Title: Relationship of ITC with NIFTY50
Author: Isha Parekh (021330924013)
Introduction: ITC Limited is a prominent Indian conglomerate that has a varied portfolio covering FMCG, hotels, paperboards, and agribusiness. In October 2024, ITC’s shares are being traded on both the Bombay Stock Exchange and National Stock Exchange, with a share price ranging from ₹400 to ₹450, indicating high market trust. The corporation has consistently shown strong financial results, thanks to its powerful brand recognition and dedication to sustainability. ITC’s strategic plans and inventive product options set the company up well for ongoing expansion in both local and international markets.
Objective: To find out beta(β) of ITC and its significance.
Data Collection: The data was collected by taking the weekly returns of NIFTY50 and ITC of dated time of 1 year from 1st May 2023 to 30th April 2024 with the help of nseindia.com.
Data was manipulated to find out Friday closing prices and weekly returns for both NIFTY50 and ITC and named as X and Y respectively and after calculation Y was regressed on X by the following formula:
(where, t=time)
Data Analysis:
Regression Equation: Y(Intercept) = ITC + NIFTY50
Weekly Returns of ITC: = (0.07) + (-0.21) weekly returns of NIFTY50
(-0.78)
N = 48, R Square = 0.01, F = 0.61, P-value = 0.44
The above equation shows the relationship between NIFTY50 and ITC.
Negative sign before the co-efficient of NIFTY50 tells us that there is a negative relationship. If NIFTY rises one point, ITC will go down by -0.21 points and vice versa.
Figure in bracket is t-state for beta and the P-value for which is 0.44 which is greater than 0.05 which means beta is statistically insignificant.
N = 48, R Square = 0.01, which means 1% of ITC’s returns are explained by NIFTY50. F = 0.61 and P-value for that is 0.44, it is greater than 0.05 meaning overall model is statistically insignificant at 5% level.
Conclusion: As per the given data of Relationship of ITC with NIFTY50, we conclude that beta value is less than 1 and negative, means ITC is not good for investment and investment in this company is not beneficial.