Title: Relationship of Nifty50 with SBI LIFE INSURANCE COMPANY LTD
Author: Sakshi Prabhu
Introduction:
This research examines the relationship between the NIFTY 50 index and the stock returns of SBI Life Insurance Company Limited to understand the impact of overall market movements on the company’s performance. Using the Capital Asset Pricing Model (CAPM), the study estimates the beta coefficient of SBI Life to measure its sensitivity to market risk and assess whether its returns move in line with the broader market. The analysis focuses on identifying the strength and significance of this relationship while considering the influence of macroeconomic conditions and insurance sector dynamics. By evaluating SBI Life’s risk–return behaviour relative to the NIFTY 50, the study provides insights into its market responsiveness and investment characteristics within the Indian financial services sector.
Objective:
To calculate the beta of SBI Life Insurance Company Limited and observe its significance in relation to NIFTY 50
Literature Review:
View 1: Dr. Srinivasa Rao Chilumuri (2013)
INDIAN INSURANCE INDUSTRY-PERFORMANCE OF SBI LIFE INSURANCE
Insurance provides protection against financial risks, and the Indian insurance industry has shown significant growth. In 2012, the industry was valued at ₹3.75 lakh crores, with India ranking 10th in life insurance and 19th in non-life insurance globally. Currently, 52 insurance companies operate in India, settling millions of claims and issuing many new policies each year. SBI Life Insurance, a joint venture between State Bank of India and BNP Paribas Cardif, stands out among private insurers for offering quality services at affordable premiums and having a wide distriCardif, standsacross India and abroad. The company aims to become a leading provider of life insurance and pension products through competitive pricing, superior customer service, and operational excellence. This research paper examines the growth of the Indian insurance industry and evaluates the performance of SBI Life Insurance, offering suggestions for improvement.
View 2: Dr. Vijetha Shetty (2018), Ms. Mittal Shah (2018)
Analysis of the Risk Retention Position of Life Insurance Corporation of India (LIC) and SBI Life Insurance Co.
Insurance is one of the upcoming and fast-growing activities in the modern business environment. It provides risk coverage to all the individuals and business communities in general. Life Insurance is one of the types of insurance available to the individuals and business persons. LIC is a public company, and SBI life insurance co. is one of the leading companies in life insurance market amongst the private life insurance companies. Evaluation of financial performance is a continuous process of regulator. The objective of this research paper is to analyse risk retention capacity of the LIC and the SBI Life Insurance Co. for the period of 11 years from 2004–05 to 2014-15. For the purpose of evaluation of risk retention capacity CARAMEL model is taken and suggestions have been offered.
Data Collection:
The data for NIFTY 50 and SBI Life Insurance Company Ltd was collected from the official NSE India website for the period 01-12-2024 to 30-11-2025. Friday closing prices were used to calculate weekly returns using the formula
Weekly Return = (Yt+1-Yt)/Yt*100
The weekly returns of NIFTY 50 were taken as the independent variable (X) and the weekly returns of SBI Life Insurance Company Ltd as the dependent variable (Y). A simple linear regression was applied to analyse the relationship by regressing Y on X.
Data Analysis:
The regression equation estimating the relationship between the returns of SBI Life Insurance Company Limited (dependent variable) and NIFTY 50 returns (independent variable) based on weekly observations is as follows:
SBI Life Insurance Company Limited Returns = 4423.45 − 0.116 (NIFTY 50)
The coefficient of the independent variable (NIFTY 50) is −0.116, which indicates a negative relationship between market returns and the returns of SBI Life Insurance Company Limited during the study period. This suggests that an increase in NIFTY 50 returns is associated with a marginal decrease in SBI Life’s equity returns, implying that the stock tends to move inversely with overall market movements in the observed period.
The p-value of 0.0000026 (2.589 × 10⁻⁶) for the NIFTY 50 coefficient indicates that the relationship is statistically significant at the 1% level, confirming that the impact of market returns on SBI Life’s returns is meaningful and not due to random chance.
The R² value of 0.378 shows that approximately 37.8% of the variation in SBI Life Insurance Company Limited’s returns is explained by changes in NIFTY 50 returns. The remaining 62.2% of the variation can be attributed to company-specific factors, such as business performance, insurance sector dynamics, interest rate movements, regulatory changes, and other macroeconomic influences.
The F-statistic value of 28.58, along with a very low Significance F (0.0000026), confirms that the overall regression model is statistically significant, indicating a strong explanatory relationship between the market index and the company’s stock returns.
Overall, the regression results suggest that while NIFTY 50 movements significantly influence SBI Life Insurance Company Limited’s equity returns, a substantial portion of return variability is driven by firm-specific and sector-related factors.
Conclusion:
The regression analysis indicates while SBI Life Insurance shows a statistically significant inverse relationship with the NIFTY 50, its performance is predominantly dictated by firm-specific and industry-related factors rather than broad market trends. For an investor, this suggests that SBI Life offers a degree of diversification from the NIFTY 50 but requires a deep focus on fundamental insurance-sector analysis rather than simply following market momentum.
References:
Dr. Srinivasa Rao Chilumuri (2013), INDIAN INSURANCE INDUSTRY-PERFORMANCE OF SBI LIFE INSURANCE, Journal of Management Studies.
Dr. Vijetha Shetty (2018), Ms. Mittal Shah (2018), “Analysis of the Risk Retention Position of LIC and SBI Life Insurance Company”, International Journal of Commerce and Management Research.