Title: Relationship of Asian Paints and NIFTY 50
Author: Aneeq Ansari
Introduction: Asian Paints is a multinational paint company that manufactures, sells, and distributes paints, coatings, and other home decor products.
Founded in 1942 by four friends, Asian Paints has been India’s leading paint company since 1967.Asian Paints offers a wide range of paints for decorative and industrial use, including interior and exterior paints, wood paints, and metal paints. They also offer waterproofing, adhesives, and wall cover. Asian Paints operates in 15 countries and has 27 manufacturing facilities, servicing consumers in over 65 countries.
Objective: To find out the Beta of Asian Paints and its significance.
Data Analysis:
Data of Asian Paints and NIFTY 50 was downloaded from 1st May 2023 to 30th April 2024 from the NSC website. The data was then manipulated to get the Friday closing prices. Weekly returns of NIFTY 50 and Asian Paints company were calculated, where weekly returns of the NIFTY 50 is taken as ‘X’ and weekly returns of Asian Paints company is taken as ‘Y’. weekly returns of Asian Paints were regressed on weekly returns of Nifty 50.
Data Analysis:
Weekly returns of Asian Paints = 0.046 + 0.091 weekly return of Nifty 50
(1.53) t Stat
N = 48, R Square = 0.0096, F = 2.37, P Value = 0.124
Interpretation:
The above equation describes the relationship between the weekly returns of Asian Paints and the weekly returns of Nifty 50. The positive coefficient of Nifty 50 indicates that when Nifty 50 increases, the returns of Asian Paints also increase, and vice versa. Specifically, if Nifty 50 rises by one-unit, Asian Paints’ returns are expected to rise by 0.091 units. The figure in the bracket is the t-statistic for the beta coefficient (1.53), which assesses its statistical significance.
The P-value for the beta coefficient is 0.124, which is greater than 0.05, indicating that the beta is not statistically significant at the 5% level.
The R-squared value is 0.0096, suggesting that only 0.96% of the variation in Asian Paints’ returns is explained by the Nifty 50.
The F-statistic is 2.37, with a P-value of 0.124, meaning that the overall model is not statistically significant at the 5% level.
Conclusion:
As Beta is 0.091, which is less than 1, hence it is advisable to invest for long term