Relation of VIP Clothing with Nifty50
Author: Vaibhav Bhandare
Introduction:
VIP Clothing Limited is a leading manufacturer and retailer of innerwear and apparel in India. It is known for its wide range of high-quality products and strong brand presence. Established several decades ago, VIP Clothing has become a household name, offering comfort and durability through its innovative product line. The company’s market position has been strengthened through consistent product innovation, strategic partnerships, and a wide distribution network. VIP Clothing continues to adapt to changing consumer preferences, maintaining its reputation as a trusted brand in the Indian apparel industry.
Objective:
The objective of this study to determine the beta value of VIP CLOTHING limited to NIFTY 50 index. Beta measure the stocks volatility compare to the market. This analysis will help investors assess the risk associated with power grid stocks and make informed investment decision.
Literature Review:
New Approaches to Production Capacity Assessments
Gourdon, Daniel et al (2023) presents refined methodologies for evaluating production capacity in the apparel industry. It highlights the limitations of traditional production assessments and proposes using average production figures to smooth out fluctuations. The study also emphasizes firm-level indicators, such as productivity metrics, to provide a more accurate capacity estimation. Additionally, it examines how mergers and acquisitions impact capacity, underscoring the need for dynamic assessment models. By integrating these methodologies, the report offers a more comprehensive approach to understanding production capacity, aiding policymakers and industry stakeholders in addressing excess capacity issues.
Impact of Production Capacity on Economic Growth
David (2017) investigates the relationship between production capacity and economic growth across various countries. Utilizing panel data from 1990 to 2015, the authors employ econometric models to assess how fluctuations in production capacity influence GDP growth rates. The findings suggest a positive correlation between enhanced production capacity and economic growth, particularly in developing nations where manufacturing industries play a pivotal role in trade and employment. The study contributes to existing literature by highlighting the significance of industrial capacity in fostering economic development and underscores the need for policies that support the expansion of critical industries like apparel manufacturing.
Data Collection:
VIP Clothing and Nifty50 data was downloaded for the period 1-1-24 to 31-12-24. The Friday closing prices were calculated of Nifty50 = X and VIP Clothing = Y. Y was regressed on X.
Data Analysis:
Equation: VIP Clothing = 1.623 + 1.636 Nifty50
Interpretation: The regression equation describes the relationship between Nifty50 (X) and VIP Clothing’s share price (Y), indicating that VIP Clothing’s share price is the dependent variable, while Nifty50 is the independent variable. The positive coefficient of 1.636 suggests that for every unit increase in Nifty50, VIP Clothing’s share price is expected to increase by 1.636 units. With 46 observations (N = 46), the R² value is 0.09048, implying that approximately 9.05% of the variation in VIP Clothing’s share price can be explained by changes in Nifty50. The F-value for the model is 4.37. The p-value for the slope is 0.0422, which is less than the conventional threshold of 0.05. This indicates that the relationship between Nifty50 and VIP Clothing’s share price is statistically significant at the 5% level. Consequently, this model provides evidence to suggest a significant linear relationship between Nifty50 and VIP Clothing’s share price.
Conclusion:
VIP Clothing’s beta of 1.64 indicates that it is more volatile than the market and better suited for short-term investment.
References:
Karin Gourdon & Laurent Daniel & Takuya Adachi & Emilie Berger, 2023. ‘New approaches to production capacity assessments,’ OECD Science, Technology and Industry Policy Papers 140, OECD Publishing.
David Perry, 2017. ‘2016 Status Report on Major Equipment Procurement,’ SPP Research Papers, The School of Public Policy, University of Calgary, vol. 10(22), September.