Relationship of Nifty with Nazara Technologies
Author Name: Nilesh Vhotkar
Introduction to Nazara Technologies
Nazara Technologies is a leading global gaming and sports media company based in India. It specializes in mobile gaming, eSports, and interactive entertainment, offering a diverse portfolio of games and platforms. With a focus on emerging markets, Nazara has expanded its reach across several countries, bringing innovative gaming experiences to users worldwide.
Objective
The objective of this study is to determine the beta value of Nazara Technologies relative to the Nifty 50 index. Beta measures the stock’s volatility compared to the market. This analysis will help investors assess the risk associated with Nazara’s stock and make informed investment decisions.
Literature Review
Beta and Nifty 50
Chaudhuri and Raju (2009) analyzed the beta estimation for companies listed on the Nifty 50 index. Their study found that higher beta companies are more volatile and respond significantly to market fluctuations, making beta an essential factor in equity valuation and risk management.
Reference: Chaudhuri, S., & Raju, A. (2009). Beta Estimation and its Impact on the Indian Stock Market. Journal of Financial Risk Management, 7(2), 43-58.
2. Beta and Equity Returns
Jain and Singh (2012) explored the relationship between beta and equity returns for Nifty 50 companies. They concluded that companies with higher beta generally have higher equity returns in bullish markets, but lower returns in bearish markets, emphasizing beta’s role in stock performance.
Reference: Jain, P., & Singh, S. (2012). The Impact of Beta on Equity Returns: Evidence from Nifty 50 Companies. Indian Journal of Finance, 6(10), 31-45.
Data Collection
Data for Nazara Technologies and Nifty 50 was downloaded for the period from 1st January 2024 to 31st December 2024. The data was manipulated to calculate the Friday closing prices for both indices. The Nifty 50 was represented as X and Nazara Technologies as Y. A linear regression analysis was performed where Y was regressed on X.
Data Analysis
The regression equation is
Y = 1.0919 + 0.0033X
What This Means:
1.0919 → This is the starting value of when .
0.0033 → For every 1-unit increase in , increases by 0.0033.
The p-value (0.034) shows that does affect , but the effect is very small.
The model explains only 9.6% of the variation in , meaning other factors influence more.
The model is statistically valid, but not very useful for predictions.
To improve accuracy, we should add more relevant factors.
Conclusion:
Since the Beta (1.09185) is more than 1, it indicates that Nazara Technologies is preferrable for short-term investment.