Title: Relationship of Nifty 50 stock with Shri Ram Fibres Limited
Author: Snehal Rajendra Shinde
Introduction:
The company was established in 1970, as Shri Ram Fibres Limited, by DCM Limited as a wholly owned subsidiary. SRF Limited is an Indian multi-business chemicals conglomerate engaged in the manufacturing of industrial and specialty intermedites. The company’s business portfolio covers textiles, tyre cord fabrics, belting fabrics, coated fabrics, laminated fabrics, industrial yarns, fluorochemicals, specialty chemicals, engineering plastics and packaging films. It has a workforce of more than 8,000 employees across eleven manufacturing plants in India. Thailand, South Africa and Hungary. The company exports to more than 90 countries.
Objective: To find out Beta of SRF limited And its significance
Data collection:
The data for Nifty50 and SRF limited has been downloaded from NSE India.com for the period of 1/02/2023 to 31/01/2024. Weekly closing price was found out. Weekly return were calculated. Weekly return of SRF limited were regressed on weekly return of Nifty50.
Data Analysis:
Equation of regression of weekly returns of SRF limited on weekly returns of Nifty 50 index.
Format of Regression equation is Y = α + β(X)
Weekly returns of SRF limited = -0.12453 + 0.598243 × weekly return of Nifty 50 index
(2.509033)
Where,
Number of observation = 48
R Square = 0.120379
F = 6.295245
P-value = 0.015692
Interpretation,
- The above equation shows the relationship between weekly returns of SRF limited and weekly returns of Nifty 50 share.
- Positive sign means direct relation, meaning if weekly returns of Nifty 50 index rise then weekly returns of SRF limited will rise and vice-versa.
- If weekly return of Nifty 50 index rise by 1 unit, weekly returns of SRF limited will rise by 0.598243 unit and vice-versa.
- Figure in bracket shows t-stat for β, P-value 015692 for which is which is smaller than 0.05 meaning β is statistically significant at 5% significant level.
- Number of observation are 48, R- square value is 120379 meaning approximately 12.03% of weekly returns of SRF limited are explained by weekly returns of Nifty 50 index. Balance 87.97% (approximate) is error due to other variables which are not model.
- F is 295245,the P-value of which is 0.015692, which is smaller than 0.05 meaning overall, the model is statistically significant at 5% significance level.
Conclusion:
As β (0.598243) is less than 1, it is good to invest in SRF limited for long term.