Relationship of Nifty 50 Index with Subex Limited
Author– Swapnali Karande
Introduction:
Subex Ltd was incorporated in year 1994 as a private limited company with the name Subex Systems. The company was converted into a public limited company in the year 1966. Subex is a leading global provider of Business support Systems (BSS) that empowers communications service providers (CSPs) to achieve competitive advantage through Business Optimization thereby enabling them to improve their operational efficiency to deliver enhanced service experiences to subscribers. The company also offers a scalable Managed Service Program and has been the market leader in Business Optimization for four consecutive years according to Analysys Manson.
Objective: To find Beta (β) of Subex Limited and its significance.
Data Collection:
Nifty 50 Index and Subex 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 Subex Limited 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 Subex Limited on weekly returns of Nifty 50 Index-
weekly returns of Subex Limited = -0.04672 – 0.26469 × weekly returns of Nifty 50 Index
(-0.05187)
Where,
Number of Observations = 47,
R Square = 0.004197,
F = 0.189665,
P Value = 0.958862
Interpretation:
- The above equation shows relationship between weekly returns of Subex 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 Subex Limited falls and vice-versa.
- If weekly returns of Nifty 50 Index rise by 1-unit, weekly returns of Subex Limited Company will fall by 0.26469 unit and vice-versa.
- Figure in bracket shows t-stat for β, P-value for which is (-0.6652), which is greater than 0.05 meaning β is not statistically significant at 5% significance level.
- Number of Observations are 47, R-square value is 004197 meaning approximately 0.4% of weekly returns of Subex Limited are explained by weekly returns of Nifty 50 Index. Balance 99.6% (approximate) is error due to other variables which are not in the model.
- F is 189665, the P-value of which is 0.665277, which is more than 0.05 meaning overall, the model is not statistically significant at 5% significance level.
Conclusion:
As β (-0.26469) is less than 1, it is good to invest in Subex Limited for long term.