Title : Relationship of Tata Motors With Nifty 50
Author: Tisha Saglani
Introduction: Tata Motors Limited is an Indian multinational automotive manufacturing company that produces a wide range of vehicles, including cars, utility vehicles, buses, trucks, and defense vehicles. The company operates both in India and internationally, with a strong presence in the commercial vehicle sector. Tata Motors is a key player in the automotive industry, particularly known for its innovation and affordable vehicle range. Founded in 1945, it has a market capitalization of ₹1.82 trillion. Over the past 52 weeks, its share price has ranged from ₹400 to ₹675. Tata Motors has a book value of ₹218 per share and does not currently pay a dividend. The company’s return on capital employed (ROCE) stands at 15.3%, while its return on equity (ROE) is 13.8%.
Objective: To Find Out Beta of Tata Motors & its significance
Data Collection: Data for Nifty50 & Tata Motors 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: Weekly returns of Tata Motors was regressed on weekly returns of Nifty50.
Data Analysis: Weekly return of Tata Motors = -1.66 +0.39 (1.23)
N = 48, R2 = 0.03, F = 1.51, P-value = 0.223
The above equation shows the relationship between Nifty50 & Tata Motors. The Positive sign before 0.3979 means if Nifty rises , Tata Motors also rises & vice versa. The Coefficient of Nifty50 has t stat = (1.2327) & the P value of which is 0.2239 which is more than 0.05 meaning nifty 50 is not Statistically Significant to Increase the Prices of Tata Motors. To increase the prices of Tata Motors , R2 is 0.0319 meaning of 3.19% of Tata Motors prices explained by Nifty50. 99.9% depends upon other factors like fundamentals of other factors. F is 1.5196 & the P value of this is 0.2239 meaning it is more than 0.05 meaning the overall all model is not statistically significant.
Conclusion : Weekly return of Coefficient is 0.3979 which is less than 1 so it is good for long term investment.