TITLE: Relationship between Nifty50 & Kotak Mahindra Bank Limited.
AUTHOR: Kalpana Baban Yedage
INTRODUCTION: Kotak Mahindra Bank is a leading financial institution in India, known for rapid growth and strong reputation. It offers a wide range of services, including transaction banking, lending, IPO management & working capital loans. The bank’s activities span consumer, commercial, and corporate banking, along with treasury and various financial services. With subsidiaries, it provides comprehensive financial solutions, covering commercial banking, investment banking, stock broking, vehicle finance, advisory services, asset and life insurance. The bank caters to the diverse needs of individuals and non-individual customers through advanced technology platforms, offering products like Mutual Funds, Life Insurance, and gold retailing. Additionally, Kotak Mahindra Bank serves Non-Resident Indians (NRIs) through strategic partnerships and has overseas subsidiaries in key global locations.
OBJECTIVE: Calculate Beta of Kotak Mahindra Bank Ltd & it’s significance.
LITERATURE REVIEW:
- Sreedhar, V. (2023) Highlights the After the mayhem in the March quarter, domestic equities rebounded sharply in the quarter ended June, and this saw foreign portfolio investors raising their holding in 37 out of the 50 companies on Nifty50. After shedding 4% in the March quarter and testing the lowest level since September 2022, the benchmark Nifty50 rebounded sharply and surged more than 10% in the June quarter. In fact, from the March lows, the index is up about 19%, thanks to the continued inflows from FPIs. FPIs increased stake across banking stocks in Nifty50 in the quarter gone by, a sector that enjoys the highest weightage in the index. After Axis Bank, Kotak Mahindra Bank saw a sharp increase in FII holding to 39.89% from 37.76%.Information technology sector, which has the second highest weightage in Nifty 50, was least preferred by FIIs as concerns over growth slowdown in developed economies clouded business outlook. Of the six IT stocks that are part of the Nifty 50, FIIs reduced their holding in four of them. Infosys saw the maximum selling, as FII reduced their stake by a whopping 165 bps to 33.44%. In Tech Mahindra, their stake came down by 118 bps to 25.69%.
2. Kumar, S. (2023) states that the Kotak Mahindra Bank shares soared nearly 6% on Tuesday after the reduction of FII stake in the private lender raised expectations of $690 million inflows.The action in Kotak Bank stock was high with over 36.8 lakh shares changing hands around this time. The stock has corrected from its 52- week high of Rs 1.997.55 which it hit in November 2022. It has marginally outperformed the Nifty50 index, giving returns of over 2% over a 12-month period as against a 0.3% gain seen in Nifty50, according to Trendline data.The foreign headroom is just above the required threshold of 25% and now could result in a change of adjustment factor to 1 from 0.50 currently, Nuwama said, adding that if its shareholding calculations hold true and MSCI considers 41.22% as current foreign holding then Kotak Mahindra Bank (KMB) could see weight-up led inflow to the tune of $690 million which is almost 32 million shares buying (7-day average traded volume).
DATA COLLECTION:
The data for Nifty 50 and Kotak Mahindra Bank 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 Kotak Mahindra Bank Ltd. The weekly returns of the NSE index Nifty 50 are represented by X, while the returns of equity for Kotak Mahindra Bank Ltd are represented by Y. Wherein Y (Equity of Kotak Mahindra Bank 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= 0.265099755+-0.549871287X
N= 50
R Square= 0.098534485
t Stat= 0.757106788
F= 5.246629172
INTERPRETATION:
- The above equation shows the relationship between Nifty 50 (X) and Kotak Mahindra Bank Limited (Y).
- Number of observations are 50.
- is 098534485, which means 98.53 % of returns of Kotak Mahindra Bank Ltd is explained by Nifty 50. Therefore, 1.47% is error due to other variables which are not taken in the model.
- 246629172, which is more than table F, which means overall the model is statistically significant at 5% level.
Conclusion:
As beta =-0.549871287, is less than 1, therefore we should invest for long term.
REFERENCES:
- Sreedhar, V. (2023, Aug 05). FIIs chased 37 Nifty50 stocks in Q1, will they continue or reverse their strategy? [stock in news]. The Economic Times Retrieved from https://www.proquest.com/newspapers/fiis-chased-37-nifty50-stocks-q1-will-they/docview/2845717188/se-2
2. Kumar, S. (2023, Apr 12). Kotak Mahindra bank shares soar 6% on likely $690 million MSCI inflows [stock in news]. The Economic Times Retrieved from https://www.proquest.com/newspapers/kotak-mahindra-bank-shares-soar-6-on-likely-690/docview/2799224277/se-2