Author Name: Akhil Nagula
Introduction to Adani Enterprises Limited
Adani Enterprises Limited (AEL) is the flagship company of the Adani Group, a diversified business conglomerate in India. Established in 1988, AEL operates in multiple sectors including energy, infrastructure, logistics, and agro-commodities. The company has been instrumental in spearheading growth initiatives in sustainable energy and expanding India’s infrastructure capabilities. Its contributions to clean energy and innovative business practices make it a key player in the Indian market.
Objective
The primary objective of this study is to determine the beta value of Adani Enterprises Limited in relation to the Nifty 50 index. The beta measures the volatility of Adani Enterprises Limited compared to the overall market. Additionally, the significance of this relationship is analyzed to understand how the stock reacts to market changes. This information will help investors assess the short-term investment potential of Adani Enterprises Limited.
Literature Review
1. A study by Gupta and Sharma (2023) analyzed the relationship between Nifty 50 and leading conglomerates, including Adani Enterprises. The research concluded that market sentiment and macroeconomic indicators heavily influence stock performance. It emphasized how large-cap companies like Adani Enterprises often mirror the performance of the broader market.
2. According to a report by Economic Times (2024), Adani Enterprises’ stock has demonstrated higher volatility compared to the Nifty 50 index. The study noted that regulatory developments, sector-specific news, and quarterly results significantly impact the company’s stock price movements. The findings suggest that investors should closely monitor market trends when investing in companies like Adani Enterprises.
Data Collection
Data for Adani Enterprises Limited 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 Adani Enterprises Limited as Y. Subsequently, a linear regression analysis was performed where Y was regressed on X.
Data Analysis
The regression equation: Y = 0.951 + 1.614X. This describes the relationship between the Nifty 50 (X) and the Adani Enterprises Ltd share price (Y), indicating that Adani Enterprises Ltd share price is the dependent variable. The positive coefficient of 1.614 suggests that for every unit increase in Nifty 50, the share price of Adani Enterprises Ltd is expected to increase by 1.614 units. With 47 observations (N = 47), the model’s R-squared value is 0.1792, indicating that 17.92% of the variation in Adani Enterprises Ltd share price can be explained by changes in the Nifty 50. The remaining 82.08% is attributed to other factors not included in the model. The p-value for the slope is 0.0030, which is less than 0.05. This indicates that the relationship between the Nifty 50 and Adani Enterprises Ltd share price is statistically significant at the 5% level. Hence, the model provides strong evidence of a significant linear relationship between Nifty 50 and Adani Enterprises Ltd share price, suggesting that market movements have a meaningful impact on the company’s stock price.
Conclusion
Since the Beta (1.614) is greater than 1, it indicates that Adani Enterprises Limited is good for short-term investment.
References
1. Gupta, A., & Sharma, R. (2023). Stock Market Correlations: A Study on Nifty 50 and Large-Cap Companies. Journal of Financial Studies.
2. Economic Times. (2024). Market Analysis Report on Adani Enterprises and Nifty 50 Trends.