Relationship of SAIL with Nifty 50
Author: Undru Shreeya
F4 2024-26 – 021330024392, ITM Business School, Kharghar, Maharashtra, India
Introduction: Steel Authority of India Limited (SAIL) is one of India’s largest state-owned steel-making companies, founded in 1954 and headquartered in New Delhi. SAIL operates and manages five integrated steel plants, offering a wide range of steel products to sectors like construction, railways, and defense. As a key player in India’s industrial development, SAIL is committed to sustainable practices and innovation in steel production.
Objective: To find out the Beta of SAIL and its significance with respect to Nifty 50.
Data Collection: The data for Nifty 50 and SAIL was downloaded from official site of NSE for the period 1st June 2023 to 31st May 2024. Data was manipulated to get Friday closing prices and weekly returns of Nifty 50 and SAIL was calculated using the formula (Yt+1 – Yt) / Yt * 100 and then Y was regressed on X. Here Y is Weekly returns of SAIL and X is weekly returns of Nifty 50.
Data Analysis:
Weekly Returns of SAIL = -1.25+0.25 Weekly Returns of Nifty 50
(0.434)
N = 49
R² = 0.004
F = 0.19
P-value = 0.66
t Stat = 0.434
Interpretation: The above equation shows the relationship between Nifty 50 and SAIL. The positive sign before 0.25means there is a positive relationship, if Nifty 50 rises by 1 unit then SAIL also rises by 0.25 and vice versa. The coefficient of Nifty 50 has t Stat = 0.434, the P-value of which is 0.66, which is more than 0.05 meaning Nifty 50 is notstatistically significant to increase the price of SAIL. SAIL R² is 0.004 which means 0.4% of Weekly returns of SAIL are explained by Nifty 50. The balance 99.6% is standard error i.e. it depends on other factors like fundamentals. F is 0.19and the P-value is 0.66 meaning it is more than 0.05 meaning the overall model is not statistically significant.
Conclusion: SAIL is good for long term investment.