TITLE: Relationship of Nifty 50 with Cipla Limited.
AUTHOR: Carol Khandagale
INTRODUCTION: Cipla, established in 1935, is a global pharmaceutical company known for its focus on agile growth, complex generics, and a diverse portfolio in markets like India, South Africa, North America, and other key regions. Over its 86-year history, Cipla has emphasized its commitment to ‘Caring for Life’ and has been recognized for its humanitarian approach to healthcare. The company has a significant presence in the pharmaceutical industry, with a wide range of products across various therapeutic categories.
OBJECTIVE: To find out Beta of Cipla Limited and its Significance.
DATA COLLECTION: Data for Nifty 50 and Cipla Limited has been downloaded from NSEindia.com for the period 1-2-23 to 31-2-24. Weekly closing prices were found out. Weekly returns were calculated. Weekly returns of Cipla were regressed on weekly returns of Nifty.
DATA ANALYSIS: Format of Regression equation is Y = a + B(X)
Equation of regression of weekly returns of Cipla Limited on weekly returns of Nifty 50.
Index + weekly returns of Cipla Limited = -0.569+ 0.1739 NIFTY 50 weekly returns of Nifty 50 Index.
Where,
Number of Observations = 48,
R Square = 0.0066,
F = 0.3101,
P-value = 0.5802
T-stats for b = 0.5569
Interpretation:
- The above equation shows the relationship between NIFTY 50 and Cipla.
- Positive sign means direct relationship, if NIFTY 50 rises Cipla will also rise and vice versa. If NIFTY 50 rises by 1 unit, then Cipla will rise by 0.1739 units and vice versa.
- T- stats for b is given in bracket and the p value for which is given as 0.5802, which is more than 0.05 meaning b is not statistically significant at 5% level meaning NIFTY 50 does not play a significant role for Cipla.
- Number of observations are 48, R2 is 0.0066 meaning 0.66% of Cipla is explained by NIFTY 50, balance 99.34% is error due to the variables not taken in the model.
- F is 0.3101 the p value for which is 0.5802 which is more than 0.05, so overall the model is not statistically significant.
CONCLUSION: As Beta 0.55691 is less than 1, Cipla Limited Company is good to invest for Long Term.