Relationship of nifty with Solar Industries Ltd.
Author: Sakshi Kadam
Introduction
Solar Industries India Ltd. Is an Indian based integrated global explosives company. The company is primarily involved in the manufacturing of complete range of industrial explosives and explosive initiating devices. Its segment is explosives and its accessories. Its industrial explosives products include packaged emulsion explosives, bulk explosives and explosive initiating systems. It is a domestic manufacturer of bulk and cartridge explosives, detonators, detonating cords and components.
Objectives
To find out β of company and its significance
Data collection
Data for Nity50 and Solar industry has been downloaded from Yahoofinance.com for the period 1-2-23 to 31-2-24 weekly closing prices were found, weekly returns were calculated, weekly returns of Solar Industry where regressed on weekly return of Nify50.
Data Analysis
Format of regression equation is
Equation of regression of weekly returns of Solar Industries Ltd on weekly returns of Nifty50 index.
Weekly returns of Solar Industry Ltd Y = 5103.258+84.61624 weekly returns of Nifty50 index. (2.621889)
Where,
Number of observation: 48
R square: 0.130012192
F = 0.011816127
P-value = 0.011816
t-stat = 2.621889
Interpretation
- – The above equation shows relationship between weekly returns of Solar Industries Ltd Company and weekly of Nifty50 Index.
- – Positive sign means direct relation, meaning if weekly returns of Nify50 Index rise then weekly returns of Solar Industries Ltd also rises and vice-versa.
- – If weekly returns of Nify50 Index rise by 1 unit, weekly returns of Solar Industry Ltd will rise by 84.61624 unit and vice-versa.
- – Figure in bracket shows t-stat for β, P-value for which is 0.011816, which is greater than 0.05 meaning β is not significant at 5% significance level.
- – Number of Observation are 48, R-square value is 0.130012192 meaning approximately 13% of weekly returns of Solar Industries Ltd are explained by weekly returns of Nifty50 Index. Balance -86.99 (approximately) is error due to other variables which are not in the model.
- – F is 0.011816, the P-value of which is 0.011816, which is more than 0.05 meaning overall, the model is not statistically significant at 5% significance level.
Conclusion
If β (84.61624) is more than one it is good to invest for short-term.