Relationship Between Mangalam Organics Ltd with Nifty-50
Author: Mahesh More.
Introduction:
Mangalam Organics Ltd is a BSE and NSE listed company primarily
manufacturing Pine Chemicals such as Terpene Chemistry: Camphor, Camphene, Isobornyl
Acetate, Isoborneol, Dipentene and Sodium Acetate and Synthetic Resins: Terpene
Phenolic Resin, Alkyl Phenolic Resin, Rosin Based Resins. The company also has a
strong retail presence through its brands Mangalam and CamPure.
Objective: To calculate Beta and find its significance.
Data Collection:
Data for NIFTY 50 and Mangalam Organics Ltd was downloaded from NSE site for the period 01.03.2023 to 28.02.2024. Friday closing prices were calculated and weekly returns of Mangalam Organics Ltd Were regressed on weekly returns of Nifty 50.
Data Analysis:
Equation: Y= α + βX
Weekly returns of Mangalam Organics Ltd = 293.4546 + 2.573431 Weekly returns of NIFTY 50
(0.836583)
Where,
Number of observations: 45
R Square: 0.016784
F: 0.699871
P-value: 0.407677
Interpretation:
- The above equation shows the relationship between NIFTY 50 and Mangalam Organics Ltd.
- Positive sign means direct relationship. If weekly returns of NIFTY 50 rises, weekly returns of Mangalam Organics Ltd rises, and vice-versa.
- If a weekly returns of NIFTY 50 rises by 1 unit, weekly returns of Mangalam Organics Ltd will rise by 2.573 units and vice-versa.
- T-stat for b Is given in Bracket and P value for this is 0.407677, Which is less than 0.05 meaning B is statistically significant at 5% level, meaning NIFTY 50 play a significant role for Mangalam Organics Ltd.
- Number of observation are 45, R square is 016784 meaning 1.6 % of Mangalam Organics Ltd is explained by NIFTY 50. Balanced 98.4% is error due to variables not taken in the model.
- F is 0.699871, the P value for which is 0.407677 which is more than 0.05 so the overall model is not statistically significant.
Conclusion:
As β (2.573431), is greater than 1, therefore Mangalam Organics Ltd is good for short term investment.