Relationship of Yes Bank with Nifty 50.
Auhtor: Yogetha Madhukunta
Introduction:
Yes Bank is a company incorporated in 2003 and headquartered in Mumbai, India. It was founded by Rana Kapoor and Ashok Kapoor. It is a public listed company. Its core business is banking. It offers services like Channel Finance, Depository Services, Email/SMS Advice, Foreign exchange support, Fund Accounting, Investment reporting.
Objective:
To find out the beta of Yes Bank and its significance.
Literature Review:
Bank efficiency and its profitability
1) Rakshit and Bardhan (2022) states that the efficiency of a bank in managing it’s resources is an important indicator of its profitability. Cost management, interest rates, stability, macroeconomic factors and the nature of ownership also affect the bank’s efficiency. Profit efficiency positively influences bank’s performance. All the factors affect the bank’s efficiency differently. In order to manage the bank’s efficiency, the bank has to make a proper blend of the input and output. Increased bank’s performance also leads to increased market shares or a positive response on the bank’s shares from the market and the investors.
Impact of numerical data on investment decisions
2) Nautiyal and Kavidayal (2018) presents that numerical data and equations help an investor to take investment decisions effectively. Ratios, equations, numerical data helps an investor understand complex organisation performance in a simpler manner. Various factors affect the data and there exists correlation between the different ratios, and also between the components of the equations. Investors take into consideration this correlation and the data for assessing the stocks and making investing decisions. The ratios, equations are not only helpful for investors but also to the analysts for analysing the markets, the stocks’ behaviour and the it’s effect on the economy.
Data Collection:
Yes Bank and Nifty 50 data was downloaded from NSE site for the period 01-01-2024 to 31-12-2024 and the data was manipulated to find out the Friday closing prices, weekly returns were calculated, weekly returns of Nifty 50 is x and weekly returns of Yes bank is y. y was regressed on x.
Data Analysis:
The equation is Equity = -101.183 + 0.001 Nifty 50
(4.731)
Number of observations (N) = 47, f = 22.381, r2 = 0.332
The interpretation of the equation:
The above equation shows the relationship between Nifty 50 and Equity. Equity is a dependent variable and Nifty 50 is an independent variable. Positive sign means there is direct relationship between equity and Nifty 50 meaning if Nifty 50 rises, equity rises and if nifty 50 falls, equity falls. If nifty 50 rises by 1 rupee, equity will rise by 0.001 units. Figure in bracket () is t-stat and the p value for this is 0.00002 which is less than 0.05 meaning nifty 50 is statistically significant at 5% level. Number of observations are 47, r2 = 0.332 which means 33.2% of equity is explained by nifty 50, balance 66.8% is the error model. f= 22.381 and the p value or the significance value is 0.00002 which is less than 0.05 which means overall the model is statistically significant at 5% level.
Conclusion:
The beta value is 0.001, which is less than 1, meaning it is good for long term investment.
References:
Bijoy Rakshit & Samaresh Bardhan, 2022. “Does Bank Efficiency Enhance Bank Performance? Empirical Evidence From Indian Banking,” Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 25(Special I), pages 103-124, March
Neeraj Nautiyal & P. C. Kavidayal, 2018. “Analysis of Institutional Factors Affecting Share Prices: The Case of National Stock Exchange,” Global Business Review, International Management Institute, vol. 19(3), pages 707-721, June.