Title: Relationship of Asian paints with Nifty 50
Author: Aditya Aute
Introduction: One of the top paint manufacturers in India, Asian Paints is a significant component of the Nifty 50, the National Stock Exchange’s benchmark index (NSE). Its significance in the Indian equity market is reflected in the way that its performance, as a Nifty 50 stock, affects the larger index. Its inclusion indicates that investors find it to be a favorite due to its strong market capitalization, liquidity, and steady performance. The stock movements of Asian Paints frequently reflect developments in the consumer goods and real estate industries.
Objective: To find out beta of Asian paints & its significance.
Data collection: Data for Nifty50 & Suzlon was downloaded from NSE website, further period 1st April 2023 to 31st March 2024. Data was manipulated to get Friday closing prices & weekly returns were calculated by the Formula: (Yt-1 – Yt)/Yt*100 Weekly returns of Suzlon were regressed on weekly returns of Nifty50.
Data analysis: Weekly returns of Asian paints =0.41+0.71, N=46, R Square =0.115, t stat= 2.394, F= 5.732, P-value= 0.021.
The above equation shows the relationship between Niffty50 & Asian paints. The positive sign before 0.71 means if Nifty raises Asian paints raises & vice versa. The Coefficient of Nifty50 has t stat = 2.394 & the P value of which is 0.021 meaning Nifty50 is statistically significant. To increase the prices of Asian paints, R square is 0.115 meaning 0.36% of Asian paints prices are explained by Nifty50. 99.9% dependent upon other factors like fundamentals are other factors. F is 5.732 & the P value of this is 0.021 meaning it is more than 0.05 meaning the overall model is statistically significant.
Conclusion: 0.71 coefficient is positive but less than 1, so we can accept this for short term investment .