Title: Relationship of Rama Steel with Nifty 50.
Author: Rohit
Introduction: Rama Steel Tubes Limited engages in the manufacture and trading of steel pipes and tubes, and rigid poly vinyl chloride and galvanized iron pipes in India and internationally. The company was incorporated in 1974 and has a market capitalization of ₹2,096 crore. Its share price has ranged from ₹9.90 to ₹17.6 in the past 52 weeks. Rama steel’s book value is ₹2.18 per share, and it does not currently pay a dividend.
Objective: To find out Beta of Rama Steel & its Significance.
Data Collection: Data for Nifty50 & Rama steel was downloaded from NSE website, further period 1st June 2023 to 31st May 2024. Data was manipulated to get Friday closing prices & weekly returns were calculated by the Formula: . Weekly returns of Rama Steel were regressed on weekly returns of Nifty50.
Data Analysis: Weekly return of Rama Steel = 5.25-2.17Weekly returns of Nifty 50(-0.749)
N = 49, R2 = 0.012, F = 0.56, P-value = 0.458
The above equation shows the relationship between Nifty 50 & Rama Steel. The negative sign before the coefficient of weekly returns of Nifty 50 means there is negative relationship. If Nifty 50 rise by 1unit, Rama Steel will decrease by 2.17 & vice versa. The Coefficient of Nifty 50 has t stat = (-0.749) & the P value of which is 0.458 which is greater than 0.05 meaning Beta is not statistically significant at 5% level and N=49, No of observations are 49. R2 is 0.012 which means 1.2% of Weekly returns of Rama Steel are explained by Nifty 50. 98.8% depends upon other factors like fundamentals are other factors. F is 0.56 & the P value of this is 0.458 meaning it is more than 0.05 meaning the overall model is not statistically significant at 5% level.
Conclusion: Beta is negative (-2.17), avoid this investment.