Author : Shravani Raut
Introduction:
SIEMENS LTD. is a leading global technology company focused on industrial automation, digitalization, and smart infrastructure solutions. The company operates in sectors such as power generation, transportation, healthcare, and manufacturing. Listed on the National Stock Exchange (NSE), SIEMENS is a key player in India’s industrial sector, contributing to technological advancements and economic growth. The NIFTY50 index represents the performance of the top 50 companies in India, providing a benchmark for market trends and investor sentiment. This study explores the relationship between SIEMENS LTD.’s stock performance and NIFTY50.
Objective:
To find out the Beta of SIEMENS LTD. and its significance.
Literature Review:
Market Sensitivity and Stock Performance
Fama and French (1992) introduced the Capital Asset Pricing Model (CAPM), which states that a stock’s beta value measures its sensitivity to market movements. A higher beta indicates higher volatility compared to the market, whereas a negative beta suggests an inverse relationship with market trends.
Sector-Specific Influences on Stock Prices
Singh and Kaur (2019) explored sector-specific factors affecting stock prices, concluding that industrial stocks are influenced by macroeconomic indicators, policy changes, and global market trends. Their findings highlight that market indices like NIFTY50 may not fully explain individual stock performance.
Data Collection:
The data for SIEMENS LTD. and Nifty50 was downloaded for the period from 01-01-2024, to 31-12-2024. The data was processed to extract Friday closing prices, where Nifty50 was assigned as X and SIEMENS LTD. as Y, with Y regressed on X.
Data Analysis:
Equation: SIEMENS LTD. = 1.2096 + (0.2176) NIFTY50
Interpretation:
The analysis reveals that Siemens Ltd. exhibits a positiverelationship with the Nifty 50, as represented by a beta value of 0.2176. This indicates that for every 1% change in Nifty 50 returns, Siemens Ltd.’s stock is expected to change by 0.2176% in the same direction. The R-squared value of 0.0041 suggests that only 0.41% of Siemens Ltd.’s return variability is explained by Nifty 50, implying that other macroeconomic, sector-specific, or firm-level factors significantly influence its price movements.
The p-value of 0.1579 indicates that the relationship is not statistically significant at the conventional 5% level. This means that the observed correlation could be due to random fluctuations rather than a strong market dependency. Given the low R-squared value, investors should consider additional market and industry-specific variables when assessing Siemens Ltd.’s stock performance.
Conclusion:
The analysis indicates that Siemens Ltd.’s stock performance has a weak correlation with Nifty 50, with a beta coefficient of 0.2176. This suggests that Siemens Ltd. is relatively independent of the broader market movements and does not strongly react to Nifty 50 fluctuations. The results align with industry trends where stocks in industrial automation tend to have lower sensitivity to overall market changes.
Reference:
Fama, E. F., & French, K. R. (1992). The cross-section of expected stock returns. Journal of Finance. Available at: https://doi.org/10.1111/j.1540-6261.1992.tb04398.x
Singh, R., & Kaur, P. (2019). Macroeconomic factors and industrial stock performance. Indian Journal of Economics. Available at: https://www.indianeconomicsjournal.com