Relationship of Nifty50 Index with Nippon Life India Asset Management Limited
Author: Nisha Siddiki
Introduction:
Nippon Life India Asset Management Limited (formerly known as Reliance Nippon Life Asset Management Limited) is one of the leading asset management companies in India and is the asset manager of Nippon India Mutual Fund (NIMF). It offers a range of mutual funds including Exchange Traded Funds, Portfolio Management services and manages investments across various asset classes, including equity, debt, and hybrid funds. Nippon Life India Asset Management Limited is a joint venture between Nippon Life Insurance which is a leading Japanese life insurance company and Reliance Capital Limited – an Indian financial services company.
Objective:
To find (β) of Nippon Life India Asset Management Limited and its significance.
Data Collection:
The data for Nifty50 Index and Nippon Life India Asset Management Limited was collected from NSE website – nseindia.com for the period 01st February 2023 to 31st January 2024. The historical data collected was manipulated to bring the results of Friday. Weekly closing prices of Nifty50 and Nippon Life India Asset Management Limited were found and calculated. Weekly returns of Nippon Life India Asset Management Limited were regressed on weekly returns of Nifty50.
Data Analysis:
Regression Equation: Y= α + β(X)
Equation gained from regression of weekly returns of Nippon Life India Asset Management Limited on weekly returns of Nifty50 is as follows:
Weekly returns of Nippon Life India Asset Management = 1.13873 + 1.40544 x weekly returns of Nifty50 (3.1865)
Where,
No. of Observations = 48,
R square = 0.18082,
F = 10.153,
P-Value = 0.0025
Interpretation:
- The above equation shows the relationship between weekly returns of Nippon Life India Asset Management Limited and weekly returns of Nifty50 Index.
- Negative sign means inverse relationship, meaning if weekly returns of Nifty50 index rise then weekly returns of Nippon Life India Asset Management Limited falls and vice-versa.
- Positive sign means direct relationship, meaning if weekly returns of Nifty50 Index rise then weekly returns of Nippon Life India Asset Management Limited also rises and vice-versa.
- If weekly returns of Nifty50 Index rise by 1 unit, weekly returns of Nippon Life India Asset Management Limited will also rise by 1.40544 units and vice-versa.
- Figure in the bracket shows t-stat for β, the P-value for which is 0.0025, which is less than 0.05, meaning β is statistically significant at 5% level of significance.
- of observations are 48, R-square value is 0.18082,meaning 18.08% of weekly returns of Nippon Life India Asset Management Limited are explained by weekly returns of Nifty50 Index. Balance 81.92% is the error due to other variables which are not in the model.
- F is 10.153, the P-value of which is 0.0025, which is less than 0.05, meaning overall the model is statistically significant at 5% level of significance.
Conclusion:
As β (1.40544) is more than 1, it is good to invest in Nippon Life India Asset Management Limited for short term.