Author: Sharmila Kularia
Batch F3
Introduction:
Steel Authority of India Limited (SAIL) is an Indian public sector steel manufacturing corporation based in New Delhi. It is the largest government-owned steel producer, with an annual production of 18.29 million metric tons. Incorporated on 24 January 1973, SAIL has 54,431 employees and is under the administrative control of the Ministry of Steel.
Objective:
To find out β (beta) of Steel Authority of India LTD and its significance with respect to Nifty 50.
Data Collection:
Friday closing prices found out for Steel Authority of India LTD and Nifty 50. Weekly returns were calculated by the formula (Y t-1 – Yt) / Yt * 100 .
Weekly returns of Nifty 50 was termed as “X” .
Weekly returns of Steel Authority of India LTD was termed as “Y”.
Data Analysis:
Regression Equation:
Weekly returns of Steel Authority of India LTD. + Weekly returns of Nifty 50
= 0.66 + 0.87
T stat = 0.42
N = 49
R2 = 0.059
F = 3.085
P value = 0.047
The above equation shows the relationship between weekly returns of Nifty 50 and weekly returns of Steel Authority of India LTD. The positive sign before the coefficient of Nifty 50 tells us that there is a positive relationship. If Nifty rises by 1 unit Steel Authority of India LTD will rise by 0.90 and vice a versa.
R square is 0.059 which means 5.9% of Steel Authority of India LTD returns are explained by Nifty 50. F=3.085 and P value =0.047 which is less than 0.05 meaning overall model is statistically significant at 5% level.
Conclusion:
Β is negative it means one should avoid doing investment in this stock.