Title: Relationship of Vodafone idea with Nifty 50
Author: Vikas Kumar
Introduction: Vodafone Idea or Vi (stylised as V!) is an Indian mobile network operator with its headquarters based in Mumbai and Gandhinagar. It is an all-India integrated GSM operator offering 2G, 3G, 4G, LTE Advanced, VoLTE, and VoWiFi service. As of 31 September 2023, Vi has a subscriber base of 219.8 million, making it third largest mobile telecommunications network in India and 11th largest mobile telecommunications network in the world. ‘Vodafone Idea Limited’ was created on 31 August 2018 by the merger of Vodafone India and Idea Cellular. In 2020, the two separate brands Vodafone and Idea rebranded as Vi.
Objective: To calculate Beta and find its significance
Data Collection: Data of Nifty 50 and data of Vodafone idea from the period 01/03/2023 to 28/02/2024. Friday closing prices were calculated and weekly return were found out. Weekly return of Vodafone idea were regressed on weekly return of Nifty 50.
Data Analysis: Return of Vodafone idea = 1.36 + 1.74 Return of Nifty 50 (2.25)
Observations = 48
R Square = 0.10
F = 5.07
P-value = 0.03
The above equation shows the relationship between the return of Nifty 50 and the return of Vodafone idea , Positive sign means direct relationship. If the return of Nifty 50 rises, the return of Vodafone idea will rise and vice-versa. If the return of Nifty 50 rises by Rs 1, the return of Vodafone idea will rise by Rs 1.74 and vice-versa. T Stat for b is given in bracket as 2.25 and P value for this is 0.03 which is less than 0.05 meaning b is statistically significant at 5% level meaning return of Nifty 50 does play a significant role in the return of Vodafone idea. The number of observations is 48, R Square is 0.10 meaning 10% of return of Vodafone idea is explained by return of Nifty 50 balance 90% is error due to the variables not being taken into the model. F is 5.07, the P value is 0.03 which is less than 0.05 so the overall model is statistically significant.
Conclusion: Beta is 1.74 which is more than 1, so Vodafone idea is good for short-term investment.
