercept, a = 0.344759534992415
Slope, b = 0.515272906400043
R Square = 11.88
F = 6.205047
So, the regression equation is –
Y (NESTLE INDIA) = 0.345 +0.515*X (Independent Variable)
The above equation shows the relationship between Nifty 50 and Nestle India. Return of Nestle is dependent variable and return of Nifty 50 is independent variable. Positive sign implies a direct relation, i.e. if Nifty 50 increases, Nestle India also increases. If Nifty 50 return rises by 1 unit, Nestle return will also rise by 0.515 and vice versa. Number of observations are 48. R square implies 11.88% of variances in Nestle India returns are explained by Nifty50 returns, in other words 89.22% error is due to other factors which are not in mentioned.
2.490993 is t- stat value of b and the P-value of it is 0.016409, which is more than 0.05 which implies that returns of Nifty 50 is statistically significant at 5% level. F is 0.434168. Overall model is statistically insignificant at 5% level.
Conclusion: –
Beta is 0.515 which is less than 1, it means Nestle India is better for long-term investment.
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