Title: Relationship of Mahindra & Mahindra Limited with Nifty 50.
Author: Manasi .M. Thorat
Introduction: Mahindra & Mahindra Limited (M&M) is an Indian multinational automotive manufacturing corporation headquartered in Mumbai. It was established in 1945 as Mahindra & Mohammed and later renamed Mahindra & Mahindra. Part of the Mahindra Group, M&M is one of the largest vehicle manufacturers by production in India. Its unit, Mahindra Tractors, is the largest manufacturer of tractors in the world by volume. It was ranked 17th on a list of top companies in India by Fortune India 500 in 2018. Its major competitors in the Indian market include Maruti Suzuki India and Tata Motors. Dr. Anish Shah is the current CEO and Managing Director of Mahindra & Mahindra.
Objective: To calculate beta of Mahindra & Mahindra Limited and its significance
Data Collection: Data for Nifty 50 and Mahindra & Mahindra Limited was downloaded from NSE site for the period 1-3-2023 to 28-2-2024. Friday closing prices were calculated and weekly returns were found out. Weekly returns of Mahindra & Mahindra Limited were regressed on weekly returns of Nifty 50.
Data Analysis: Equation of regression of weekly returns of Mahindra & Mahindra Limited on weekly returns of Nifty 50 Index – weekly returns of Mahindra & Mahindra Limited = -0.7457 – 0.1280 x weekly returns of Nifty 50 Index
Where,
Number of Observations = 48,
R Square = 0.00246,
F = 0.11355,
P-value = 0.73767
Interpretation:-
The above equation shows relationship between weekly returns of Mahindra & Mahindra 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 Mahindra & Mahindra Limited Company fall and vice-versa. If weekly returns of Nifty 50 Index rise by 1-unit, weekly returns of Mahindra & Mahindra Limited Company will fall by 0.1280 unit and vice-versa. Figure in bracket shows t-stat for B, P-value for which is 0.73767, 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 0.00246 meaning 0.25% of weekly returns of Mahindra & Mahindra Limited Company are explained by weekly returns of Nifty 50 Index. Balance 99.75% is error due to other variables which are not in the model. F is 0.11355, the P-value of which is 0.73767, which is more than 0.05 meaning overall, the model is not statistically significant at 5% significance.
Conclusion: – As Beta (-0.1280) is less than 1, Mahindra & Mahindra Limited Company is good to invest for long term.