Author: Sarthak Dubey
Introduction: State Bank of India (SBI) is India’s largest commercial bank and a leading financial services provider. It is the public sector bank and it Offers a wide range of banking and financial services, including savings accounts, loans, credit cards, insurance, investment products, and more. It Holds a significant market share in India’s banking industry.
Objective: To find out beta of SBI and its significance
Data Collection: Data for Nifty50 & SBI was downloaded from NSE website, further period 1st may 2023 to 30st April 2024. Data was manipulated to get Friday closing prices & weekly returns were calculated by the Formula: . Weekly returns of SBI were regressed on weekly returns of Nifty50.
Data Analysis: Weekly return of SBI = -0.30 -0.75 Weekly returns of Nifty 50(-2.24)
N = 48, R2 = 0.098, F = 5.02 , P-value = 0.029
Interpretation: The above equation shows the relationship between Nifty 50 & SBI . The negative sign before the coefficient of weekly returns of Nifty 50 means there is negative relationship. If Nifty 50 rise by 1unit, SBI will decrease by 0.75 & vice versa. The Coefficient of Nifty 50 has t stat = (-2.24) & the P value of which is 0.029 which is less than 0.05 meaning Beta is statistically significant at 5% level and N=48, No of observations are 48. R2 is 0.098 which means 9.8 % of Weekly returns of SBI are explained by Nifty 50. 90.2 % depends upon other factors like fundamentals are other factors. F is 5.021 & the P value of this is 0.029 meaning it is less than 0.05 meaning the overall model is statistically significant at 5% level.
Conclusion: Beta is negative (-0.75), avoid this investment.