Relationship of Asian paints with Nifty50
Aaryan Teli | 021330024518 | F4 | ITM |2024.aaryant@isu.ac.in
Introduction: Asian Paints, a key Nifty50 stock, has shown consistent growth driven by strong demand in the paint industry. Its performance aligns with consumer spending and real estate trends, though it’s impacted by raw material costs. Generally, it moves with the Nifty50 but can outperform during periods of strong domestic consumption.
Objective: To find out Beta of Asian paints and its significance.
Data Collection: Data was collected of Asian paints and Nifty50 was downloaded from NSE website from 1st June 2023 to 31st May 2024 data was manipulated to find Friday closing prices weekly return of Nifty50 was term of ‘x’ and Asian paints was termed as ‘y’ and we find out Y regressed on X. Weekly return was calculated by this formula (Yt+1-Yt)/Yt *100.
Data analysis: The equation was the weekly return of Asian paints is equal to
-0.52+0.78 on weekly return of Nifty50 i.e. (y= -0.52+0.78x)
T stat: 3.13 N: 48, R square: 0.17, F: 9.85, P value: 0.0029.
Results: The above equation shows the relationship between Nifty50 and weekly returns of Asian paints the positive sign before coefficient of weekly return of Nifty50 means there is a positive relationship if Nifty50 rises by one-unit Asian paints will rise by 0.78 unit and by wise-versa if it falls down it will fall by the same unit. This figure stats for Beta are written as 3.13 which is T stat and P value for this is 0.0029 if it is less than 0.05 meaning beta is significantly at 5 % level which means 0.17 weekly return of Asian paints of are explained by Nifty50. So, 83 percent is my error, and F is 9.85 and P value for this is 0.0029 meaning overall the model is statistically significant at 5 % level.
Conclusion: As Asian paints beta is 0.78 which is less than 1 therefore it’s advisable to invest for long term duration.