Title – Relationship between Nifty fifty and Adani Power ltd
Author – Aditi Mithbawkar
Introduction – Adani Power Ltd is a leading power generation and infrastructure company based in India. It is part of the Adani Group, one of India’s largest conglomerates. Adani Power specializes in the development, operation, and maintenance of power plants across India, focusing on both thermal and renewable energy sources. With a strong emphasis on sustainability and innovation, Adani Power has emerged as a key player in the Indian energy sector, contributing significantly to the nation’s power needs while also expanding its presence globally. The company is committed to delivering reliable and affordable electricity to support India’s growing economy and meet the challenges of the future energy landscape.
Objective – To calculate Beta and its significance
Literature Review –
Swathy, M. (2016). An empirical performance evaluation of NSE NIFTY (vs) BSE SENSEX ETFs. IPE Journal of Management, 6(1), 53-62. Natarajan and M. Dharani (2010) Nifty BeES is the first Exchange Traded Funds in the Indian Capital Market and its daily returns are compared to benchmark returns. The Researcher found out that Nifty BeES basically over performed their benchmark while they endorsed their investors with lesser risk than the standard deviation of the Nifty Index. Further, this paper analyses the relationship between portfolio returns and market returns by using Simple Regression Model. The Researcher discovered that returns of the Nifty BeES for price was not related to the index returns, but returns of the Nifty BeES for NAV was related to the index returns. This was due to the price of the Nifty BeES in the secondary market being based on supply and demand while NAV of the Nifty BeES was based on the underlying index. Finally, this paper examined the observed deviation between returns of the Nifty BeES and Nifty Index. Applying three methods, the Researcher concluded that the average tracking error fluctuates from approximately 0.59% to 0.907% for price and 0.049% to 0.549% for NAV. All the methods, which were used in this study for calculating tracking error, did not produce the same results. During the study period of 6 years, portfolio returns of the Nifty BeES beat the market returns and hence it can be considered as one of the investment products in the promising Indian capital market
Kumar, et. Al. (2023). The Adani Hindenburg saga: A case study. South Asian Journal of Management, 30(1), 187-196.Adani Group has a significant presence in the energy sector in India and overseas. The group is involved in generating, transmitting, and distributing power and plans to expand its presence in the energy sector in India and abroad. In India, Adani Group has several power plants that generate electricity from various sources, including solar, thermal, and wind energy. The group is also involved in power transmission and distribution and plans to increase its capacity in this area. Adani Group also invests in the renewable energy sector, with a major investment in Australia’s solar and wind power industries. The group is building a large solar power plant in India and has plans to develop several other renewable energy projects in the country and overseas.
Data Collection –
Data has been collected from NSC site from (1/2/23 – 31/1/24). Data has been manipulated for Friday closing prices of nifty fifty and Adani power ltd. Friday closing prices is (X) and Friday closing price of Adani Power ltd (Y).
Data Analysis –
- t-statistic (b): This tells us if the relationship between Nifty Fifty and Adani Power Group’s equity is significant. With a high t-value of approximately 9.85 and a very low p-value (essentially zero), it means there is a strong and significant relationship between Nifty Fifty and Adani Power Group’s equity. In simpler terms, changes in Nifty Fifty tend to correspond to significant changes in Adani Power Group’s equity.
- 2. F-test: This checks if the overall model (using Nifty Fifty to predict Adani Power Group’s equity) is useful. A high F-value of around 97, combined with a very low p-value, indicates that the model as a whole is useful and statistically significant. Put simply, the model is reliable for predicting Adani Power Group’s equity based on Nifty Fifty.
- R-squared (R²): This gives us an idea of how well Nifty Fifty explains changes in Adani Power Group’s equity. An R-squared value of about 0.71 means that roughly 71% of the variation in Adani Power Group’s equity can be explained by changes in Nifty Fifty. In simpler terms, Nifty Fifty explains a good portion of the changes we see in Adani Power Group’s equity, showing a solid relationship between the two.
Conclusion – If beta is more than 1 and if Nifty is down invested for short term or else invested for long term.
References –
Swathy, M. (2016). An empirical performance evaluation of NSE NIFTY (vs) BSE SENSEX ETFs. IPE Journal of Management, 6(1), 53-62. Retrieved from https://www.proquest.com/scholarly-journals/empirical-performance-evaluation-nse-nifty-vs-bse/docview/1828144505/se-2
Kumar, D., & Mishra, A. K. (2023). The adani-hindenburg saga: A case study. South Asian Journal of Management, 30(1), 187-196. Retrieved from https://www.proquest.com/scholarly-journals/adani-hindenburg-saga-case-study/docview/2816943500/se-2
