Relationship of Nifty 50 Index with Avenue Supermarts Limited
Author: Akshaya Kardak
Introduction:
Avenue Supermarts Limited Avenue Supermarts Limited is a prominent retail company headquartered in Mumbai, India. Founded in 2002 by entrepreneur Radhakishan Damani, it operates under the brand name “DMart”. It is renowned for its focus on value retailing, offering a wide range of products at affordable prices, including groceries, household essentials, apparel, and more. With a strong presence across multiple states in India, Avenue Supermarts has emerged as one of the leading players in the Indian retail sector, known for its efficient operations and customer-centric approach.
Objective: To find Beta (β) of Avenue Supermarts Limited and its significance
Data Collection:
The data from Nifty50 Limited data has been downloaded from nseindia.com for the period (01-02-23 to 31-1-24). Weekly closing prices were found out. Weekly returns of Avenue Supermarts Limited were regressed on weekly returns on NIFTY50.
Data Analysis:
Format of Regression equation is Y = α + β(X)
Equation of regression of weekly returns of Avenue Supermarts Limited on weekly returns of Nifty 50 index-
Weekly returns of Avenue Supermarts Limited = -0.2817+ 1.2001x weekly returns of Nifty 50 index (tstat= 3.8324)
Where,
Number of Observations = 48,
R Square= 0.2420
F= 14.6873
P-value= 0.0003
Interpretation:
- The above equation shows relationship between weekly returns of Avenue Supermarts 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 Avenue Supermarts Limited Company falls and vice-versa.
- If weekly returns of Nifty 50 Index rise by 1-unit, weekly returns of Avenue Supermarts Limited Company will fall by 1.2001 unit and vice-versa.
- Figure in bracket shows t-stat for β, P-value for which is 0.0003, which is less than 0.05 meaning β is statistically significant at 5% significance level.
- Number of Observations are 48, R-square value is 2420 meaning approximately 24.2% of weekly returns of Avenue Supermarts Limited are explained by weekly returns of Nifty 50 Index. Balance 75.8% (approximate) is error due to other variables which are not in the model.
- F is 6873, the P-value of which is 0.0003, which is less than 0.05 meaning overall, the model is statistically significant at 5% significance level.
Conclusion:
As β (1.2001) is more than 1, it is good to invest in Avenue Supermarts Limited for short term.