Relationship of Nifty50 index with Data patterns India ltd.
Author: Dishant Kante
Introduction:
Data Patterns (India) Limited is one of the fastest-growing companies in the Defence and Aerospace Electronics sector in India. It is among the few vertically integrated defence and aerospace electronics solutions providers catering to the indigenously developed defence products industry. It is focused on in-house development and manufacturing facilities led by innovation and design and development efforts. It is in the business for over 35 years. It has supplied products catering to all the platforms, viz., space, air, land and sea, including products for LCA-Tejas, Light Utility Helicopter, BrahMos missile.
Objective: To find Beta(β) of Data patterns ltd and its significance.
Data collection:
Nifty 50 data was collected from Nseindia.com and Data patterns (India) ltd data was collected from Yahoofinance.com for the period starting from 1st February 2023 to 31st January 2024.The historical data collected was manipulated using Microsoft excel to get Friday closing prices for both, the index and the company. Weekly returns were based on the closing prices which were calculated using excel tools and with use of regression analysis ,weekly returns of Data patterns India ltd were regressed on weekly returns of nifty 50 index.
Data analysis:
Format of regression equation is Y= α + β(X)
Equation of regression of weekly returns of Data patterns India ltd on weekly returns of nifty50 index –
Weekly returns of Data patterns India ltd = 0.5367 + 0.6145* weekly returns of nifty50 index
(1.0366)
Where,
Number of observations: 48,
R square = 0.023321775,
F =1.074540044,
P-value = 0.3054
Interpretation:
The above equation shows relationship between weekly returns of Data patterns India Limited Company and weekly returns of Nifty 50 Index.
Positive sign means direct relation, meaning if weekly returns of Nifty 50 Index rise then weekly returns of Data patterns India Limited Company also rises and vice-versa.
If weekly returns of Nifty 50 Index rise by 1-unit, weekly returns of Data patterns India Limited Company will rise by 0.6145 unit and vice-versa.
Figure in bracket shows t-stat for β(1.0366),P-value for which is 0.3054 , 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 0.023321775 meaning approximately 2.33% of weekly returns of Data patterns India Company Limited are explained by weekly returns of Nifty 50 Index. Balance 97.67 (approximate) is error due to other variables which are not in the model.
F is 1.0745400, the P-value of which is 0.3054, which is more than 0.05 meaning overall, the model is not statistically significant at 5% significance level.
Conclusion:
As β (0.6145) is less than 1, it is good to invest in Data patterns India Company Limited for long term.