Relationship of Nifty 50 Index with SBI Life Insurance co
Author: Shubham Vishwakarma
Introduction: SBI Life Insurance Co Ltd, a prominent life insurance company in India, stands out as a leading provider of a wide array of individual and group insurance plans. Established in 2001, SBI Life has garnered a strong reputation for its commitment to offering comprehensive life, pension, annuity, and health insurance products to both individual and group customers. With a focus on financial security and customer satisfaction, SBI Life’s diverse range of offerings caters to the varied needs of its policyholders, ensuring a reliable and trustworthy insurance experience.
Objective: To find Beta (β) of SBI Life Insurance co. and its significance
Data Collection:
Nifty 50 Index and SBI Life Insurance co data was collected from nseindia.com website for the period of one year dating from 1st February 2023 to 31st January 2024. The historical data collected was manipulated using Microsoft Excel to get Friday closing prices of both, the index and the company. Weekly returns were based on the closing prices were calculated using Excel tools and with use of Regression analysis, weekly returns of SBI Life Insurance co were regressed on weekly returns of Nifty 50 Index.
Data Analysis:
Equation of regression of weekly returns of SBI Life Insurance co. on weekly returns of Nifty 50 Index-
Format of Regression equation is Y = α + β(X)
weekly returns of SBI Life Insurance co. = 0.619223+0.155355× weekly returns of Nifty 50 Index
(0.633564)
Where,
Number of Observations = 47,
R Square = 0.008841,
F = 0.401403,
P-value = 0.529573
Interpretation-
- The above equation shows relationship between weekly returns of SBI Life Insurance co. Company and weekly returns of Nifty 50 Index.
- Positive sign means direct relation, meaning if weekly returns of Nifty 50 Index rise then weekly returns of SBI Life Insurance co. rise and vice-versa.
- If weekly returns of Nifty 50 Index rise by 1-unit, weekly returns of SBI Life Insurance co. Company will rise by 0.155355 unit and vice-versa.
- Figure in bracket shows t-stat for β, P-value for which is 0.529573, which is greater than 0.05 meaning β is statistically significant at 5% significance level.
- Number of Observations are 47, R-square value is 008841 meaning approximately 0.9% of weekly returns of SBI Life Insurance co. are explained by weekly returns of Nifty 50 Index. Balance 99.1% (approximate) is error due to other variables which are not in the model.
- F is 401403, the P-value of which is 0.529573, which is more than 0.05 meaning overall, the model is statistically significant at 5% significance level.
Conclusion:
As β (0. 155355) is less than 1, it is good to invest in SBI Life Insurance co. for long term.