Relationship of HDFC Bank limited
with Nifty 50
Author: Harshal Gaikwad
, ITM Business School, Kharghar, Maharashtra, India
* Corresponding Author E-mail: harshalgaikwad544@gmail.com
Introduction: HDFC Bank, India’s largest private sector bank, is a leading financial services provider. Established in 1994, it offers a wide range of banking products and services to individuals and businesses. The bank’s stock is listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE), and it has a significant market capitalization.
Objective: To find out βeta of HDFC Bank Limited and its significance.
Data Collection:
Data for Nifty 50 and HDFC Bank Limited was downloaded from https://www.nseindia.com/ for the period 1st march 2023 to 31st April 2024.
Data was manipulated to get Friday closing prices and weekly returns were calculated using formula (Yt+1 – Yt) / Yt * 100. Weekly returns of HDFC Bank Limited were regressed on weekly returns of Nifty 50.
Weekly returns of NIFTY50 terns as X and HDFC LTD as Y.
Data Analysis:
Weekly Returns of HDFC Ltd= 4.17 + (-5.35) Weekly Returns of Nifty
(-0.99) (t stat).
N = 49, R2 = 0.023, F = 0.98, P-value = 0.33
Interpretation:
The above equation shows the relationship between Nifty 50 and HDFC Bank
Limited. The positive sign before 0.01 means there is a positive relationship if Nifty 50 rises by 1-unit of HDFC Bank Limited will rise 7.71 and vice versa. The coefficient of Nifty 50 has t Stat = -1 , the P-value of which is 0.32. It is more than 0.05 meaning Nifty 50 is not statistically significant to increase the price of HDFC Bank Limited. R2 is 0.02 meaning 2% of HDFC Bank Limited prices are explained by Nifty 98% depends upon other factors like fundamentals. F is 0.98 and P-value is 0.32 meaning it is more than 0.05 meaning overall model is not statistically significant at 5% level.
Conclusion: As βeta is negative, avoid investment in HDFC Bank Limited.