Title:- Relationship of NTPC with Nifty 50.
Author: – Nidhi Mary Reji
Introduction: – NTPC, founded in 1975, is India’s largest power generation company, producing electricity from coal, gas, hydro, and renewables. It plays a crucial role in the nation’s energy supply and is a significant contributor to India’s power infrastructure. NTPC is a part of the Nifty 50 index, highlighting its prominence in the Indian stock market. The company is also expanding its renewable energy portfolio to align with India’s green energy goals.
Objective: – To find out beta of NTPC and its significance
Data Collection: – Data of NTPC and Nifty 50 was downloaded from date 1 May 2023 to 30 April 2024 from NSE. The data was manipulated to get Friday closing prices. Weekly return of Nifty 50(X) and weekly return of NTPC(y). Weekly return of Nifty 50 was regressed on weekly return of NTPC.
Data Analysis: – Weekly return of NTPC = -1.27 + (-0.59) weekly return of Nifty 50
(-1.97) = t stat
N = 47, R square = 0.08 ,F = 3.91 , P value =0.05
Interpretation: – The above equation shows the relationship between weekly return of NTPC and weekly return of Nifty 50. The plus sign before the coefficient of Nifty 50 tells that if Nifty rises NTPC will also rise and vice versa. If Nifty rise one unit, NTPC rises by 0.90 unit. Figure in the bracket is t stat for beta. P value for which is 0.05, which is less than 0.5, meaning beta is statistically significant at 5% level. R square is 0.08 meaning 8% company’s return is explained by Nifty 50. The balance 92%may be due to fundamentals. F is 3.91 and P value is 0.05, meaning overall model is statistically significant.
Conclusion: –Beta is negative (-0.59). Avoid this investment