TITLE:- Relationship of TATA Motors with Nifty50
Author:- Tirth Jain
Introduction:- Tata Motors Limited is a key player in the Indian automotive industry, and its performance is closely tied to the Nifty50 index. As one of the largest automobile manufacturers in India, Tata Motors’ stock price movements can significantly impact the Nifty50 index .
The Nifty50 index, also known as the Nifty50, is a benchmark index of the Indian stock market, comprising 50 of the largest and most liquid stocks listed on the National Stock Exchange (NSE) . Tata Motors is one of these 50 stocks, and its market capitalization is around ₹3.43 trillion .
Objective:- To Find out Beta of TATA Motors and its significance
Data Collection:-
Data of TATA Motors and Nifty 50 was downloaded from dated 1 May 2023 to 30 April 2024 from NSE. The data was manipulated to get Friday closing prices. Weekly return of Nifty 50(X) and weekly return of TATA Motors(y). Weekly return of Nifty 50 was regressed on weekly return of TATA Motors.
Data Analysis:-
The above equation shows the relationship between weekly return of TATA Motors and weekly return of Nifty 50, positive sign before the coefficient of Nifty 50 tells that there is a positive relationship, if Nifty rises 1 unit then TATA Motors will rise by 1.00(Coefficient) and vice versa .
Figure in the bracket is t-stat for beta and P value for which is 0.0009, which is less than 0.5, meaning beta is statistically significant . R square is 0.21 which means 21% company’s return are explained by Nifty 50. The balance error 79% are explained by the other variable which are not in the model.
F =12.50 and P value is 0.0009,it is less than 0.05 meaning overall model is statistically significant at 5% level.
Conclusion:-
Beta=4.91, which is more than 1 and positive means good for short term investment , if Nifty is at the buttom.