Title: Relationship of Siemens Ltd with Nifty50
Author: Swathy Parameswaran
Introduction: Siemens Ltd is a leading multinational engineering and technology company in India, primarily engaged in sectors like automation, energy, infrastructure, and industrial solutions. It is a prominent player in the stock market and listed on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). Siemens Ltd.’s stock has shown consistent performance over the years, often outperforming market indices like Nifty50.
Objectives: To find out beta and its significance
Data Collection: Data of Siemens Ltd and Nifty50 taken from 1-4-2023 to 31-5-2024, is downloaded from NSE( https://www.nseindia.com/) . Data is manipulated to get Friday closing prices and weekly returns is calculated using formula (Yt+1 – Yt) / Yt * 100. Weekly return of Nifty50 is taken as X and Siemens Ltd is taken as Y. Weekly Return of Siemens Ltd was regressed on weekly return of Nifty50.
Data Analysis: Weekly Return of Siemens Ltd = 0.60+ 0.91weekly return of Nifty50
( T stat= 2.485)
Where, N = 48, R2 = 0.11, F = 6.17 , P Value = 0.016
Interpretation: The above equation depicts the relationship between weekly return of Siemens Ltd and weekly return of Nifty50. The positive sign before the coefficient of Nifty50 tells that if Nifty rises, Siemens Ltd will also rise and vice versa. If Nifty rises one unit, Siemens Ltd will rise by 0.91 unit. Figure in the bracket is t-stat for β. P value for which is 0.016 which is less than 0.05, meaning beta is statistically significant at 5% level. R2 is 0.12, meaning 12% of company’s return are explained by Nifty50. The balance 88% maybe due to fundamentals. If F is 6.17 and P value is 0.016,meaning overall the model is statistically significant.
Conclusion: Since β is 0.91,which is less than 1 but more than 0, it indicates that Siemens Ltd is a good option for long term investments.