Title: Relationship of Nestle with Nifty 50
Author: Nishu Bhomia
Introduction: Nestlé is the world’s largest food and beverage company, with over 2,000 brands and a presence in 191 countries. The number of registered shares amounts to 2’620’000’000 with a nominal value of CHF 0.10 each. The symbol of the Nestlé share is NESN.
Objective: To find out Beta of Nestle and its significance.
Data Collection: Data of Nestle and Nifty 50 was downloaded from 01/05/23 to 30/04/24 taken from NSE, then data is manipulated to get Friday closing prices.
Weekly returns of Nifty 50 is taken as X and weekly return of Nestle is taken as Y, then weekly returns of both were calculated, Weekly return of Nestle was regressed on weekly returns of Nifty 50.
Data Analysis:
Weekly return of Nestle = 23.46 + (-10.41) weekly return of Nifty 50
(-0.69)
N = 47, R square = 0.01, F = 0.48, P value = 0.49
Interpretation: The above equation depicts the relationship between weekly returns of Nestle and weekly returns of Nifty 50.
The plus sign before the coefficient of Nifty 50 tells that if Nifty rises your competition will also rise & vice versa, If Nifty rises by one unit Nestle will rise by 0.90 unit, figure in the bracket is tstat for beta.
The p value for which 0.49 which is more than 0.05 meaning beta is statistically not significant at 5% level.
R square is 0.01 meaning 1% of company’s return are explained by Nifty 50 the balance 99% may be due to fundamentals.
F is 0.48 & P value is 0.49 meaning overall model is statistically insignificant.
Conclusion: As beta is -10.40 meaning it is negative, hence avoid to invest.