Title: Relationship of Nifty 50 with Tata Consultancy services
Author: Tejas Khanapure
Introduction: Tata Consultancy Services is an IT services, consulting and business solutions organization that has been partnering with many of the world’s largest businesses for the past 50 years.
Objective: To find out BETA of TATA Consultancy services and its significance.
Data collection: The data for Nifty 50 index and Tata Consultancy Services has been taken from NSEindia.com for the period 1-2-23 to 31-1-24. The data was manipulated to bring the results of Friday. Weekly closing prices were found out. Weekly returns of nifty and company were calculated. Weekly returns of selected company were regressed on weekly returns of nifty50.
Data Analysis: The equation of regression of weekly returns of TCS on weekly returns of Nifty 50 + weekly returns of TCS (Y^) = -0.127734 + 1.021867 X weekly returns of Nifty 50 index
Where,
Number of Observations = 48,
R Square = 0.324318
F = 22.07939
P-value = 0.000024
Interpretation:
The above equation, shows the relationship between weekly returns of Nifty 50 index and Tata Consultancy Services.
Positive sign means, direct relationship, meaning if weekly returns of Nifty 50 increases, then the weekly returns of Tata Consultancy Services will also increase.
If the weekly return of Nifty 50 index rises by 1-unit, weekly returns of Tata Consultancy Services will change by 0.894135.
Figure in the bracket is T- stat (4.69887) for B, the P value for which is 0.000024, which is less than 0.05, meaning, b is a statistically significant at 5% level.
The number of observations is 48. R Square is 0.32, meaning 32% of demand is explained by Nifty 50 returns (X). Balance 68% is the error due to other variables which are not in the model. F is 22.07, the P value of which is 0.000024, which is less than 0.05, meaning, overall, the model is statistically significant at 5% level.
Conclusion:
Since Beta is more than 1, it is good to invest for short term.