RELATIONSHIP OF NIFTY WITH RAIL VIKAS NIGAM LTD.
AUTHOR : Ronit Thorat
Introduction :
Rail Vikas Nigam Limited (RVNL) is an Indian central public sector enterprise which works as the construction arm of the Ministry of Railways for project implementation and transportation infrastructure development. It was incorporated in 2003 to meet the country’s surging infrastructural requirements and to implement projects on a fast-track basis as well as for creating a Railway equipment construction company. It is a ‘Navratna’ CPSE in India under the administrative control of the Indian Ministry of Railways.
Objective : To find out Beta of Rail Vikas Nigam Ltd. and it’s significance.
Data Collection :
Data for Nifty 50 and Rail Vikas Company has been downloaded from nseindia.com for the period 1-12-23 to 31-1-24. Weekly closing prices were found put. Weekly returns of Rail Vikas Nigam Ltd. were regressed on Weekly returns Nifty.
Data Analysis:
Format of regression equation: Y =α + β(X)
Weekly returns of RAIL VIKAS NIGAM Ltd. = -2.069809559 – 0.894269158 x Weekly returns of Nifty 50
N = 48, R Square = 0.02092155136, F = 0.9829563338 P value = 0.3266567622
Interpretation :
The above equation shows the relationship between the weekly returns of Rail Vikas Nigam Ltd. and the weekly ,returns of Nifty 50. Negative sign means inverse relationship, meaning if price rises demand falls and vice versa. If Nifty50 rises by 1 unit, Rail Vikas Nigam Ltd. will falls by 0.894 units and vice versa.
The value inside bracket is t-stat for b, the P-value for which is 0.3266567622 which is less than 0.05 meaning b is statistically significant at 5% level.
Number of observations are 48. R square is 0.02092155136 meaning only 2% of Rail Vikas Nigam Ltd. is explained by weekly returns of Nifty 50. Balance 98% is the error due to other variables which are not in the model.
F is 0.9829563338 , the P-value for which is 0.3266567622 which is less than 0.05 meaning overall the model is statistically significant at 5% level.
Conclusion:
As β(- 0.894269158) is less than 1, it is good to invest in Rail Vikas Nigam Ltd. for long term.