Title : Relationship of CANARA BANK With Nifty 50
Author: Chirag Jain
Introduction: Canara Bank, established in 1906, is a leading public sector bank in India with a diverse portfolio. The bank has a market capitalization of ₹95,006 crore as of October 2024. Its share price has ranged from ₹68.42 to ₹128.90 in the past 52 weeks, and the current share price is ₹104.74. The price-to-earnings (P/E) ratio is 6.22, and the price-to-book (P/B) ratio stands at 1.17.Financially, Canara Bank posted a net profit of ₹14,782 crore for FY2023-24, a 37% increase from the previous year, with a revenue of ₹1,10,519 crore. The bank’s return on equity (ROE) is 20.22%, and its return on capital employed (ROCE) is 18.49%. Additionally, it offers a dividend yield of 2.99%, making it an attractive option for income-seeking investor.
Objective: To Find Out Beta of CANARA BANK & its significance
Data Collection: Data for Nifty50 & CANARA BANK was downloaded from NSE website, further period 1st may 2023 to 31st april 2024. Data was manipulated to get Friday closing prices & weekly returns were calculated by the Formula: Weekly returns of Ambuja Cement was regressed on weekly returns of Nifty50.
Data Analysis: Weekly return of CANARA BANK = -1.009 + (-0.61)*(-1.39)
N = 48, R2 = 0.04, F = 1.95, P-value = 0.16
The above equation shows the relationship between Niffty50 & Canara bank. The negative sign before -0.6150 means if Nifty raises then Canara bank falls & vice versa. The Coefficient of Nifty50 has t stat = (-1.3968) & the P value of 0.1691 which is more than 0.05 meaning nifty 50 is not Statistically Significant to Increase the Prices of Canara bank. To increase the prices of Canara bank , R2 is 0.0406 meaning of 4.06% of Canara bank prices explained by Nifty50. 95.96% dependents upon other factors like fundamentals are other factors. F is 1.9512& the P value of 0.1691 this is meaning it is more than 0.05 meaning the overall all model is not statistically significant.
Conclusion : Weekly return of Coefficient is -0.6150 which is negative and less than 1 so avoid this for any investment.