REC Limited with Nifty 50
Author: Ramjeet Yadav*
, ITM Business School, Kharghar, Maharashtra, India
* Corresponding Author E-mail: ramjeet1112000@gamil.com
Introduction: REC Limited, formerly Rural Electrification Corporation Limited, is an Indian public sector company which finances and promotes power projects across India.
Objective: To find out βeta of REC Limited and its significance.
Data Collection: Data for Nifty 50 and Tata Motors Limited was downloaded from https://www.nseindia.com/ for the period 1st June 2023 to 30st May 2024. Data was manipulated to get Friday closing prices and weekly returns were calculated using formula (Yt+1 – Yt) / Yt * 100. Weekly returns of REC Limited were regressed on weekly returns of Nifty 50.
Data Analysis:
Weekly Returns of REC = 3.39 -1.04 Weekly Returns of Nifty
N = 49, R2 = 0.05, F = 2.34, P-value = 0.13, t Stat = -1.53
Interpretation:
The above equation shows the relationship between Nifty 50 and REC Limited. The negative sign before -1.04 means there is a positive relationship if Nifty 50 rises by 1-unit REC Limited will rise 0.01 and vice versa. The coefficient of Nifty 50 has t Stat = -1.53, the P-value of which is 0.13 . It is more than 0.05 meaning Nifty 50 is not statistically significant to increase the price of REC Limited. R2 is 0.05 meaning 5% of RECLimited prices are explained by Nifty 95% depends upon other factors like fundamentals. F is 2.34 and P-value is 0.13 meaning it is less than 0.05 meaning overall model is not statistically significant at 5% level.
R^2=0.048 which means 4.8% of REC Limited returns are explained by nifty 50, the balance 95.2% is due to fundamental.
F=2.34 and P value=0.13, which means that overall model is not statistically significant at 5% level.
Conclusion: As per the given data of RELATIONSHIP OF REC Limited WITH NIFTY50. We come at the conclusion that the Beta value < 0 and negative, which means that we should avoid this company for investment, as it may be problematic .