Relationship of Ultratech Cement limited with Nifty 50
Author: Umang Maheshwari1
, ITM Business School, Kharghar, Maharashtra, India
* Corresponding Author E-mail: tanayg6803@gamil.com
Introduction: UltraTech Cement Limited is an Indian multinational cement company based in Mumbai. It is the largest manufacturer of grey cement, ready-mix concrete (RMC) and white cement in India and 5th largest around the globe with an installed capacity of 152.70 million tonnes per annum and 119 million tonnes per annum sales volume.
Objective: To find out βeta of Ultratech Cement Limited and its significance.
Data Collection: Data for Nifty 50 and Ultratech Cement Limited 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 Ultratech Cement Limited were regressed on weekly returns of Nifty 50.
Data Analysis:
Weekly Returns of Ultratech Cement= -0.47 + 0.09 Weekly Returns of Nifty
N = 49, R2 = 0.002, F = 0.1, P-value = 0.75 (0.32)(t stat)
Interpretation:
The above equation shows the relationship between Nifty 50 and Ultratech Cement Limited. The positive sign before 0.09 means there is a positive relationship if Nifty 50 rises by 1-unit Ultratech Cement will rise 0.09 and vice versa. The coefficient of Nifty 50 has t Stat = 0.32, the P-value of which is 0.75. It is more than 0.05 meaning Nifty 50 is not statistically significant to increase the price of Ultratech Cement Limited. R2 is 0.002 meaning 0.2% of Ultratech Cement Limited prices are explained by Nifty 99.8% depends upon other factors like fundamentals. F is 0.1 and P-value is 0.75 meaning it is more than 0.05 meaning overall model is not statistically significant at 5% level.
Conclusion: Ultratech Cement Limited is good for short term investment if nifty is at low.