TITLE: Relationship of Nifty 50 with Muthoot Finance Limited
AUTHOR: Manav Gohil
INTRODUCTION: Muthoot Finance Ltd specializes in gold-based financing alongside a range of financial services including personal loans, insurance, housing finance, and debentures. They also offer ancillary services such as money transfers, PAN card assistance, and travel solutions, embracing digital platforms for convenience.
OBJECTIVE: To find out Beta of Muthoot Finance Limited and its Significance.
DATA COLLECTION: Data for Nifty 50 and Muthoot Finance Limited has been downloaded from NSEindia.com for the period 1-2-23 to 31-2-24. Weekly closing prices were found out. Weekly returns were calculated. Weekly returns of Muthoot Finance were regressed on weekly returns of Nifty.
DATA ANALYSIS: Format of Regression equation is Y = a + B(X)
Equation of regression of weekly returns of Muthoot Finance Limited on weekly returns of Nifty 50
Index + weekly returns of Muthoot Finance Limited = -0.4532 -0.4504x weekly returns of Nifty 50 Index
Where,
Number of Observations = 48,
R Square = 0.040328,
F = 1.933059,
P-value = 0.171115
Interpretation:
- The above equation shows relationship between weekly returns of Muthoot Finance 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 Muthoot Finance Limited Company fall and vice-versa.
- If weekly returns of Nifty 50 Index rise by 1-unit, weekly returns of Muthoot Finance Limited Company will fall by 0.4504 unit and vice-versa.
- Figure in bracket shows t-stat for B, P-value for which is 0.17115, which is greater than 0.05 meaning ẞ is not statistically significant at 5% significance level.
- Number of Observations are 48, R-square value is 0.040328 meaning 4% of weekly returns of Muthoot Finance Company Limited are explained by weekly returns of Nifty 50 Index. Balance 95.97% is error due to other variables which are not in the model.
- F is 1.933059, the P-value of which is 0.171115, which is more than 0.05 meaning overall, the model is not statistically significant at 5% significance.
CONCLUSION: As Beta –1.39034 is less than 1, Muthoot Finance Limited Company is good to invest for Long Term.