Title – Relationship of Nifty 50 index with ABB India.
Author – Atharva Borade
Introduction – ABB India is a leading technology company that provides solutions in electrification, robotics, automation, and motion. With a strong presence in India for over a century, ABB offers a wide range of products, services, and digital solutions for industries such as utilities, infrastructure, and manufacturing. The company is committed to driving innovation and sustainability in the country’s development journey.
Objective – To find out beta of ABB India and its significance
Data Collection – Nifty 50 data was collected from Nseindia.com and ABB India Company’s data was collected from Yahoofinance.com for the period starting from 1st February 2023 to 31st January 2024.The historical data collected was manipulated 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 ABB India were regressed on weekly returns of nifty 50 index
Data Analysis – Format of regression equation is Y= α + β(X)
Equation of regression of weekly returns of Data patterns India ltd on weekly returns of nifty50 index –
Weekly returns of Data patterns India ltd = -1.070 + 0.048* weekly returns of nifty50 index
(0.123)
Where,
Number of observations: 48,
R square = 0.0003,
F = 0.015,
P-value = 0.901
Interpretation:
- The above equation shows relationship between weekly returns of ABB India Company and weekly returns of Nifty 50 Index.
- Positive sign means direct relation, meaning if weekly returns of Nifty 50 Index rise then weekly returns of ABB India Company also rises and vice-versa.
- If weekly returns of Nifty 50 Index rise by 1-unit, weekly returns of ABB India will rise by 0.048 unit and vice-versa.
- Figure in bracket shows t-stat for β, P-value for which is 0.901, 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 0.0003 meaning approximately 0.03% of weekly returns of ABB India are explained by weekly returns of Nifty 50 Index. Balance 99.97 (approximate) is error due to other variables which are not in the model.
- F is 0.015, the P-value of which is 0.901, which is more than 0.05 meaning overall, the model is not statistically significant at 5% significance level.
Conclusion:
As β (0.048) is less than 1, it is good to invest in ABB India Company for long term.