Relationship of Nifty50 index with V-Mart Retail Ltd.
.
Author: Vikas Awari
Introduction:
V-Mart is an Omni-channel value retailer delivering experiential offerings to India’s aspirational middle class. A value retail chain rooted in strong ethos and beliefs, V-Mart offers fashion apparel, footwear, home furnishings, general merchandise and groceries for the complete family. Led by the concept of ‘value retailing’, the Company caters to the needs of the value and fashion conscious consumers living in tier II, III and IV cities across India. Founded in 2002, V-Mart has consistently delivered a differentiated experience to its growing customer base through relevant products, with an optimal mix of private and market labels.
Objective: To find Beta (β) of V – Mart Retail Ltd and its significance.
Data collection:
Nifty 50 data and V – Mart Retail Ltd. Data was collected from Nseindia 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 V – Mart Retail 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 V – Mart Retail Ltd on weekly returns of nifty50 index.
Weekly returns of V – Mart Retail Ltd = 109.6342 + (-0.091070)* weekly returns of nifty50 index
(-0.195166)
Where,
Number of observations: 48,
R square = 0.000827354,
F = 0.0380898,
P-value = 0.846122427
Interpretation:
- The above equation shows relationship between weekly returns of V – Mart Retail Ltd 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 V – Mart Retail Ltd Company falls and vice-versa.
- If weekly returns of Nifty 50 Index rise by 1-unit, weekly returns of V – Mart Retail Ltd Company will fall by -0.091070415 unit and vice-versa.
- Figure in bracket shows t-stat for β, P-value for which is 0.846122427, 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 0.000827354 meaning approximately 0.082 % of weekly returns of V – Mart Retail Ltd Company are explained by weekly returns of Nifty 50 Index. Balance 99.91 (approximate) is error due to other variables which are not in the model.
- F is 0.0380898, the P-value of which is 0.846122427, which is greater than 0.05 meaning overall, the model is not statistically significant at 5% significance level.
Conclusion:
As β (-0.091070415) is less than 1, it is good to invest in V – Mart Retail Ltd Company for long term.
