Relation analysis of Bharat Forge Ltd. with Nifty 50
Author: Bhairavi Kambare
F3 – 021330024095
ITM Business School Navi Mumbai
Introduction:
Bharat Forge Limited (BFL) is an Indian multinational company that manufactures and engineer high-performance components for industrial and automotive applications. They are a global leader in the manufacturing of forged and machined components.
Data Analysis:
Weekly returns of Nifty 50 quoted as β (beta) = -0.08582
Weekly returns of Bharat Forge Ltd. = -1.01677
T stat = -1.699592669
N = 46
R2 = 0.000831
F = 0.038238
P value = 0.095961
Y = Weekly returns of Bharat Forge Ltd.+ Weekly returns of Nifty 50
Y = -0.0858 + (-1.017) x
Interpretation:
The above equation shows the relationship between weekly returns of Nifty 50 and weekly returns of Bharat Forge Ltd. The positive sign before the coefficient of β means the positive relation between Nifty 50 and Sun Pharmaceutical Industries Ltd. I.e. if Nifty rises by 1 unit, then Sun Pharmaceutical will rise by 0.085.
Also, P value is 0.0959 which is lower than 0.5 so T-stat is statistically significant at 5% level.
R2 is 0.000831which means 8.3% of weekly returns of Sun Pharmaceutical Industries Ltd. Are explained by Nifty.
Rest 91.7% is standard error i.e. affected by other factors such as PESTEL and operations of the company.
Conclusion:
If β is less than 0 then the stock should be avoided. Therefore, investment should be done in Bharat Forge Ltd.