Title: Relationship between State Bank of India with Nifty50.
Author: Sejal Maske
Introduction: –
State Bank of India (SBI) a Fortune 500 company, is an Indian Multinational, Public Sector Banking and Financial services statutory body headquartered in Mumbai. The rich heritage and legacy of over 200 years, accredits SBI as the most trusted Bank by Indians through generations. SBI, the largest Indian Bank with 1/4th market share, serves over 48 crore customers through its vast network of over 22,405 branches, 65,627 ATMs/ADWMs, 76,089 BC outlets, with an undeterred focus on innovation, and customer centricity, which stems from the core values of the Bank – Service, Transparency, Ethics, Politeness and Sustainability.
Objective: To find Beta(β) of State Bank of India and its significance
Data Collection:
Nifty 50 data was collected from Nseindia.com and State Bank of India data was collected from Yahoofinance.com for the period starting from 1st February 2023 to 31st January 2024.
The historical data collected was calculated using Microsoft excel to get Friday closing prices for both, the index and the company. Weekly returns were based on the closing prices which were calculated using excel tools and with use of regression analysis, weekly returns of State Bank of India were regressed on weekly returns of nifty 50 index.
Data Analysis:
Format of regression equation is Y= α + β(X)
State Bank of India share= 0.24 + 1.16x
The above equation shows the relationship of State Bank of India and Nifty 50. Positive sign means direct relationship, if weekly return of Nifty50 rises, State Bank of India’s returns rises. If price rises by 1 unit, demand will fall by 1.16 units.
T-stat for b is 3.589 and the p value is 0.519 which is more than 0.05, meaning b is not statistically significant at 5% level, meaning price does not play a significant role for demand. The Number of observations is 45.
R-square is 0.23, meaning 23% of State Bank of India share is explained by the movement in Nifty, Balance meaning 77% is error due to the variables not taken in the model.
F is 12.88, the P value for which is 0.00084 which is less than 0.05 so the overall model is statistically significant.
Conclusion: –
As β = 1.16, is greater than 1, therefore company is good for short term investment.