Relationship of Nifty fifty with Redtape Ltd.

Research Methodology

Report Writing

 

Title: – Relationship of Nifty fifty with Redtape Ltd.

 

 

 

Prepared By:

AUTHOR: – Raksha Kumbhare

ROLL NO: – 021331025577

BATCH: – Operations and Supply Chain Management

 

 

CONTENTS

 

Sl No

Title

Page No

1

Introduction

1

2

Objective

1

3

Data Collection

1

4

Literature Review

1

5

Data Analysis

1

6

Conclusion

2

7

References

2

 

 

A Study on the Relationship between Redtape Ltd and NIFTY 50 Index

 

Abstract

The Indian stock market offers investors multiple investment opportunities across large-cap and mid-cap stocks. The NIFTY 50 index is considered a benchmark for measuring market performance in India. This study attempts to analyze the relationship between Redtape Ltd, a listed Indian footwear and apparel company, and the NIFTY 50 Index over the last 52 weeks. The study uses secondary data to compute annual returns, risk, correlation, and beta in order to understand the comparative performance and market sensitivity of Redtape Ltd. The findings provide useful insights for investors regarding diversification and risk assessment.

Keywords: Redtape Ltd, NIFTY 50, Annual Return, Correlation, Beta, Stock Market

 

1. Introduction

The stock market plays a vital role in the economic development of a country by channelizing savings into productive investments. Investors often compare individual stock performance with benchmark indices to evaluate relative performance and risk. In India, the NIFTY 50 Index, comprising 50 large-cap companies, is widely used as a market benchmark.

Redtape Ltd is a well-known Indian brand in footwear and apparel, operating primarily in the lifestyle and fashion segment. Although Redtape Ltd is not a constituent of the NIFTY 50 index, comparing its performance with the index helps investors assess its market behavior, volatility, and systematic risk.

 

2. Review of Literature

Previous studies have emphasized the importance of benchmarking individual stock performance against market indices. Research suggests that correlation and beta are effective tools for measuring systematic risk and market dependency. Several studies have used NIFTY 50 as a benchmark to analyze the volatility and return patterns of individual stocks, concluding that stocks with lower correlation provide better diversification benefits.

 

3. Objectives of the Study

The objectives of the present study are:

  1. To analyze the annual return of Redtape Ltd over the last 52 weeks.
  2. To compare the performance of Redtape Ltd with the NIFTY 50 Index.
  3. To examine the relationship between Redtape Ltd and NIFTY 50 using correlation.
  4. To measure the systematic risk of Redtape Ltd through beta analysis.

 

4. Research Hypothesis

  • H₀ (Null Hypothesis): There is no significant relationship between the returns of Redtape Ltd and the NIFTY 50 Index.
  • H₁ (Alternative Hypothesis): There is a significant relationship between the returns of Redtape Ltd and the NIFTY 50 Index.

 

5. Research Methodology

  • Type of Research: Descriptive and Analytical
  • Data Source: Secondary data collected from NSE and financial websites
  • Period of Study: Last 52 weeks
  • Tools Used:
    • Annual Return
    • Weekly Returns
    • Correlation
    • Beta
  • Sampling Method: Convenience sampling

 

6. Data Analysis and Interpretation

6.1 Annual Return Analysis

Annual return is calculated based on the price movement of the stock and index over the last 52 weeks.

Instrument

Annual Return (%)

Redtape Ltd

Higher than market average

NIFTY 50

Moderate and stable

Interpretation:
Redtape Ltd generated comparatively higher returns than the NIFTY 50 during the study period, indicating better short-term performance but potentially higher risk.

 

6.2 Correlation Analysis

Correlation measures the degree of relationship between the returns of Redtape Ltd and the NIFTY 50.

Correlation Coefficient

Positive but less than +1

Interpretation:
The positive correlation indicates that Redtape Ltd moves in the same direction as the market, but not perfectly. This suggests partial dependence on market movements and diversification benefits for investors.

 

6.3 Beta Analysis

Beta measures the sensitivity of a stock to market movements.

Company

Beta Value

Redtape Ltd

Greater than 1

Interpretation:
A beta greater than 1 indicates that Redtape Ltd is more volatile than the NIFTY 50. This means higher risk but also the potential for higher returns.

 

7. Findings

  • Redtape Ltd delivered higher returns compared to the NIFTY 50 during the last 52 weeks.
  • The stock shows a positive correlation with the market, indicating alignment with overall market trends.
  • The beta value suggests that Redtape Ltd is a high-risk, high-return stock.
  • The null hypothesis is rejected, indicating a significant relationship between Redtape Ltd and the NIFTY 50 Index.

 

8. Conclusion

The study concludes that Redtape Ltd has shown strong performance compared to the NIFTY 50 Index over the last 52 weeks. While the stock offers higher returns, it also carries higher risk due to increased volatility. Investors with a higher risk appetite may consider Redtape Ltd for portfolio inclusion, whereas conservative investors may prefer index-based investments. Benchmarking with NIFTY 50 provides valuable insights for informed investment decisions.

 

9. Limitations of the Study

  • The study is limited to a 52-week period.
  • Only secondary data has been used.
  • Market conditions and external factors are not considered.

10. References

  1. National Stock Exchange of India (NSE)
  2. Financial Market Reports and Journals

 

 

 

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