Title: Relationship of Kotak Mahindra Bank Ltd. with NIFTY 50
Author: Kajal Gangele
Introduction
Kotak Mahindra Bank Ltd., a leading private sector bank in India, was founded in 1985 and became a commercial bank in 2003. It has consistently maintained strong financial performance, with a healthy ROA, ROE, NIM, and capital adequacy ratio. The bank has grown its customer base to 5.1 crore as of June 30, 2024. In the first quarter of FY2025, the bank reported a 23% increase in fees and services and a 6% increase in operating profit. As of October 7, 2024, its market capitalization was ₹3.63 trillion, and its 52-week range was ₹1,543.85–1,942.00.
Objective: To find out the Beta of Kotak Mahindra Bank Ltd. and its significance.
Data Collection:
NIFTY 50 and Kotak Mahindra Bank Ltd. data was downloaded from the NSE site from 01-04-2023 to 31-03-24. Data was manipulated to get Friday’s Closing price and weekly returns were calculated by the formula ((Yt-1 – Yt )/ Yt)*100.
Weekly returns of Kotak Mahindra Bank Ltd. were regressed on weekly returns of NIFTY 50.
Data Analysis:
Weekly returns of Kotak Mahindra Bank Ltd. = -0.67 + 1.11* Weekly returns of NIFTY 50
N = 46, R square = 0.42 , F = 31.42 , P value = 0.00
The above regression equation shows the relationship between NIFTY 50 and Kotak Mahindra Bank Ltd. The positive sign of the coefficient of Weekly returns of NIFTY 50 indicates that an increase in NIFTY 50 is associated with an increase in Kotak Mahindra Bank Ltd. and vice versa.
The coefficient of NIFTY 50 has a t-statistic of 5.61 and a p-value of 0.00, which is less than 0.05, indicating that it is statistically significant.
The R-squared value of 0.42 indicates that 42% of the variation in Kotak Mahindra Bank Ltd.’s returns can be explained by variations in NIFTY 50. The remaining 58% may be explained by other factors.
The F value is 31.42 and the P value is 0.00, which is less than 0.05 indicating that the overall modal is statistically significant.
Conclusion
The coefficient of weekly return of NIFTY 50 is 1.11 which is greater than 1 means Kotak Mahindra Bank Ltd. is good for short-term investment.