Relation analysis of Sun Pharmaceutical Industries Ltd. with Nifty 50.
Author: Smriti Ahuja
021330024578 F2 ITM B-School Kharghar, Navi Mumbai.
Introduction:
Sun Pharmaceutical Industries Ltd. (Sun Pharma) is the fourth largest specialty generic pharmaceutical company in the world with global revenues of US$ 5.4 billion. Supported by 43 manufacturing facilities, we provide high-quality, affordable medicines, trusted by healthcare professionals and patients, to more than 100 countries across the globe.
Objective:
To find out Beta of Sun Pharmaceutical Industries Limited and its significant.
Data Collection:
Data for Nifty 50 and Sun Pharmaceutical Industries Limited was downloaded from NSE https://www.nseindia.com/reports-indices-historical-index-site for the period 01-04-2023 to 31-03-2024. Data was manipulated to get Friday closing prices and weekly returns were calculated by the formula ( Y t-1 -Y t ) / Y t *100 weekly returns of Sun Pharmaceutical were regressed on weekly return of Nifty 50.
Data Analysis:
Weekly Return of Sun Pharmaceutical Industries Limited
= 0.77 + 0.64 W.R of Nifty 50
T-stat = ( 2.309)
N = 48 , R 2 = 0.108 , F = 5.33 , P Value = 0.025.
Data Interpretation:
Above equation shows the relationship between Nifty 50 and Sun Pharmaceutical Industries Limited . The positive sign before 0.64 means if Nifty rises Sun Pharmaceutical Industries Limited will also rise and vice versa.
The coefficient of Nifty 50 has T Stat = 2.309 and the P Value of which is 0.025 which is lower than 0.50 means Nifty 50 is statistically significant to increase the prices of Sun Pharmaceutical Industries Limited.
R 2 is 0.108 which means 10.8% of Sun Pharmaceuticals Industries Limited prices are explained by Nifty 50 . 89.2% depends upon other factors like fundamentals.
F is 5.33 and the P Value of this 0.025 meaning it is less than 0.50 means the overall model is statistically significant.
Conclusion:
When the beta is more than 1 then it is advised to invest for the short term as the beta is more volatile.
When the Beta is less than 1 but greater than 0 (1>Beta>0) as in the case of our research problem I.e. Sun Pharmaceutical Industries Ltd. it is advised to invest for the long term as the market volatility is less than one.
Hence Sun Pharmaceutical Industries Ltd. is good for long term investment.