RELATIONSHIP OF NIFTY WITH POWER GRID CORPORATION OF INDIA LIMITED
AUTHOR -: Pratham Wagh
Introduction -:
Power Grid Corporation of India Limited (POWERGRID), is a Schedule ‘A’, ‘Maharatna’ Public Sector Enterprise of Govt. of India which was incorporated on 23rd Oct 1989 under the Company Act, 1956. POWERGRID is a listed Company, with 51.34% holding of Government of India and the balance is held by Institutional Investors and public.
POWERGRID is mainly engaged in the business of transmission of power through its EHVAC/HVDC transmission network. The company has diversified into telecom business by leveraging its Pan India transmission network through stringing of optical ground wire(OPGW).POWERGRID has provided/providing consultancy services to domestic and international clients by leveraging its capability and experience in the field of power transmission, sub transmission, distribution management, load dispatch & communication etc.
Objective -: To find out Beta of Power Grid Corporation of India Limited and It’s significance
Data collection -:
Data for Nifty 50 and POWERGRID has been downloaded from NSE INDIA.com for the period 01-02-2023 to 31-01-2024 Weekly closing price were found out Weekly return were calculated. weekly returns of POWERGRID were regressed on weekly return of Nifty.
Data Analysis -:
Format of regression equation: Y =α + β(X)
Returns of the Power Grid Corporation of India = -0.462899149+0.981095942returns of Nifty 50
(1.772333007)
N = 48, R Square = 0.063921243, F = 3.141164288 P value = 0.082962103
Interpretation:
The above equation shows the relationship between the weekly returns of Power Grid Corporation of India and the weekly ,returns of Nifty 50. Positive sign means direct relationship, meaning if Nifty 50 rises Power Grid Corporation of India also rises and vice versa. If Nifty50 rises by 1 unit, Power Grid Corporation of India will rise by 0.981 units and vice versa.
The value inside bracket is t-stat for b, the P-value for which is 0.082962103 which is more than 0.05 meaning b is statistically not significant at 5% level.
Number of observations are 48. R square is 0.063921243 meaning only 6% of Power Grid Corporation of India is explained by weekly returns of Nifty 50. Balance 94% is the error due to other variables which are not in the model.
F is 3.141164288, the P-value for which is 0.082962103 which is more than 0.05 meaning overall the model is statistically not significant at 5% level.
Conclusion:
As β(0.981095942) is less than 1, it is good to invest in Power Grid Corporation of India for long term.