Relationship of MRF with Nifty50
Mayur Shetty | 021330024331 | F4 | ITM |2024.mayurs@isu.ac.in
Introduction: MRF, a leading tire manufacturer in India, has a notable relationship with Nifty 50, the benchmark stock index. As a constituent of the index, MRF’s performance influences and reflects broader market trends. Investors analyse MRF’s stock movements as an indicator of industrial health and demand, making it a key player in assessing market within Nifty 50 framework.
Objective: To find out Beta of MRF and its significance.
Data Collection: Data was collected of MRF and Nifty50 was downloaded from NSE website from 1st June 2023 to 31st May 2024 data was manipulated to find Friday closing prices weekly return of Nifty50 was term of ‘x’ and MRF was termed as ‘y’ and we find out Y regressed on X. Weekly return was calculated by this formula (Yt+1-Yt)/Yt *100.
Data analysis: The equation was the weekly return of MRF is equal to 0.25+0.84 on weekly return of Nifty50 i.e. (y= 0.25+0.84) ,T stat = 2.87 , N = 48, R square = 0.15, F = 8.19, P value = 0.0062.
Results: The above equation shows the relationship between Nifty50 and weekly returns of MRF the positive sign before coefficient of weekly return of Nifty50 means there is a positive relationship if Nifty50 rises by one-unit MRF will rise by 0.84 unit and by vice-versa if it falls down it will fall by the same unit. This figure stats for Beta are written as 2.87 which is T stat and P value for this is 0.0062 if it is less than 0.05 meaning beta is significantly at 5 % level. R square = 0.15 which means 15% of weekly return of MRF of are explained by Nifty50. So, 85 percent is my error, and F is 9.85 and P value for this is 0.0062 meaning overall the model is statistically significant at 5 % level.
Conclusion: As MRF beta is 0.84 which is less than 1 therefore it’s advisable to invest for long term duration.