Research Methodology Report
Relationship of Nifty50 with NHPC
Name: Nikhil Tandalekar | Roll no: 21230023021 | Batch: Operations & Supply Chain Management
Company Introduction:
NHPC Limited (National Hydroelectric Power Corporation) is an Indian public sector hydropower company that was incorporated in 1975 to plan, promote and organise an integrated and efficient development of hydroelectric power. Recently it has expanded to include other sources of energy like solar, geothermal, tidal, and wind.
At present, NHPC is a Mini Ratna Category-I Enterprise of the Govt. of India and among the top ten companies in the country in terms of investment base. Baira Suil Power station in Salooni Tehsil of Chamba district was the first project undertaken by NHPC.
Objective: Development of Power in all aspects through conventional and non-conventional sources in India and abroad.
View And Reviews:
At a recent Power Line conference, R.K. Vishnoi, Chairman and Managing Director, NHPC Limited and THDC India Limited, talked about the current state of the hydropower sector as well as some of the major developments in this space. He also spoke about NHPC’s key upcoming projects, and future plans and targets. Edited excerpts…
India is the third largest power producer and consumer in the world. With its expanding economy, population, urbanisation and industrialisation, its power demand is increasing sharply. About a decade ago, the country was facing the challenge of meeting a peak demand of 125-130 GW, but it has come a long way, with around 240 GW of peak demand currently. This has been fuelled by population growth along with increasing electrification and per-capita energy consumption. While thermal capacity additions will continue to satisfy the growth in power demand, we are now also working on shifting the base load to green energy. The focus is on creating an arrangement from different sources, such that firm power is available round the clock.
India stands committed to reduce the emissions intensity of its GDP by 45 per cent from 2005 levels by 2030. For the decarbonisation drive, there is a need to increase the installation of renewable energy resources from the present levels of 72,312 MW of solar, 44,564 MW of wind and 46,880 MW of hydropower capacity. Although the share of solar and wind power in the total non-fossil power capacity is increasing exponentially, power from these resources is only available intermittently. Hydro has inherent capabilities to quickly ramp up or swiftly shut off generation. Solar and wind power must be supplemented with hydro to meet electricity demand fluctuations, in order to maintain grid stability. Hydropower projects, being clean, green and sustainable sources of energy, will be of paramount importance in our green energy mission. Hydropower projects are also essential for complementing solar and wind power, since solar and wind are intermittent in nature. Hydropower has a significant role to play in energy transition, as it provides clean and environment-friendly energy with a low carbon footprint. Hydropower is reliable and will be available at affordable rates in the long run through load balancing, frequency regulation, strengthening of grid resilience, grid integration with intermittent renewable energy sources, ancillary services such as voltage support and reactive power control, etc.
Data Analysis:
Regression equation: Return of NHPC = 0.905 + 0.9265 * (Return of Nifty50)
t-stat of b = 2.704526657
P-value of b = 0.009557433
R Square = 0.137194747
F = 7.31446444
The regression analysis conducted on the relationship between the returns of NHPC (National Hydroelectric Power Corporation) and Nifty50, a benchmark index representing the performance of the Indian stock market, yielded several important results. The regression equation obtained from the analysis is: Return of NHPC = 0.905 + 0.9265 * (Return of Nifty50). This equation indicates that the return of NHPC is positively influenced by the return of Nifty50, with a coefficient of 0.9265.
The t-statistic for the coefficient of Nifty50 (b) is calculated as 2.7045, with a corresponding p-value of 0.0096. Since the p-value is less than the commonly used significance level of 0.05, we reject the null hypothesis that the coefficient is equal to zero, indicating that the coefficient is statistically significant at the 5% level. This suggests that there is a significant relationship between the returns of NHPC and Nifty50.
The coefficient of determination (R-squared) is calculated as 0.1372, indicating that approximately 13.72% of the variability in the returns of NHPC can be explained by the variability in the returns of Nifty50. While this suggests a relatively weak relationship between the two variables, it still provides some explanatory power.
Additionally, the F-statistic obtained from the analysis is 7.3145, indicating that the overall regression model is statistically significant. This means that the independent variable (return of Nifty50) collectively has a significant impact on the dependent variable (return of NHPC).
In summary, based on the results of the regression analysis, we can conclude that there is a statistically significant positive relationship between the returns of NHPC and Nifty50. However, the explanatory power of the model is relatively low, suggesting that other factors beyond the return of Nifty50 may also influence the returns of NHPC.
References:
NHPC Limited (NHPC.NS) Stock Historical Prices & Data – Yahoo Finance
Views of R.K. Vishnoi: “NHPC aims to be a 23 GW company by 2032” – Power Line Magazine
16911493480.pdf (nhpcindia.com)