Title : Relationship Between NIFTY50 and Mahindra & Mahindra
Author : Mansi Balpande
Introduction :
Mahindra & Mahindra Limited (M&M) is an Indian multinational automative manufacturing corporation headquartered in Mumbai. It was established in 1945 as Mahindra & Mohammed and later renamed Mahindra & Mahindra. M&M is one of the largest vehicle manufacturers by production in India. Its unit, Mahindra Tractors, is the largest manufacturer of tractors in the world by volume. It was ranked 17th on a list of top companies in India by Fortune India 500 in 2018.
Mahindra & Mahindra was founded as a steel trading company on October 2, 1945, in Ludhiana as Mahindra & Mohammed by brothers Kailash Chandra Mahindra and Jagdish Chandra Mahindra.
Objective : To calculate Beta and its significance
Literature Review :
1.Mahindra & Mahindra Ltd (M&M) manufactures tractors and utility vehicles. It has presence in a range of businesses including automotive, farm equipment, technology services, renewable energy, financial services, steel trading and processing, infrastructure, hospitality, IT services, agri industry, construction equipment, aerostructures, boats, real estate, defense, hospitality, retail, trucks and buses, logistics, equity investments. The company operates through six reportable business segments: Automotive, Farm Equipment, Financial Services, Real Estate, Hospitality and Others.
As of March 31, 2023, it had approximately 67 manufacturing facilities worldwide. It has presence in over 100 countries in the US, the UK, Asia, Australia, and Africa.
2. A majority of the portfolio management services (PMS) schemes outperformed Nifty50 in October.
Nearly 63 per cent, or 205 of the 326 PMS schemes, were able to beat the returns generated by the benchmark, data from PMS Bazaar show. The 326 schemes collectively delivered average returns of -2 per cent, higher than the -2.7 per cent given by the benchmark.
Portfolio Management Services (PMS) in India manage significant funds, with Rs. 24.9 lakh crore in discretionary portfolios, Rs. 2.3 lakh crore in non-discretionary portfolios, and Rs. 2.5 lakh crore under advisory services, according to recent regulatory data. PMS caters to affluent individuals, requiring a minimum investment of Rs. 50 lakh, as per regulatory standards.
Data Collection : Historical data has been downloaded for both Nifty and Mahindra & Mahindra for the period between 01/02/2023 to 31/01/2024 from www.nseindia.com and data has been manipulated to get only Friday Closing Prices.
Data Analysis : The Standard Equation is : Y = a + b * X
Where X = Nifty Returns and
Y = Mahindra and Mahindra Returns
Y was Regress on X
Therefor the Equation becomes,
Y = (-0.1027) + 1.2790 * X
Equity = (-0.1027) + 1.2790 Nifty
N = 48
R-square = 0.3012
F = 19.83201
Interpretetion : The above Equation shows the relationship between NIFTY50 and Mahindra & Mahindra. NIFTY50 is independent variable and Mahindra & Mahindra is dependent variable.
The negative sign in the Equation means that there is an inverse relationship between NIFTY50 and Equity of Mahindra & Mahindra. i.e if the return of NIFTY50 increases then the return of Mahindra & Mahindra will decreases and vice versa.
The number of Observations is 48
R-square = 0.3012 which means 30.12 % of Mahindra & Mahindra is explained by NIFTY50. 69.88 % are errors which are not in the model.
Figures and Brackets are the t-stat is R-square. The t-stat value of this is 4.4533
F = 19.83201 which means the overall model is statistically significant at 5 % level.
Conclusion : Beta = 1.2790 which is greater than 1 , therefore we should invest for short term.
References :
Mahindra & mahindra ltd (M&M). (2024). (). London: GlobalData plc. Retrieved from ProQuest Central Retrieved from https://www.proquest.com/reports/mahindra-amp-ltd-m/docview/2455687921/se-2
Majority of PMS schemes outperform Nifty50 in oct. (2023, Nov 20). Businessline Retrieved from https://www.proquest.com/newspapers/majority-pms-schemes-outperform-nifty50-oct/docview/2891589590/se-2