TITLE: RELATIONSHIP OF SBI CARDS AND PAYMENT SERVICES LIMITED WITH NIFTY 50.
Author: Sakshi Patil. Roll No.111
INTRODUCTION:
SBI Cards and Payment Services Limited (SBI Card) is India’s second-largest credit card issuer, established in 1998 as a joint venture between State Bank of India and GE Capital. It became the first pure-play credit card company to be publicly listed in March 2020. With over 16.8 million customers, SBI Card offers a wide range of credit cards catering to lifestyle, travel, shopping, and rewards. Despite strong growth, the company has faced recent profitability challenges due to rising bad loan provisions and write-offs. However, it continues to expand and innovate in India’s evolving financial market.
OBJECTIVE:
To find out beta of SBI Cards and Payment Services Limited and its Significance.
LITERATURE REVIEW:
Assessment of SBI ETFs in EPFO Investments
Kumar SSS, (2017) Presented the Employees’ Provident Fund Organization (EPFO) has invested a significant portion of its funds in the stock market through SBI Nifty ETF and SBI Sensex ETF, both managed by SBI Mutual Fund, with 75% allocated to SBI Nifty ETF and 25% to SBI Sensex ETF. These investments were made under the assumption that index-linked ETFs passively track the market and expose investors only to market risk (beta) without generating excess returns (alpha). However, the study found that SBI Sensex ETF exhibits statistically significant alpha, indicating that it is not entirely passive and may not be the ideal choice for EPFO’s investment strategy. Since Nifty and Sensex indices themselves are not purely passive, ETFs tracking them, including SBI Sensex ETF, may expose investors to risks beyond just market movements. Given these findings, the study recommends that EPFO develop its own truly passive ETF, ensuring that investments align with its goal of limiting exposure to only market risk.
Evaluating SBI’s Merger
S. Sasikala, et al. (2024) Concluded The analysis revealed no substantial difference in SBI’s abnormal returns (AR) between the pre- and post-merger periods, suggesting that the market had already factored in the merger’s impact, resulting in minimal fluctuations in stock performance. Although cumulative abnormal returns (CAR) exhibited significance on select days preceding the event, no notable effects were observed post-merger. Furthermore, the study assessed broader implications on profitability, asset quality, and operational efficiency. These findings provide critical insights for policymakers and investors, enhancing their understanding of the strategic and financial ramifications of bank mergers.
DATA COLLECTION:
SBI Cards and Payment Services Limited and Nifty 50 data were downloaded from the NSE website for the period 01-01-2024 to 31-12-2024. The data were manipulated to extract the Friday closing prices, and weekly returns were calculated. The weekly returns of Nifty 50 are denoted as X, and the weekly returns of the company (SBI Cards and Payment Services Limited) are denoted as Y. Y was regressed on X.
DATA ANALYSIS:
SBI Cards and Payment Services Limited Return (Y) = 519.673 + 0.00455 Nifty 50 Return (X)
N = 47, R² = 0.04279, F = 2.0117, t-Stat = 1.4183
The above equation is a linear regression equation that represents the relationship between the returns of SBI Cards and Payment Services Limited (dependent variable, Y) and the returns of the Nifty 50 Index (independent variable, X).
The 0.00455 positive coefficient indicates a direct relationship between Nifty 50 and SBI Cards and Payment Services Limited, meaning that if the Nifty 50 rises, the SBI Cards and Payment Services Limited return also rises, and vice versa. If the Nifty 50 rises by Rs. 1, the SBI Cards and Payment Services Limited return will rise by 0.00455 units.
The t-statistic is 1.4183, and the p-value for this is 0.1629, which is greater than 0.05, meaning that Nifty 50 is not statistically significant at the 5% level.
N = 47, meaning the number of observations is 47. R² = 0.04279, which indicates that 4.279% of the variation in SBI Cards and Payment Services Limited returns is explained by the Nifty 50 returns. The p-value (significance value) is 0.1629, which is greater than 0.05, meaning that overall, the model is not statistically significant at the 5% level. However, the independent variable (Nifty 50) has a significant positive effect on the dependent variable (SBI Cards and Payment Services Limited).
CONCLUSION:
Beta is less than 1 it is Good to invest in long term Investment.
REFERENCE:
Kumar SSS, 2017. “Sensex and Nifty indices – Are they the right Benchmarks for mutualfunds in India?,” Working papers 244, Indian Institute of Management Kozhikode.
S. Sasikala & B. Sudha & Ms. N. Manju & M. Ra. Yuvashree, 2024. “Analyzing the market and financial impacts of the State Bank of India’s Merger: A comprehensive Event Study,” Edelweiss Applied Science and Technology, Learning Gate, vol. 8(4), pages 1986-1991
