Relationship of NTPC limited with Nifty 50
Author: Naman Jha1*
, ITM Business School, Kharghar, Maharashtra, India
* Corresponding Author E-mail: namanjha1904@gmail.com
Introduction: NTPC (National Thermal Power Corporation) Ltd along with its subsidiaries/ associates & JVs is primarily involved in generation and sale of bulk power to State power utilities. Other business of the group includes providing consultancy, project management & supervision, energy trading, oil & gas exploration and coal mining.
Objective: To find out Beta of NTPC Limited and its significance.
Data Collection: Data for Nifty 50 and NTPC Limited was downloaded from https://www.nseindia.com/ for the period 1st June 2023 to 30st May 2024. Data was manipulated to get Friday closing prices and weekly returns were calculated using formula (Yt+1 – Yt) / Yt * 100. Weekly returns of NTPC Limited were regressed on weekly returns of Nifty 50.
Data Analysis:
Weekly Returns of NTPC = -0.86 + 1.40 Weekly Returns of Nifty
N = 49, R2 = 0.32, F = 22.21, P-value = 2.20 (4.71)
Interpretation:
The above equation shows the relationship between Nifty 50 and NTPC Limited. The positive sign before 1.40 means there is a positive relationship if Nifty 50 rises by 1-unit NTPC will rise 1.40 and vice versa. The coefficient of Nifty 50 has t Stat = 4.71, the P-value of which is 2.20. It is more than 0.05 meaning Nifty 50 is not statistically significant to increase the price of NTPC Limited. R2 is 0.32 meaning 32% of NTPC Limited prices are explained by Nifty 50. 68% depends upon other factors like fundamentals. F is 22.2and P-value is 2.20 meaning it is more than 0.05 meaning overall model is not statistically significant at 5% level.
Conclusion: NTPC Limited is good for short term investment if nifty is at low.