Title: Relationship of PowerGrid with Nifty 50.
Authors: Priyanka Gupta
Introduction: PowerGrid is a listed Company, with 51.34% holding of Government of India and the balance is held by Institutional Investors and public. PowerGrid has experienced notable ups and downs in its share price from April 1, 2023, to March 31, 2024, reflecting market trends and energy sector dynamics. While regulatory changes and energy demand shifts have influenced its performance, PowerGrid remains a strong option for long-term investment due to its stable revenue and essential role in India’s energy infrastructure.
Objective: To find out Beta of PowerGrid and its significance.
Data collection: Data for Nifty 50 and PowerGrid was downloaded from NSE site from the period 1-4-2023 to 31-3-2024. The Data was manipulated to get Friday closing price and weekly returns were calculated by using formula (Yt-1 – Y t) Yt * 100. Weekly returns of PowerGrid were regressed on weekly return of Nifty 50.
Data analysis:
Weekly returns of PowerGrid =0.25 + weekly returns of Nifty 0.57
0.9108
N= 46, R2=0.0185, F=0.8291, P value= 0.37
The above equation shows the relationship between Nifty 50 and PowerGrid. The positive sign before 0.57 means if Nifty 50 rises PowerGrid will also rise and vice versa. The coefficient of Nifty 50 has t-stat=0.9108 and P value of which is 0.37. It is more than 0.50 meaning Nifty 50 is not statistically significant to increase the prices of PowerGrid R2=0.0185 meaning 0.01% of PowerGrid prices are explained by Nifty 50, 99.9% depends upon other factors like fundamentals. F=0.8291 and the P-value for this is 0.37 meaning it is more than 0.05 means overall model is statistically significant.
Conclusion: With a beta of 0.57, which is less than 1, therefore it is considered a stable option for long-term investment.