Relationship of Nifty 50 Index with Silver Oak India Limited
Author: Shubham Bhagirath Bansode
Introduction:
Silver Oak India Limited (SOL) company incorporated in 1984 has a licence to manufacture liquor issued by the government and the units are cleared with all Government compliance. SOL has having production capacity of more than 22 lac cases per year out. The company produces varieties of regular and premium range of products like Whiskey, Vodka, Rum, Gin and Tango etc. SOL is committed to offering professional & intimate service to consumers so that they can not only buy authentic liquor but also enjoy meticulous, considerate, and intimate services.
Objective: To find the Beta (β) of Silver Oak India Limited and its significance.
Data Collection:
Nifty 50 Index and Silver Oak India Limited data were collected from the moneycontrol.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 based on the closing prices were calculated using Excel tools and with the use of Regression analysis, weekly returns of Yuken India 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 Silver Oak India Limited on weekly returns of Nifty 50 Index-
weekly returns of Silver Oak India Limited = 1.691937- (-1.01115)× weekly returns of Nifty 50 Index
(-0.99169)
Where,
Number of Observations = 48
R Square = 0.020932
F = 0.983452
P-value = 0.326536
Interpretation-
- The above equation shows the relationship between weekly returns of Silver Oak India Limited Company and the weekly returns of Nifty 50 Index.
- Negative sign means inverse relation, meaning if weekly returns of Nifty 50 Index rise then weekly returns of Silver Oak India Limited Company falls and vice-versa.
- If the weekly returns of Nifty 50 Index rise by 1 unit, the weekly returns of Silver Oak India Limited Company will fall by -1.01115 unit and vice-versa.
- Figure in bracket shows t-stat for β, P-value for which is 0.326536, 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 020932 meaning approximately 0.9% of weekly returns of Silver Oak India Limited are explained by weekly returns of Nifty 50 Index. Balance 99.1% (approximate) is an error due to other variables which are not in the model.
- F is 983452, the P-value of which is 0.326536, which is more than 0.05 meaning overall, the model is not statistically significant at 5% significance level.
Conclusion:
As β -1.01115) is less than 1, it is good to invest in Silver Oak India Limited for the long term.