Relation between Nifty 50 and Yes bank
Authur: yash pawar
Roll no: 21230023199
Batch: OPS and SCM
Introduction:
Established in 1999, Yes Bank is a full-service commercial bank headquartered in Mumbai, India. They cater to a diverse range of customers, including individuals, micro, small, and medium enterprises (MSMEs), and corporations. Their offerings encompass a wide array of products, services, and technology-driven digital solutions, aiming to meet the varied financial needs of their clients. Yes Bank operates a network of over 1192 branches and 1301 ATMs/cash recyclers across more than 700 Indian cities, ensuring a widespread presence throughout the country. They extend their reach beyond national borders by maintaining an International Banking Unit (IBU) at GIFT City and a Representative Office in Abu Dhabi. For investment banking needs, Yes Bank leverages its wholly-owned subsidiary, YES SECURITIES. However, it’s crucial to acknowledge that Yes Bank faced challenges in 2020 and was subsequently taken over by the Reserve Bank of India (RBI). While they have taken steps to recover, it’s essential to conduct your own research and due diligence before making any financial decisions involving Yes Bank.
Objective:
To find out Beta and its significance.
Views & Reviews:
Yes Bank is forecast to grow earnings and revenue by 42.4% and 22.3% per annum respectively. EPS is expected to grow by 50.1% per annum. Return on equity is forecast to be 9.5% in 3 years.
Data Collection:
The closing prices of equity were collected from NSE India Index and Yes Bank for the period 01/02/2023 to 31/01/2024 considering their weekly close rates calculated the returns and formed the regression analysis.
Data Analysis:
The regression equation is as follows-
Y= 0.650251 – 1.45744X
The above equation shows us the relationship between weekly returns of Nifty 50 and weekly returns of Yes Bank.
The Weekly returns of Nifty 50 is independent variable, and the weekly returns of Yes Bank is dependent variable. The negative sign shows that if weekly returns of Nifty 50 decreases, weekly returns of Yes Bank also goes down and vice versa.
It implies that if the weekly returns of Nifty 50 (X) decreased by 1 unit, the weekly returns of Yes Bank (Y) is expected to decrease by approximately -1.45744 units.
The number of observations is 48 and the adjusted R square is 0.066508, which means 6.6% of weekly returns of Yes Bank depends upon weekly returns of Nifty 50. In other words, 93.4% is error which may be due to other variables which are not taken in the model.
F is 4.3485 and P-value is 0.04216 which means that the overall model is statistically significant at 5% level.
Conclusion:
Since the Beta is more than 1, It is more volatile than the market and hence, Yes Bank is good for short term investment.
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