Relationship of Nifty 50 Index with Religare Enterprises Limited
Author: Rishita Singh
Introduction:
Religare Enterprises Limited (REL) is an Indian investment and financial services holding company, headquartered in New Delhi. It offers an integrated suite of financial services through its underlying subsidiaries and operating entities, including loans to SMEs, Affordable Housing Finance, Health Insurance and Capital Markets. As a group, Religare caters to almost every segment of the market from mass retail to affluent, HNIs, mid-size corporates, SMEs to large corporates and institutions.
Objective: To find Beta (β) of Religare Enterprises Limited and its significance.
Data Collection:
The data of Nifty 50 and Religare Enterprises has been downloaded from nscindia.com for the period 1-2-23 to 31-1-24. Weekly closing prices were found out, Weekly returns were calculated. Weekly returns of Religare were regressed on weekly returns of Nifty.
Data Analysis:
Format of Regression equation is Y = α + β(X)
Equation of regression of weekly returns of Religare Limited on weekly returns of Nifty 50 Index-
Weekly returns of Religare Enterprise Limited = 0.816175
-0.016863× weekly returns of Nifty 50 Index
(-0.032690)
Where,
Number of Observations = 48,
R Square = 0.0000232311,
F = 0.0010686,
P-value = 0.9740629
Interpretation:
- The above equation demonstrates the relationship between weekly returns of Religare Limited Company and weekly returns of Nifty 50 Index.
- A negative sign implies an inverse relationship, indicating that when the weekly returns of Nifty 50 Index rise then weekly returns of Religare Limited Company falls and vice-versa.
- Specifically if the weekly returns of the Nifty 50 Index rise by 1unit, weekly returns of Religare Limited Company will fall by -0.0168636 units, and vice-versa.
- The t-stat for β, with a corresponding P-value of 0.9740629, which is greater than 0.05, it indicates that β is not statistically significant at 5% significance level. This suggest that weekly return of Religare and Nifty 50 index may not be statistically significant.
- With 48 observation, R-square value is 0.0000232311 indicating that approximately 0.0023% of weekly returns of Religare Company Limited can be explained by weekly returns of Nifty 50 Index. The remaining 99.9977% (approximate) is error due to other variables which are not in the model.
- The F statistic is 0.0010686, yielding a p-value of 0.9740629. Since the p-value is greater than 0.05, the overall model is not statistically significant at the 5% significance level. This implies that the model as a whole may not adequately explain the relationship between the variables.
Conclusion:
As β (-0.016863) is less than, it is good to invest for long term.