TOPIC – RELATIONSHIP OF NIFTY 50 WITH KOTAK MAHINDRA BANK LIMITED
AUTHOR – Koshalraj gaire
Introduction
Kotak Mahindra Bank Limited is one of India’s leading private sector banks with a strong presence in retail banking, corporate banking, wealth management, and other financial services. The banking sector plays a crucial role in the Indian economy and is highly sensitive to changes in economic growth, interest rates, and overall market conditions. As a result, the stock performance of Kotak Mahindra Bank is influenced by movements in the broader equity market. Studying its relationship with the Nifty 50 helps in understanding the market risk and volatility associated with the bank’s shares.
Objective
To calculate the beta of Kotak Mahindra Bank Limited with respect to the Nifty 50 and examine its statistical significance, in order to understand the systematic risk associated with Kotak Mahindra Bank shares.
Literature Review
NIFTY 50 Shariah Scrips – A Beta Analysis
Existing literature on beta analysis emphasizes the role of beta as a key measure of systematic risk. Studies on Shariah-compliant stocks indicate that although financial screening reduces leverage, beta values still vary significantly across different companies and sectors. These studies confirm that beta remains a reliable indicator of market-related risk.
Banking Sector Stock Performance in India
Previous studies on Indian banking sector stocks highlight that private sector banks generally show moderate sensitivity to market movements due to diversified operations, strong capital adequacy, and efficient risk management practices. These findings support the relevance of beta analysis while studying banking stocks such as Kotak Mahindra Bank Limited.
Data Collection
Historical data for Kotak Mahindra Bank Limited and Nifty 50 was collected from the official website of the National Stock Exchange (www.nseindia.com) for the period from 01-12-2024 to 30-11-2025. Friday closing prices were considered. Weekly returns were calculated. Nifty 50 weekly returns were treated as the independent variable (X). Kotak Mahindra Bank weekly returns were treated as the dependent variable (Y). A simple linear regression was conducted by regressing Y on X.
Data Analysis
Regression Equation
Kotak Mahindra Bank (Y) = 0.859 × Nifty 50 (X) – 0.237
Regression Statistics
Beta (Slope Coefficient) = 0.859
Intercept = –0.237
t-Statistic (Beta) = 4.509
p-value (Beta) = 0.000045
Number of observations (N) = 48
R² = 0.307
F-statistic = 20.33
Interpretation
The regression results indicate a positive and statistically significant relationship between the weekly returns of the Nifty 50 and Kotak Mahindra Bank Limited. A 1% increase in Nifty 50 returns leads to an approximate 0.86% increase in Kotak Mahindra Bank’s weekly returns, indicating that the stock is less volatile than the overall market. The t-statistic of 4.509 and p-value less than 0.01 confirm that the beta coefficient is statistically significant, showing that market movements have a meaningful impact on Kotak Mahindra Bank’s returns. The R² value of 0.307 indicates that 30.7% of the variation in Kotak Mahindra Bank’s returns is explained by movements in the Nifty 50, while the remaining 69.3% is due to bank-specific factors such as interest rate changes, asset quality, credit growth, profitability, and management efficiency. The F-statistic of 20.33 with a very low probability value confirms that the overall regression model is statistically significant.
Conclusion
Kotak Mahindra Bank Limited has a beta of 0.859, which is less than 1, indicating that the stock is less volatile than the overall market.
This implies that:
Kotak Mahindra Bank tends to provide relatively stable returns during market fluctuations. The stock carries lower market risk compared to high-beta stocks. It is suitable for risk-averse investors. Kotak Mahindra Bank is appropriate for long-term investment strategies, especially during periods of moderate market growth.
References
Patel, A. and Shah, M. (2018) ‘NIFTY 50 Shariah scrips a beta analysis’, GAP Bodhitaru: A Global Journal of Humanities, 1(2), pp. 36–46.
Reserve Bank of India and National Stock Exchange publications on Indian banking sector performance.