Relationship of NIFTY 50 with SBI Mutual Fund

Introduction 

SBI Mutual Fund is one of the largest and oldest asset management companies in India. It is sponsored by the State Bank of India and was established in 1987. The fund house offers a wide range of investment products including equity, debt, hybrid, and index-based schemes. 

SBI Mutual Fund plays an important role in the Indian financial market by providing investment opportunities to retail and institutional investors. Its equity-oriented schemes are influenced by market conditions, economic factors, and movements in benchmark indices such as the NIFTY 50. 

This study examines the relationship between SBI Mutual Fund’s equity-linked price movements and the NIFTY 50 index. 

Objective 

The primary objective of this study is to analyze the systematic risk of SBI Mutual Fund’s equity-linked returns in relation to the broader market represented by the NIFTY 50 Index. Specifically, the study aims to: 

Literature Review 

This analysis is based on the Capital Asset Pricing Model (CAPM), which is widely used to measure the relationship between asset returns and market returns. 

Systematic Risk (Beta): 
Beta measures the sensitivity of an asset’s returns to changes in market returns. 

Unsystematic Risk: 
This is asset-specific risk caused by factors such as fund strategy, portfolio composition, and management decisions. It can be reduced through diversification and is represented by the error term in regression analysis. 

Regression Equation 

The relationship between SBI Mutual Fund returns and NIFTY 50 returns is modeled using the following regression equation: 

                                                    Ri = Alpha + Beta (Rm) + Epsilon 

Where: 

= SBI Mutual Fund return 

= Market (NIFTY 50) return 

= Intercept (alpha) 

= Error term 

Where Ri is the stock return, Rm is the market return, alpha is the intercept (excess return), and epsilon is the error term. 

Data Collection 

The data for this study was obtained from the provided financial dataset covering the period from December 1, 2024, to November 30, 2025. 

Variables Used: 

Data Analysis 

Weekly returns for both SBI Mutual Fund and the NIFTY 50 were calculated, and a linear regression analysis was conducted. 

Key Findings 

Beta: –0.49 

Interpretation: 
A beta of –0.49 indicates that SBI Mutual Fund shows a weak and inverse relationship with the market. For every 1% change in the NIFTY 50, SBI Mutual Fund returns move by approximately –0.49%. This suggests low market sensitivity. 

Alpha: –1.03 

Interpretation: 
The negative alpha indicates that the fund generated negative returns when the market return was zero during the observed period. 

Regression Equation 

 Based on the coefficients table: 

                                                          SBI MF (Y)=−1.03−0.49(NIFTY 50 (X)) 

R-Squared: 0.08 

Interpretation: 
Approximately 8% of the variation in SBI Mutual Fund returns is explained by movements in the NIFTY 50 index. This indicates a weak relationship, with most of the price movement influenced by fund-specific factors. 

Visual Representation: The scatter plot below illustrates the relationship between Nifty 50 returns (X-axis) and SBI Mutual Fund  (Y-axis). The steep slope of the red regression line visually confirms the high Beta (>2). 

Conclusion 

The analysis concludes that SBI Mutual Fund exhibits a low and negative beta during the period from December 2024 to November 2025. This indicates that the fund has weak systematic risk exposure and does not move closely with the overall market. 

Implications for Investors: 

Overall, investors should evaluate SBI Mutual Fund based on long-term performance and portfolio objectives rather than short-term market movements. 

References: