Relationship of Nifty 50 Index with Surya Roshni Limited
Author: Sawan Sandip Narote
Introduction:
Surya Roshni Limited was established in 1973, making it a well-established player in the Indian industrial landscape. The company operates across multiple sectors, including steel, lighting, and PVC pipes. In its steel division, Surya Roshni manufactures an extensive range of products such as pipes, tubes, and strips, catering to diverse industrial needs. Their lighting solutions encompass LED lamps, luminaires, and consumer lighting products, showcasing their commitment to energy-efficient technologies. Furthermore, Surya Roshni’s PVC pipes division produces high-quality pipes and fittings for applications ranging from agriculture to plumbing. The company is known for its emphasis on innovation, quality, and sustainability, reflected in its products and operational policies. Surya Roshni Limited has established itself as a trusted brand both domestically and internationally, with a strong focus on customer satisfaction and industry-leading practices.
Objective: To find Beta (β) of Surya Roshni Limited and its significance
Data Collection:
Nifty 50 Index and Surya Roshni 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 Yuken India Limited were regressed on weekly returns of Nifty 50 Index.
Data Analysis:
Equation of regression of weekly returns of Yuken India Limited on weekly returns of Nifty 50 Index-
Format of Regression equation is Y = α + β(X)
weekly returns of Yuken India Limited = 0.437537238 – 0.131755 × weekly returns of Nifty 50 Index
(-0.08286)
Where,
Number of Observations = 48,
R Square = 0.000149241,
F = 0.006866111,
P-value = 0.934320803
Interpretation-
• The above equation shows relationship between weekly returns of Surya Roshni 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 Surya Roshni Limited Company falls and vice-versa.
• If weekly returns of Nifty 50 Index rise by 1-unit, weekly returns of Surya Roshni Limited Company will fall by 0.131755 unit and vice-versa.
• Figure in bracket shows t-stat for β, P-value for which is 0.934320803, 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 0.000149241 meaning approximately 0.9% of weekly returns of Surya Roshni Company Limited are explained by weekly returns of Nifty 50 Index. Balance 99.1% (approximate) is error due to other variables which are not in the model.
• F is 0.006866111, the P-value of which is 0.934320803, which is more than 0.05 meaning overall, the model is not statistically significant at 5% significance level.
Conclusion:
As β (-0.131755131) is less than 1, it is good to invest in Surya Roshni Company Limited for long term.