Relationship of Nifty 50 Index with GABRIEL INDIA Limited
Author: Gaurav Bhoir
Introduction:
Gabriel India Limited (GIL) is an auto component company that manufactures ride control products for passenger cars, utility vehicles, commercial vehicles, and two-wheelers. The company was founded in 1961 by Deep C. Anand in collaboration with Maremont Corporation, and is now the flagship company of the Anand group. GIL has seven manufacturing plants across India, and its products are also marketed outside India
Objective: To find Beta (β) of GABRIEL INDIA Limited and its significance
Data Collection:
Nifty 50 Index and GABRIEL INDIA Limited data was collected from nseindia.com website for the period of one year dating from 1st February 2023 to 31st January 2024. The historical data collected was manipulated using Microsoft Excel to get Friday closing prices of both, the index and the company. Weekly returns were based on the closing prices were calculated using Excel tools and with use of Regression analysis, weekly returns of GABRIEL INDIA Limited were regressed on weekly returns of Nifty 50 Index.
Data Analysis:
Equation of regression of weekly returns of GABRIEL INDIA Limited on weekly returns of Nifty 50 Index –
Format of Regression equation is Y = α + β(X)
weekly returns of GABRIEL INDIA Limited = -1.662341095 -0.110407569 × weekly returns of Nifty 50 Index (-0.237086927)
Where,
Number of Observations = 48,
R Square = 0.00122047
F = 0.056210211
P-value = 0.813642072
Interpretation-
- The above equation shows relationship between weekly returns of GABRIEL INDIA Limited Company and weekly returns of Nifty 50 Index.
- Negative sign means inverse relation, meaning if weekly returns of Nifty 50 Index rise then weekly returns of GABRIEL INDIA Limited Company falls and vice-versa.
- If weekly returns of Nifty 50 Index rise by 1-unit, weekly returns of GABRIEL INDIA Limited Company will fall by -0.110407569 unit and vice-versa.
- Figure in bracket shows t-stat for β, P-value for which is. 813642072, which is greater than 0.05 meaning β is not statistically significant at 5% significance level.
- Number of Observations are 48, R-square value is 00122047. meaning approximately 0.12% of weekly returns of GABRIEL INDIA Limited are explained by weekly returns of Nifty 50 Index. Balance 99.88% (approximate) is error due to other variables which are not in the model.
- F is 056210211, the P-value of which is 0.813642072, which is greater than 0.05 meaning overall, the model is not statistically significant at 5% significance level.
Conclusion:
As β (-0.110407569) is less than 1, It is not Advised to invest in Gabriel India ltd as its Fundamentals are weak.