TITLE: Relationship between Nifty 50 & Shilpa Medicare Ltd.
AUTHOR: Shreya Kotian
INTRODUCTION: Shilpa Medicare Limited (formerly known as Shilpa Antibiotics Limited) was incorporated as a Private Limited Company on November 20th, 1987 and has been promoted by Vishnukant C Bhutada and his associates. Shilpa Medicare Limited (SML) is engaged in the manufacturing of Active Pharmaceutical Ingredients (API), Formulation and Development service. The Company started its operations as an API manufacturer way back in 1987 in Raichur, Karnataka. The company started commercial production in November 1989. In November 1993, Shilpa Medicare Limited was converted into a Public Limited Company. The Company is one of the leading API and formulations manufacturers with strong capabilities in the therapeutic area of oncology. It supplies more than 30 oncology APIs including key products such as Capecitabine, Gemcitabine Hydrochloride, Axitinib, Erlotinib Hydrochloride and Irinotecan Hydrochloride for various regulated markets including USA, Europe, Japan, South Korea, Russia, Mexico, Brazil, and other emerging markets.
OBJECTIVE: Calculate the Beta of Shilpa Medicare Ltd & its significance.
LITERATURE REVIEW:
Singh(2023) Highlights the contrasting findings for market and pharma indices as well as individual stocks in the context of weak form efficiency. While both indices are not efficient, the individual stocks exhibit signs of inefficiency. The study suggests that daily stock returns of pharmaceutical companies can be used by prospective investors to identify trends. Further exploration is recommended to understand the various causes of inefficiency in the Indian pharmaceutical stock market.
Amuthan (2021) states that the Indian stock market has been performing well during the COVID-19 pandemic, with most trading days resulting in positive returns for investors. The S&P CNX Nifty 50 is the benchmark index for stable returns, and Bank Nifty, Nifty IT, Nifty Pharma, and Nifty Consumer Durables are the most actively traded indices. Nifty IT and Nifty Consumer Durables are highly influenced by movements in the S&P CNX Nifty 50, while Bank Nifty and Nifty Pharma are influenced more by industry movements and positive news about products, businesses, and markets.
DATA COLLECTION:
The data for Nifty 50 and Shilpa Medicare Ltd has been downloaded from the NSE website for the period of 01 February 2023 to 31 January 2024. The data has been manipulated to obtain the Friday closing prices of Nifty 50 and Shilpa Medicare Ltd. The weekly returns of the NSE index Nifty 50 are represented by X, while the returns of equity for Shilpa Medicare Ltd are represented by Y. Wherein Y (Equity of Shilpa Medicare Ltd) is Regressed on X (Nifty 50), and the relationship between the two has been plotted.
DATA ANALYSIS:
The equation for the data is-
Y= -0.682620357 + 0.427822781X
N= 48
R Square= 0.012695335
t Stat= 0.76908689
F= 0.591494645
INTERPRETATION:
- The above equation shows the relationship between Nifty 50 (X) and Shilpa Medicare Ltd (Y)
- The positive sign in the equation means that there is a direct relationship between Nifty 50 and Shilpa Medicare Ltd i.e., if Nifty 50 rises by 1 unit, Shilpa Medicare Ltd will also rise by 0.42782
- Number of observations are 48.
- R2 is 0.01269, which means 12.69% of the returns of Shilpa Medicare Ltd are explained by Nifty 50. Therefore, 87.31% is the error due to other variables which are not taken in the model.
- F= 0.59149, which is less than table F, which means overall the model is not statistically significant at 5% level.
Conclusion:
As beta =0.42782, is less than 1, therefore we should invest for long term
REFERENCES:
Singh, S. (2023). Testing of weak market efficiency in indian stock market: An empirical study of pharmaceutical sector. Parikalpana: K I I T Journal of Management, 19(2), 164-174.
Amuthan, R. (2021). Co relating NIFTY 50 index trend’s impact on NSE’s sector based indices growth momentum in post COVID-19 led indian economy with special reference to NIFTY bank, NIFTY consumer durables, NIFTY IT and NIFTY pharma indices using arithmetic modelling. Turkish Journal of Computer and Mathematics Education, 12(6), 2184-2189.