Relationship of Nifty 50 Index with Associated Cement Companies (ACC)Limited
Author: Azhar Shaikh
Introduction:
Associated Cement companies (ACC) Limited by amalgamating 11 cement companies in 1936 in Mumbai. ACC is one of India’s leading cement manufacturers. ACC has been a pioneer in the cement industry known for its innovation, quality, and sustainable practices. ACC produces a wide range of cement and ready-mixed concrete products catering to various constructions needs. The company is committed to environmental responsibility and social welfare, making it a trusted name in the construction sector.
Objective: To find Beta (β) of Associated Cement Companies Limited and its significance.
Data collection:
Nifty 50 Index and Associated Cement Companies Limited data was collected from nseindia.com website for the period of one year dating from 1st February 2023 to 31st January 2024. The historical data collected was manipulated using Microsoft Excel to get Friday closing prices of both the index and the company. Weekly returns were based on the closing prices calculated using Excel tools and with use of Regression analysis, weekly returns of Associated Cement Companies Limited were regressed on weekly returns of Nifty 50 Index.
Data Analysis: Equation of regression of weekly returns of Associated Cement Companies Limited on weekly returns of Nifty 50 Index
Format of Regression equation is Y = α + β(X)
Weekly returns of Associated Cement Companies Limited= -0.2537-0.04099 x weekly return of Nifty 50 Index (-0.10096)
Where,
Number of Observations = 48,
R Square = 0.000222
F =0.010192
P-value = 0.920023
Interpretation:
- The above equation shows the relationship between weekly returns of Associated Cement Companies 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 Associated Cement Companies Limited Company falls and vice-versa.
- If weekly returns of Nifty 50 Index rise by 1-unit, weekly returns of Associated Cement Companies Limited Company will fall by -0.04099 unit and vice-versa.
- Figure in bracket shows t-stat for β, P-value for which is 0.920023, which is greater than 0.05 meaning β is not statistically significant at 5% significance level.
- Number of Observations are 48, R-square value is 0.000222 meaning approximately 0.222% of weekly returns of Associated Cement Companies Limited are explained by weekly returns of Nifty 50 Index. Balance 99.778% (approximate) is error due to other variables which are not in the model.
- F is 0.010192, the P-value of which is 0.920023, which is greater than 0.05 meaning overall, the model is not statistically significant at 5% significance level.
Conclusion:
As β (-0.04099) is less than 1, it is good to invest in Associated Cement Companies Limited Company for the long term.