Relationship of : JK TYRE AND INDUSTRIES LTD
with Nifty 50
Author: Jayesh Kumar Choudhary
, ITM Business School, Kharghar, Maharashtra, India
* Corresponding Author E-mail: jayeshcho90@gamil.com
Introduction: JK TYRE and Industries LTD. is an
Indian multinational automotive company, headquartered in Mumbai and part of the JK organisation. The company produces tyre for cars, trucks, vans, and buses. JK tyre is listed on the BSE and NSE, and is a constituent of the BSE SENSEX and NIFTY 50 benchmark indices.
Objective: To find out βeta of : JK TYRE and Industries LTD. and its significance.
Data Collection: Data for Nifty 50 and : JK TYRE and Industries LTD was downloaded from https://www.nseindia.com/ for the period 1st June 2023 to 30st May 2024. Data was manipulated to get Friday closing prices and weekly returns were calculated using formula (Yt+1 – Yt) / Yt * 100. Weekly returns of : JK TYRE and Industries LTD were regressed on weekly returns of Nifty 50.
Data Analysis:
Weekly Returns of JK Tyre= 1.23 + 1.37 Weekly Returns of Nifty
(2.09)(t stat)
N = 49, R2 = 0.085, F = 4.38, P-value = 0.041
Interpretation:
The above equation shows the relationship between Nifty 50 and JK TYRE and Industries LTD. The positive sign before 0.01 means there is a positive relationship if Nifty 50 rises by 1-unit JK TYRE will rise 1.37 and vice versa. The coefficient of Nifty 50 has t Stat = 2.09, the P-value of which is 0.04. It is less than 0.05 meaning Nifty 50 is statistically significant to increase the price of JK TYRE and Industries LTD. R2 is 0.085 meaning 8.5% of JK TYRE and Industries LTD prices are explained by Nifty 91.5% depends upon other factors like fundamentals. F is 4.3 and P-value is 0.04 meaning it is less than 0.05 meaning overall model is statistically significant at 5% level.
Conclusion: As βeta is greater than 1 JK TYRE and Industries LTD. Is good for short term investment, if Nifty is low.