Title = Relationship Between Niffy 50 and Reliance.
Author= Radha Ughade
Introduction=
Reliance Industries Limited, commonly known as Reliance, is an Indian conglomerate company founded by Dhirubhai Ambani in 1960s. It has diverse interests across various sectors including petrochemicals, refining, oil & gas exploration, telecommunications, retail, and digital services. Reliance is one of the largest companies in India by market capitalization and revenue. Led by Mukesh Ambani, the company has grown significantly over the years and has become a prominent player in both domestic and global markets.
Objective=
To calculate Beta Reliance Limited and it’s significance.
Literature review=
In today’s business news, Life Insurance Corporation has appointed R Doraiswamy as its managing director, while Aeroflex Industries’ IPO is set to open for subscription. Banter between Mark Zuckerberg and Elon Musk over Meta’s new platform, THREADS, has caught attention, with Musk challenging Zuckerberg to a “cage match.” Barratt London’s partnership with Benham & Reeves India aims to cater to Indian investors interested in London properties. Meanwhile, SEBI has requested more time to complete its probe into the Adani group’s dealings. Market indices ended flat, with gains in IT and FMCG sectors countered by losses in metal, power, realty, and PSU Bank sectors.
The NSE’s semi-annual rebalance of Nifty indices, scheduled for March 29 with effect from March 31, will bring changes to stock weightings. According to Nuvama Institutional Research, Reliance Industries, Infosys, ICICI Bank, and HDFC Bank are expected to see significant outflows, while Page Industries, Canara Bank, SBI, Axis Bank, and Coal India could experience inflows. Notable adjustments include RIL and Infosys facing predicted outflows of $42 million and $39 million respectively, while HDFC Bank and ICICI Bank are expected to see outflows of $16 million and $13 million. Conversely, HDFC, Axis Bank, and Kotak Mahindra Bank are anticipated to see weight increases in the Nifty50 index, while SBI, IndusInd Bank, and Axis Bank may see weightage increases in the Nifty Bank index. Additionally, changes in methodology will lead to weight reductions for non-F&O stocks in the Nifty Next50 index.
Data Collection=
The data for Nifty 50 and Reliance 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 Reliance Ltd. The weekly returns of the NSE index Nifty 50 are represented by X, while the returns of equity for Voltas Ltd are represented by Y. Wherein Y (Equity of Reliance 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. 191984298+ (-0.265796293X)
N= 48
R Square= 0.020
t Stat= -0. 488
F= 0.983
Interpretation=
1)The above equation shows the relationship between Nifty 50 (X) and Reliance Ltd (Y).
2) The equation suggests that as the Nifty 50 index increases, the predicted value of Reliance Ltd decreases, indicating a negative relationship between the two variables.
3)However, the weak R-square value of 0.020 indicates that only about 2% of the variability in Reliance Ltd can be explained by changes in the Nifty 50 index, suggesting that other factors beyond the index play a more significant role in influencing Reliance Ltd’s performance.
4)The t-statistic of -0.488 suggests that the coefficient of the Nifty 50 index is not statistically significant, implying that the observed relationship between the Nifty 50 index and Reliance Ltd may not be reliable or meaningful.
5)The F-statistic of 0.983 indicates that the overall significance of the regression model is low, suggesting that the model does not significantly improve the prediction of Reliance Ltd compared to using just the mean value.
6)Therefore, while there is a negative association between the Nifty 50 index and Reliance Ltd, the weak statistical significance and low explanatory power of the model caution against relying solely on the Nifty 50 index to predict or explain changes in Reliance Ltd’s performance.
Conclusion=
As beta =-0.26579, is less than 1, therefore we should invest for long term
𝙍𝙚𝙛𝙚𝙧𝙚𝙣𝙘𝙚:
1) Nifty semi-annual rejig: Reliance, infosys expected to see highest outflows [stock in news]. (2023, Mar 29). The Economic Times Retrieved from https://www.proquest.com/newspapers/nifty-semi-annual-rejig-reliance-infosys-expected/docview/2791695480/se-2
2) Sharma, A. (2023, Aug 14). Business news at 05:30 pm on 14th august 2023. Financial Express Retrieved from https://www.proquest.com/newspapers/business-news-at-05-30-pm-on-14th-august-2023/docview/2850418784/se-2