Title: Relation of JSW Energy with Nifty50
Author: Jay Maru
Introduction:
JSW Energy Limited is one of India’s leading private-sector power generation companies. A subsidiary of the JSW Group, the company is engaged in power generation, transmission, and trading. It operates thermal, hydro, and renewable energy assets across multiple states in India. With a strong focus on sustainability, JSW Energy is actively expanding its renewable energy portfolio, aiming to transition towards a greener future. The company plays a crucial role in India’s energy sector, contributing to the country’s power security and industrial growth.
Objective:
To determine the Beta of JSW Energy and its significance.
Literature Review:
Corina (2011) stated that the paper examines Romania’s renewable energy sector, highlighting its potential and investment barriers. While Romania aligns with the EU’s 20-20-20 goals, challenges such as bureaucracy, high costs, lack of infrastructure, and limited financing options hinder investment. The study categorizes these barriers into administrative, technical, market, and economic obstacles, emphasizing the need for policy reforms and improved infrastructure to support sustainable energy growth.
World Bank (2015) presents that GTF 2015 report tracks global progress on energy access, efficiency, and renewable energy under the Sustainable Energy for All (SE4All) initiative. While electrification improved to 85%, 1.1 billion people still lack electricity, and 2.9 billion lack clean cooking fuels. Energy efficiency improved by 1.7% annually, but falls short of the 2.6% target, and renewable energy growth remains slow. The $400 billion annual investment in sustainable energy must triple to meet 2030 goals. Urgent policy action and investment are needed to stay on track.
Data Collection:
Data for JSW Energy and Nifty50 was collected for the period from 01-01-24 to 31-12-24. The dataset was manipulated to calculate the Friday closing prices for Nifty50 (X) and JSW Energy (Y), with Y regression on X.
Data Analysis:
Equation: JSW Energy = 0.0118 + 1.0454 Nifty50
Interpretation: The regression equation describes the relationship between Nifty50 (X) and JSW Energy share price (Y), indicating that JSW Energy share price is the dependent variable, and Nifty50 is the independent variable. The positive coefficient of 1.0454 suggests that for every one-unit increase in Nifty50, JSW Energy share price is expected to increase by 1.0454 units. With 47 observations (N=47), the model’s R-squared value: 0.1113, implying that approximately 11.13% of the variation in JSW Energy share price can be explained by changes in Nifty50, leaving 88.87% of the variation attributable to other factors not include in the model. The p-value for the slope is 0.0219, which is less than the conventional threshold of 0.05, indicating that the relationship between Nifty50 and JSW Energy share price is statistically significant at the 5% level. Consequently, this model provides strong evidence to suggest a significant linear relationship between Nifty50 and JSW Energy share price.
Conclusion:
JSW Energy’s beta of 1.0454 indicates that it is moderately volatile compared to the market and may be suited for both short-term and long-term investment strategies
Reference:
Corina PÎRLOGEA, 2011. “Barriers to Investment in Energy from Renewable Sources,” Economia. Seria Management, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 14(1), pages 132-140, June.
World Bank & International Energy Agency, “undated”. “Sustainable Energy for All 2015,” World Bank Publications – Reports 22148, The World Bank Group.