Relationship of Nifty 50 with Marico Limited
Author– Mansi Kanojia
Introduction – One of the top consumer products firms in India, Marico Limited is active in the international beauty and wellness markets. Marico, which has its main office in Mumbai, has operations in more than 25 nations in developing Asian and African markets. Leading companies in the fields of edible oils, healthy foods, male grooming, fabric care, hair care, and skincare are supported by it. Marico has potentially targeted the African and the Asian markets and it has established a turnover of USD 1.2 billion through its products sold in India. The company is present in 25 different companies in Asia and Africa.
Objective – To find out the Beta of Marico Limited and its Significance.
Data Collection – Data for Nifty 50 and Marico has been downloaded from the NSE India website for the period 1-2-23 to 31-1-24. Its weekly closing prices were found out and weekly returns were calculated. Weekly returns of Marico were regressed on Weekly returns of Nifty 50.
Data Analysis -The format of the Regression equation is Y = α + β (X)
Equation of regression of weekly returns of Friday closing price of Marico Limited on weekly returns of Friday closing price of Nifty 50 Index
Marico Limited= 0.13482 – 0.180 Nifty 50
(-1.417)
Number of Observations = 48,
R Square = 0.0418
F = 0.80
P-value = 0.163
Interpretation-
- The above equation shows the relationship between the returns of Marico Limited Company and the Nifty 50 index (i.e., from 1-2-23 to 31-1-24) on Friday’s closing.
- A negative sign means inverse relation, meaning if returns of the Nifty 50 Index rise then weekly returns of Marico Limited Company fall and vice-versa.
- If the weekly returns of the Nifty 50 Index rise by 1 unit, the weekly returns of Marico Limited Company will fall by 0.180 units.
- The figure in the bracket shows the t-stat for β, the P-value for which is 0.163, which is greater than 0.05 meaning β is not statistically significant at a 5% significance level.
- The number of Observations is 48, R-square value is 0.0418 meaning approximately 4.18% of the weekly returns of Marico Limited are explained by weekly returns of the Nifty 50 Index. Balance 95.82% is an error due to other variables which are not in the model.
- F is 0.80, the P-value of which is 0.163, which is more than 0.05 meaning overall, the model is not statistically significant at a 5% significance level.
- Hence, the fundamentals of Marico Limited are poor.
Conclusion – Since Beta is less than one, it is good to invest in Marico Limited for the long term.