Title: Relationship of Coal India Limited with NIFTY 50
Author: Chayanika Basak
Introduction: Coal India Limited (CIL) is a major Indian coal producer, accounting for a significant portion of the country’s output. Its financial performance is influenced by global coal market trends, domestic demand, and government policies. CIL’s stock price is traded on the NSE and BSE, reflecting its market valuation and profitability. The company’s operations involve numerous coal mines across India, and it plays a crucial role in meeting India’s energy needs.
Objective: To find out Beta of Coal India Limited and its significance.
Data Collection: The data of NIFTY 50 and Coal India Limited from 01.05.23 to 30.04.24 was downloaded from NSEindia. Data was manipulated to find the Friday closing prices. Weekly returns of NIFTY 50 and Coal India Ltd were calculated. Weekly returns of NIFTY 50 were X and that of Coal India Ltd were Y. Then Y was regressed upon X.
Data Analysis: -899.00+0.05
(15.530)
N= 48, R square= 0.84, F= 241.19, P Value= 6.452
Interpretation: The above equation depicts the relationship between weekly returns of Coal India Ltd and weekly returns of NIFTY 50. The plus sign before the coefficient of NIFTY 50 tells that if NIFTY 50 rises, Coal India Ltd will also rise and vice versa. The figure in the bracket is tstat for Beta. If NIFTY 50 rises by 1 unit, Coal India Ltd will rise by 0.05 unit. The figure in the bracket is the tstat for Beta. The P value of which is 6.452, which is more than 0.5. Hence, this means that Beta is not statistically significant.
R square is 0.84, meaning 84% of the company’s returns are explained by NIFTY 50. The balance 16% may be due to fundamentals. F is 241.19 and P value is 6.452 meaning overall model is statistically insignificant.
Conclusion: Beta is 0.05, which is less than 1, so investment in Coal India Ltd can be done for long term.