Author: Kesha
Introduction:
Karnataka Bank Limited, established in 1924, is a prominent private sector bank headquartered in Mangalore, Karnataka. The bank’s shares are actively traded on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) under the ticker symbol KTKBANK. Karnataka Bank has a market capitalization of approximately ₹8,658 crore and a price-to-earnings (P/E) ratio of 5.74. The bank’s stock has shown a 52-week high of ₹285.70 and a low of ₹192.25.
Objective:
To find out Beta of Karnatak Bank and its significant.
Data Collection: Data collection of Karnatak Bank and NIFTY50 was downloaded from 1st May 2023 to 30th April 2024 from NSE. Data was manipulated to get Friday closing price. Weekly return of NIFTY50 is X and Karnatak Bank is Y. Weekly return of Karnatak Bank was regressed on weekly return of NIFTY50.
Data Analysis: Weekly return of Karnatak Bank = -0.56 + 0.98 weekly return of NIFTY50 , N=48, R Square=0.066, F=3.24, P-value=0.45.
Interpretation:
The above equation depicts the relationship between weekly returns of Karnatak Bank and weekly returns of NIFTY 50.
The + sign before the coefficient of NIFTY 50 tells that if NIFTY 50 rises Karnatak Bank. Will also rise and vice-versa. If NIFTY falls by 1unit Karnatak Bank will fall by.
Figure in bracket (1.80) is t stat for β (beta) and P value for which is 0.45 which is less than 0.5 meaning β (beta) is statistically significant at 5% level.
is 0.07 meaning 1% of company’s return are explained by NIFTY 50 the balance 99% maybe due to fundamentals.
F is 3.24 and P value is 0.09 meaning overall model is statistically significant.
Conclusion:
As β is 0.98 which is positive value indicates that investing in Karnatak Bank. Is a good choice and you should invest for long term.