Relation analysis of Axis Bank Pvt. Ltd. with Nifty 50.
Author: Akash Upadhyay
Introduction:
Axis Bank was established in 1993 as one of the first new-generation private sector banks in India, originally named UTI Bank. It is headquartered in Mumbai and provides a broad spectrum of financial services, including retail, corporate, and international banking. The bank emphasizes innovation, with a strong focus on digital banking and technology-driven solutions to enhance customer experience. It has a significant presence across India, operating through a network of over 4,700 branches, 17,000 ATMs, and extending its services globally through international offices and branches.
Objective:
To find out β (beta) of Axis Bank and its significance with respect to Nifty 50.
Data Collection:
The data was collected of Nifty 50 and Axis Bank, from official site of NSE for the period between 1/06/23 and 31/05/2024 which included historical market equity returns and the closing prices then the data was manipulated to get closing prices precisely on Fridays and then market returns were calculated by the formula (Y t-1 – Yt) / Yt * 100 and then Y was regressed on X.
Data Analysis:
Weekly returns of Nifty 50 quoted as β (beta) = -0.11
Weekly returns of Axis Bank pvt ltd = 0.402
T stat = -1.851
N = 50
R2 = 0.06934
F = 3.4276
P value = 0.0705
Y = Weekly returns of Axis Bank Pvt. Ltd. + Weekly returns of Nifty 50
Y = 0.40 + (-0.11) x
Interpretation:
The above equation shows the relationship between weekly returns of Nifty 50 and weekly returns Axis Bank Pvt. Ltd. The negative sign before the coefficient of β means the negative relation between Nifty 50 and Axis Bank Pvt. Ltd.. I.e. if Nifty rises by 1 unit, then axis bank will fall by 0..11
Also, P value is 0.0705 which is lower than 0.5 so T-stat is not statistically significant at 5% level.
R2 is 0.069 which means 6.9% of weekly returns of Axis Bank Pvt. Ltd.are explained by Nifty.
Rest 93.1% is standard error i.e. affected by other factors such as PESTEL and operations of the company.
Conclusion:
If β is less than 0 as in the research problem of Axis Bank Pvt. Ltd. then the stock should be avoided