Relationship of RBL Bank with Nifty 50
Author: Ruturaj Desai1
1 F2 2024-26 – 021330124019, ITM Business School, Kharghar, Maharashtra, India
Introduction: RBL Bank experienced a mix of challenges and recovery, with its stock price reflecting this volatility. The bank faced issues related to asset quality and higher provisioning, which affected investor sentiment initially. However, as management implemented strategic changes and focused on improving loan growth and operational efficiency, the stock showed signs of recovery. Overall, while the year was marked by ups and downs, there was cautious optimism about RBL Bank’s long-term growth potential.
Objective: To find out Beta of RBL Bank and its significance.
Data Collection: Data for Nifty 50 and RBL Bank was downloaded from https://www.nseindia.com/ for the period 1st April 2023 to 31st March 2024. Data was manipulated to get Friday closing prices and weekly returns were calculated using formula (Yt+1 – Yt) / Yt * 100. Weekly returns of RBL Bank were regressed on weekly returns of Nifty 50.
Data Analysis:
Weekly Returns of RBL Bank = -0.83 + 0.20 Weekly Returns of Nifty
N = 45, R2 = 0.001, F = 0.08, P-value = 0.78 (0.2776)
The above equation shows the relationship between Nifty 50 and RBL Bank. The positive sign before 0.20 means if Nifty 50 rises, RBL Bank also rise and vice versa. The coefficient of Nifty 50 has t Stat = 0.2776, the P-value of which is 0.78. It is more than 0.05 meaning Nifty 50 is not statistically significant to increase the price of RBL Bank. R2 IS 0.001 meaning 0.1% of RBL Bank prices are explained by Nifty 50. 99.9% depends upon other factors like fundamentals. F is 0.08 and P-value is 0.78 meaning it is more than 0.05 meaning overall model is not statistically significant.
Conclusion: RBL Bank is good for long term investment.