Title: Relationship of RBL BANK with Nifty 50
Author: Roshan Dilip Ambavale
Introduction: RBL Bank, established in 1943, is a leading private sector bank in India. Headquartered in Mumbai, it offers a wide range of banking and financial services across six business verticals, including Corporate & Institutional Banking, Commercial Banking, and Retail Banking. The bank has a robust network of branches and ATMs across the country, serving a diverse customer base. It is known for its focus on innovation and digital banking services. RBL Bank is listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).
Objective: To find out beta of RBL Bank and its significance.
Data collection: The data of limited RBL Bank and Nifty 50, from the period 01.05.2023 to 30.04.2024, was downloaded from NSE’s official website nse.india. Data was manipulated to find Friday closing prices. The weekly returns of Sun pharmaceutical industries limited and the weekly returns of Nifty 50 were calculated.
Data analysis:
Equation
Weekly Returns of RBL Bank = -0.56 +0.68 weekly Return of Nifty-50
N (no. of observation) = 50, R2 = 0.27, F-Stat= 17.64, P-Value=0.97
The above equation depicts the relationship between the weekly returns RBL Bank of and the weekly returns of Nifty-50. The plus (+) sign before the coefficient of Nifty-50 tells that if Nifty-50 rises, then company value rises too, and vice-versa.
If Nifty-50 rises by 1 unit, the company value will rise by 0.92 units. The figure in the bracket is t-stat for beta and the p-value for which is 0.013, which is less than 0.5, meaning beta is statistically significant at 5 percent levels of significance.
R2 value is 0.27, meaning 73% of RBL Bank limited returns are explained by Nifty-50, the balance 73 percent are maybe due to fundamentals. F-stat value is 17.64 and the p-value is 0.97, meaning that the overall model is statistically significant.
Conclusion: The Beta value for weekly of Nifty-50 is more than 1 (β= 2.39), than significantly the company should be for the short-term Investment.