Title: Relationship between nifty and Punjab National Bank
Author: Pranita Kailas Nikam
Introduction: Punjab National Bank (PNB) is an Indian public sector bank with a rich history dating back to 1894. It serves as prominent financial institutions, offering a range of banking services such as savings accounts, loans, and investments. PNB is known for its widespread network of branches across India, contributing to the country’s banking sector.
Objective: To calculate Beta and its Significance
Literature Review: In a comprehensive analysis of Punjab National Bank’s (PNB) risk management framework, Gupta and Sharma (2018) highlighted the bank’s robust internal risk assessment mechanisms covering credit, market, and operational risks. They stressed the importance of continuous monitoring to mitigate potential losses.
Singh and Kapoor (2020) focused on the role of technology in PNB’s risk management, emphasizing the implementation of advanced analytics, artificial intelligence, and machine learning for predictive risk modeling. Their study underscored the necessity for banks like PNB to adopt technological innovations for competitiveness and resilience against evolving risks.
Data Collection: The Nifty 50 data and Punjab National Bank (PNB) has been downloaded from NSE site from the period 01/02/2023 to 31/01/2024 and data has been manipulated to get for Friday closing prices. Friday closing price for Nifty50 is ‘x’ and Friday closing price for Punjab National Bank is ‘y’.
Data Analysis: The Standard equation is: Y= a+b *X
Where X= Nifty returns
Y= Punjab National Bank
Y regress on X
Therefore the equation becomes,
Y= -0.216237209+ (-2.310467082)* X
Equity= (-0.216237209) + (-2.310467082) Nifty
N= 99
R square= 0.383177011
F= 60.25743326
Interpretation= The above equation shows direct relationship between NIFTY50 and Punjab National Bank. i.e. If the return of NIFTY50 decreases then the return of PNB will also decreases.
The number of Observations is 99
R square = 0.383177011
Figures and brackets are the t-stat is R square. The t test value of this is 7.76256615
F= 60.25743326 which means the overall model is statistically significant at 5 % level.
Conclusion: Beta= 2.310467082 which is greater than 1, therefore we should invest for short term.
References:
Gupta, R., & Sharma, S. (2018). Risk management in Indian public sector banks: A case study of Punjab National Bank. International Journal of Business Management & Research, 8(4), 1-9.
Singh, A., & Kapoor, R. (2020). Technological advancements and risk management practices: A case study of Punjab National Bank. International Journal of Research in Finance and Marketing, 10(1), 23-34.