Title: Relationship of Tata Power with Nifty 50
Author: Tanmay Damodar Mungekar
Intro: Tata Power Company Limited is an Indian electric utility and electricity generation company based in Mumbai, India and is part of the Tata Group. With an installed electricity generation capacity of 14,110 MW out of which 5250 MW is from Non-Conventional (Green Energy) sources rest from thermal, making it India’s largest integrated power company. In February 2017, Tata Power became the first Indian company to ship over 1 GW solar modules. The firm started as the Tata Hydroelectric Power Supply Company in 1910, which amalgamated with the Andhra Valley Power Supply Company in 1916. It commissioned India’s Second hydro-electric project in 1915 in Khopoli for 72 MW.
Objective: To calculate beta and find its significance.
Data collection: Data for Nifty 50 and Tata Power downloaded from nseindia.com for date 1-3-23 to 28-2-24. Friday closing returns were calculated and weekly returns of Tata power were regress on weekly return of Nifty 50.
Data Analysis: Tata Power return = 0.64-1.06 Nifty50
(-2.70)
n=48
R2=0.14
F=7.30
P value=0.009
Interpretation:
The above equations shows the relationship between returns of Nifty50 and Tata Power, negative sign means inverse relationship if returns of nifty50 increases returns of tata power decreases and vise versa. If returns of Nifty50 increases by ₹1 returns of Tata Power decrease by ₹1.06 and vise versa. T stats for b is given in bracket and P value for this is given as 0.009 which is less than 0.05 meaning b is statistically significant at 5% level meaning returns of nifty50 plays a significant role for demand. Number of observation are 48, R2 is 0.14 meaning 14% of returns of Tata Power is explained by returns of Nifty50, balance 86% is error due to the variables not taken in the model. F is 7.30 the P value for which is 0.009 which is less than 0.05 so the overall the model is statistically significant.
Conclusion: Tata Power is good for long term investment.