Shriram Finance

Relationship of Nifty 50 with Shriram Finance Ltd

By Sushant Jadhav

About Shriram Finance

Shriram Finance Ltd is one of India’s largest and most trusted non-banking financial companies (NBFCs). The company has built its reputation by serving millions of customers across the country, particularly in semi-urban and rural markets where access to formal banking is limited. Its core business revolves around commercial vehicle finance, but it has diversified into personal loans, SME financing, and other retail financial services. Shriram Finance is recognized for its customer-centric approach, strong risk management practices, and its ability to provide financial solutions to underserved segments of society.

Objectives of the Study

The primary objective of this study is to calculate the beta of Shriram Finance Ltd and evaluate its statistical significance in relation to the NIFTY 50 index. Beta is a measure of volatility and risk compared to the broader market. By analyzing this relationship, we aim to understand how Shriram Finance’s stock price movements are influenced by the NIFTY 50 and whether it is suitable for long-term investment.

Data Collection

  • Period considered: 01-Dec-2024 to 30-Nov-2025
  • Data source: Historical closing prices of Shriram Finance Ltd and the NIFTY 50 index.
  • Frequency: Weekly data filtered to Friday closing prices for consistency.
  • This dataset ensures comparability and reduces noise from daily fluctuations.

Data Analysis

The regression analysis was conducted with Shriram Finance’s closing price as the dependent variable and NIFTY 50 index as the independent variable.

  • Regression Equation:
    [ y = -5447.77 + 0.3244x ]
    Here, (y) represents Shriram Finance’s closing price, and (x) represents the NIFTY 50 index value.
  • Beta (Slope = 0.3244):
    Indicates that for every 1-point increase in NIFTY 50, Shriram Finance’s stock price increases by approximately 0.3244 points. Since beta is less than 1, Shriram Finance is less volatile compared to the market.
  • Intercept (-5447.77):
    Theoretically represents the value of Shriram Finance’s stock when NIFTY 50 is zero. While not practically meaningful, it is part of the regression equation.
  • t-statistic (7.0894) and p-value (6.69E-09):
    The beta coefficient is highly significant, confirming that the relationship between Shriram Finance and NIFTY 50 is statistically reliable.
  • R² = 0.5221:
    About 52.21% of the variation in Shriram Finance’s stock price is explained by NIFTY 50 movements. The remaining variation is due to other factors not included in the model.
  • F-statistic = 50.259 (p-value < 0.01):
    The overall regression model is statistically significant, meaning the relationship is not due to chance.

References

Saladi Lokesh, K Lalitha (2025). Financial Performance of Non-Banking Finance Companies (NBFCs): Muthoot Finance. Issue Vol. 13 No. 2 (2025): Volume 13 Issue 2.

Conclusion

The analysis shows that Shriram Finance Ltd has a beta of 0.3244, which is significantly less than 1. This means the stock is less volatile than the NIFTY 50 index. Investors can expect Shriram Finance to move in the same direction as the market, but with smaller fluctuations.

  • Implication: Shriram Finance Ltd is a stable investment option, suitable for long-term investors who prefer lower risk compared to the broader market.
  • The statistical significance of the regression confirms that the relationship is strong and reliable.

 

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