Title: Relationship of Sun Pharmaceutical Industries Limited with Nifty 50
Author: Sairaj Sudhir Raokar
Introduction: Sun Pharmaceutical Industries Limited is one of India’s leading pharmaceutical companies, known for its strong presence in the global pharmaceutical market. Established in 1983, it specializes in manufacturing generic and specialty medicines in fields such as cardiology, neurology, and gastroenterology. With operations in over 100 countries, Sun Pharma has consistently been a key player in India’s pharmaceutical sector. As part of the Nifty 50 index, Sun Pharma’s growth is driven by both domestic and international markets, making it a vital component of India’s economy.
Objective: To find out beta of Sun Pharmaceutical Industries Limited and its significance.
Data collection: The data of Sun pharmaceutical industries limited and Nifty 50, from the period 01.05.2023 to 30.04.2024, was downloaded from NSE’s official website nse.india. Data was manipulated to find Friday closing prices. The weekly returns of Sun pharmaceutical industries limited and the weekly returns of Nifty 50 were calculated.
Data analysis:
Equation
Weekly Returns of Sun pharmaceutical industries limited = -0.56 +0.68 weekly Return of Nifty-50
N (no. of observation) = 50, R2 = 0.12, F-Stat= 6.55, P-Value=0.01
The above equation depicts the relationship between the weekly returns Sun pharmaceutical industries limited of and the weekly returns of Nifty-50. The plus (+) sign before the coefficient of Nifty-50 tells that if Nifty-50 rises, then company value rises too, and vice-versa.
If Nifty-50 rises by 1 unit, the company value will rise by 0.92 units. The figure in the bracket is t-stat for beta and the p-value for which is 0.013, which is less than 0.5, meaning beta is statistically significant at 5 percent levels of significance.
R2 value is 0.12, meaning 12% of Sun pharmaceutical industries limited returns are explained by Nifty-50, the balance 80 percent are maybe due to fundamentals. F-stat value is 6.55 and the p-value is 0.01, meaning that the overall model is statistically significant.
Conclusion: The Beta value for weekly of Nifty-50 is less than 1 (β= 0.68), than significantly the company should be for the long term Investment.