Relationship of Nifty 50 with Alok Industries Ltd.
Author: Ameya Tambe – 119
Introduction:
Alok Industries Ltd. is an India-based integrated textile company founded in 1986. It is one of India’s largest vertically integrated textile companies, offering end-to-end solutions through its various divisions, including Home Textiles, Cotton Yarn, Apparel Fabric, Garments, Technical Textiles, Textile Accessories, and Polyester Yarn. The company is primarily engaged in textile manufacturing, with operations in weaving, knitting, processing, home textiles, ready-made garments, and polyester yarns. Alok Industries exports a significant portion of its products to over 90 countries worldwide, serving renowned brands like Levi’s, Walmart, Zara, Calvin Klein, H&M, and many more. The company is owned by Reliance Industries and has subsidiaries like Alok Infrastructure Limited and Alok Singapore Pte Limited. Alok Industries has a strong focus on quality and sustainability, holding certifications such as Global Organic Textiles (GOTS), OEKOTEX, Made In Green, Fairtrade, Egyptian Cotton certified, among others.
Objective: To find out beta of Alok Industries Ltd. And it’s significance.
Data Collection:
Data for Nifty 50 and Alok Industries Ltd has been downloaded from nseindia.com for the period 01/02/2023 to 31/01/2024. Weekly closing prices were found out. Weekly returns were calculated. Weekly returns of Alok Industries Ltd were regressed on weekly returns of Nifty 50.
Data Analysis:
Format of regression equation: Y =α + β(X)
Returns of the Alok Industries Ltd = -2.173442999+ 1.58888718returns of Nifty 50
(1.985156294)
N = 48, R Square = 0.078910268, F = 3.940845511 P value = 0.053108299
Interpretation:
- The above equation shows the relationship between the weekly returns of Alok Industries Ltd and the weekly ,returns of Nifty 50.
- Positive sign means direct relationship, meaning if Nifty 50 rises Alok Industries Ltd also rises and vice versa. If Nifty50 rises by 1 unit, Alok Industries will rise by 1.589 units and vice versa.
- The value inside bracket is t-stat for b, the P-value for which is 0.053108299 which is more than 0.05 meaning b is statistically not significant at 5% level.
- Number of observations are 48. R square is 0.078910268 meaning only 7% of Alok Industries Ltd is explained by weekly returns of Nifty 50. Balance 93% is the error due to other variables which are not in the model.
- F is 3.940845511, the P-value for which is 0.053108299 which is more than 0.05 meaning overall the model is statistically not significant at 5% level.
Conclusion:
As β(1.58888718) is more than 1, it is good to invest in Alok Industries Ltd for short term.