Title: Relationship of Tata Motors with Nifty 50
Author: Tanishqa Bajpai
Introduction: Tata Motors, a flagship company of the Tata Group, is one of India’s largest automobile manufacturers, with a strong global presence in over 125 countries. Founded in 1945, it produces a wide range of vehicles, including cars, buses, trucks, and defense vehicles. Known for its innovation and commitment to sustainability, Tata Motors has made significant strides in electric mobility with its EV lineup. The company is also focused on offering advanced automotive technologies to enhance user experiences. With a strong legacy, it continues to play a pivotal role in shaping the future of mobility in India and beyond.
Objective: To find out beta of Tata Motors and its significance.
Data collection: The data of Tata Motors 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 Tata Motors and the weekly returns of Nifty 50 were calculated.
Data analysis:
Equation
Weekly Returns of Tata Motors= +595.85 +7.79 weekly Return of Nifty-50
N (no. of observation) = 50, R2 = 0.003, F-Stat= 0.158, P-Value=0.69
The above equation depicts the relationship between the weekly returns Tata Motors 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 0.003, meaning 0.3% of Tata Motors returns are explained by Nifty-50, the balance 99.7% are maybe due to fundamentals. F-stat value is 0.158 and the p-value is 0.69, meaning that the overall model is statistically significant.
Conclusion: The Beta value for weekly of Nifty-50 is more than 1 (β=7.79), than significantly the company should be for the short term Investment.