Title: Relationship of Reliance Industries with Nifty 50
Author: Rutuj Parab
Introduction: Reliance Industries Limited is a multinational conglomerate headquartered in Mumbai, India. It’s one of the largest private sector companies in the world, with a diverse portfolio spanning energy, petrochemicals, natural gas, retail, telecommunications, and more. Founded in 1958, Reliance has grown rapidly to become a major player in the Indian economy, contributing significantly to the country’s industrial development.
Objective: To find out Beta of Reliance Industries and its significance.
Data Collection: The data of Nifty 50 and the data for Reliance Industries was downloaded from 01-06-2023 to 31-05-2024 form NSE India.com. This data is used for finding out the Friday closing prices for Nifty 50 and Reliance Industries. Weekly return was calculated by the formula (Yt+1-Yt)/Yt*100 and then weekly returns of the Nifty 50 was taken as X and the equity of Reliance Industries was taken as Y. Y was regressed on X.
Data Analysis: – Weekly return of Reliance Industries = (-0.41) + 0.13
N = 48, R2 = 0.005, t stat = (-1.05), F = 0.23, P-value = 0.63.
The above Equation shows the relationship between Nifty 50 and Reliance Industries. Negative sign before the co-efficient of Nifty 50 tells us that there is a negative relationship. If Nifty rise by 1 unit then Reliance Industries will rise by 0.90 and vice versa. Figures in bracket is t stands for Beta and P value is 0.63 which is more than 0.5 meaning that the Beta is not statistically significant. No of observation are 48. R2 is 0.005 which means 0.5%of the company returns are explained by Nifty 50. F = 0.24 and the P value for that is 0.63. It is more than 0.005 meaning that overall model is not statistically significant at 5% level.
Conclusion: β< 1 and positive (less than 1) means good for long term investment.