Title: Relationship of NIFTY 50 with Mahindra and Mahindra Limited
Author: Manas Salve
Introduction:
This research examines the relationship between the stock returns of Mahindra and Mahindra Limited and the benchmark index NIFTY 50, focusing on the estimation and interpretation of systematic risk through beta analysis. The study evaluates how closely the company’s returns move with the overall market and whether Mahindra and Mahindra Limited exhibits market sensitivity or firm-specific behaviour. By applying a regression-based Capital Asset Pricing Model (CAPM) framework, the research assesses the strength, direction, and significance of the relationship. The analysis provides insights into the risk-return characteristics of Mahindra and Mahindra Limited and its suitability as an investment option in comparison with broader market movements.
Objective:
- To calculate the beta of Mahindra and Mahindra Limited
- To observe and analyse the significance of beta in relation to NIFTY 50
Literature Review:
View 1: V. L. Govindarajan, U. Parthiban, V. Balu (2020)
Financial Performance of Nifty 50 Automobile Companies in India – An Empirical Comparative Analysis
The study is based on secondary data collected from annual reports and financial websites such as Moneycontrol and BSE for a ten-year period from 2009–10 to 2018–19. The research analyses the financial performance of selected NIFTY 50 automobile companies using Edward Altman’s Z-score and DuPont analysis of Internal Growth Rate (IGR) and Sustainable Growth Rate (SGR). Profitability, liquidity, and per-share ratios are used as independent variables. Descriptive statistics, correlation analysis, Friedman test, and coefficient of determination are applied. The results show that EPS, DPS, and Net Profit Margin significantly influence IGR and SGR, while key financial ratios have a strong impact on the Altman Z-score. The findings highlight the importance of financial ratios in assessing growth and financial stability.
View 2: Mr. Pushkar Dilip Parulekar (2015)
DUPONT ANALYSIS FOR SELECTED FIVE NIFTY FIFTY COMPANIES
Equity shareholders are residual claimants of a company, and financial management aims to maximize their wealth. Return on Equity (ROE) measures the returns earned by equity shareholders on their investment. The DuPont analysis decomposes ROE into three key components: operating efficiency, asset use efficiency, and financial leverage, represented by Net Profit Margin, Asset Turnover Ratio, and Equity Multiplier respectively. This study examines these components across five companies—Infosys Limited, Hindustan Unilever Limited, Larsen & Toubro Limited, Mahindra and Mahindra Limited, and Sun Pharmaceutical Industries Limited—representing different sectors of the Indian economy. Multiple regression analysis and ANOVA at a 95% confidence level are used, based on audited financial statements from 2005 to 2014.
Data Collection:
The data for NIFTY 50 and Mahindra and Mahindra Limited was collected from the official website of NSE India for the period 01-12-2024 to 30-11-2025. Friday closing prices were used to calculate weekly returns.
Weekly returns were computed using the formula:
[weekly return = (current weekly report- previous weekly report)/previous weekly report*100]
The weekly returns of NIFTY 50 were taken as the independent variable (X), and the weekly returns of Mahindra and Mahindra Limited were taken as the dependent variable (Y). A regression analysis was carried out by regressing Y on X.
Data Analysis:
Mahindra and Mahindra Limited Returns = 0.497 + 0.0027 (NIFTY 50)
The above regression equation explains the relationship between the dependent variable (returns of Mahindra and Mahindra Limited) and the independent variable (NIFTY 50 returns) using 48 weekly observations.
The coefficient of the independent variable (NIFTY 50) is 0.0027, indicating a very weak positive relationship between market returns and the returns of Mahindra and Mahindra Limited. This implies that changes in NIFTY 50 returns have almost no impact on the company’s equity returns during the study period.
The p-value of 0.994 for the NIFTY 50 coefficient is much higher than the 5% and 1% significance levels, indicating that the relationship is statistically insignificant. Hence, the null hypothesis cannot be rejected, and market returns do not meaningfully explain the returns of Mahindra and Mahindra Limited in this period.
The R² value of 0.00000118 shows that only 0.0001% of the variation in Mahindra and Mahindra Limited’s returns is explained by changes in NIFTY 50 returns. This clearly indicates that almost the entire variation (approximately 99.99%) in the company’s returns is driven by firm-specific factors, such as operational performance, sector conditions, management decisions, and macroeconomic influences.
Further, the F-statistic of 0.000054 with a Significance F value of 0.994 confirms that the overall regression model is statistically insignificant. This suggests that NIFTY 50 returns fail to explain the movement in Mahindra and Mahindra Limited’s equity returns during the study period.
Conclusion:
The regression analysis reveals no statistically significant relationship between the returns of Mahindra and Mahindra Limited and the NIFTY 50 index. The estimated beta coefficient is positive but extremely small and statistically insignificant, indicating that the company’s stock returns do not meaningfully respond to market movements during the study period. This suggests that the stock does not move in close alignment with the broader market.
The very low R² value indicates that market movements explain an insignificant portion of the variability in Mahindra and Mahindra Limited’s returns, highlighting the dominance of firm-specific and sectoral factors in influencing its performance. Overall, Mahindra and Mahindra Limited demonstrates distinctive risk characteristics, making it suitable for investors seeking diversification benefits rather than direct exposure to general market movements represented by the NIFTY 50
References:
V. L. Govindarajan, U. Parthiban, V. Balu (2020). Financial Performance of Nifty 50 Automobile Companies in India – An Empirical Comparative Analysis., Volume I, 2020.
Mr. Pushkar Dilip Parulekar (2015). DUPONT ANALYSIS FOR SELECTED FIVE NIFTY FIFTY COMPANIES , Vol. 2, 2015