Title : Relationship of Nifty50 with Reliance Industries Limited
Author: Rutuja Nalawade
Introduction:
Reliance Industries Limited (RIL) is a Fortune 500 company and the largest private sector corporation in India. Established by Dhirubhai Ambani, it has evolved from a textiles and polyester firm into a global conglomerate with a dominant presence in diverse sectors, including Oil-to-Chemicals (O2C), Retail, Digital Services (Jio), and New Energy. As a heavyweight in the Indian equity market, RIL holds one of the highest weightages in the NIFTY 50 index, often acting as a primary driver of market sentiment. The company’s strategic shift toward green energy and digital ecosystems has redefined its risk profile, making it a focal point for investors seeking both stability and high-growth potential in the Indian economy.
Objective:
Calculation of beta of Reliance Industries Limited and observe its significance
Literature Review:
View 1: Abhijit Biswas (2018) Impact of Reliance Industry Stock Price on NIFTY 50 – Granger Causality Test
The research paper attempts to analyse the dynamic interrelationship between nifty-50 and sectoral indices daily returns of the national stock exchange. This study will offer valuable insights into market dynamics, risk management, performance evaluation, investment strategies, sector analysis, market sentiment, and benchmarking. This analysis can assist investors, analysts, and market participants in making informed decisions and optimizing their investment portfolios. The main objective of this paper is to analyse the trend and pattern of Nifty-Fifty and sectorial indices, check for unit root in data to determine whether the data are stationary or non-stationary and investigate the interrelationship between Nifty-Fifty and sectorial indices’ daily returns. Descriptive statistics, unit root test and multiple correlation test have been applied in calculated daily returns of Nifty-50 and Sectoral Indices. The finding of the study shows that the NSE realty sector performed better and followed by the NSE auto sector and NSE energy sector among all the indices; while, the NSE bank sector performed poorly followed by NSE FMCG sector, Nifty IT sector in comparison to other indices. The Nifty-50 has been found less volatile in comparison to other sectorial indices however Realty sector indices show the highest volatility followed by NSE metal sector, NSE IT sector during the study period. Augmented Dickey-Fuller unit root test (ADF Test) was used to check the unit root. Results of this test reflected the data for the Nifty-Fifty and other sectorial indices’ average daily returns was stationary and suitable for further study. Multiple correlation test was performed to analyse the relationships between NSE sectoral indices’ daily return in the dataset. It was found that the daily returns from NSE oil & gas & NSE Energy indices was significantly very high correlated; while, daily return from NSE pharma & NSE bank indices was very low correlated. The study provides benefit a wide range of stakeholders, including investors, portfolio managers, financial analysts, market researchers, regulators, and the academic community. The insights gained from such a study can inform decision-making, improve market understanding, and contribute to the efficient functioning of the financial markets.
View 2: Pawan Kumar Gupta (2024) ANALYSING THE DYNAMIC INTERRELATIONSHIP BETWEEN NIFTY-FIFTY AND SECTORAL INDICES DAILY RETURNS OF THE NATIONAL STOCK EXCHANGE
It is well known for the Indian Equity Market NIFTY 50 is the National Stock Exchange of India’s benchmark broad based stock market Index. Full form of NIFTY 50 is “National Stock Exchange Fifty”. Generally, it represents the weighted average of fifty Indian Company Stocks; but right now, it is fifty-one stocks and is one of the main stock indices in India. The study is an attempt to find the impact of Reliance Industries Limited (Reliance) stock price (one of the 51 stocks enlisted under NIFTY 50) on NIFTY 50. We have collected data mostly from i.) NSE and ii.) Yahoo finance. Annual Data (Daily) for the period of 2008-2018 have been utilized. The data comprises of Open, High, low, Close and Volume Traded. For this empirical study Closing values are considered. This study employs Testing of parameters, Hypothesis, and Granger Causality Test an econometric tool to analyse the cause effect relationship. It will be helpful for rational investors to understand the moving trend of NIFTY 50 with respect to Reliance stock price movement and also to understand the current position of Reliance in Indian Stock Market. We used EViews for detailed analysis
Data Collection:
The data of Nifty 50 and the data for Reliance Industries Limited was downloaded from 01-12-2024 to 30-11-2025 form NSE India.com. This data is used for finding out the Friday closing prices for Nifty 50 and ONGC. Weekly return was calculated by the formula (Yt+1-Yt)/Yt*100 and then weekly returns of the Nifty 50 was taken as X and the equity of ONGC was taken as Y. Y was regressed on X.
Data Analysis:
{Reliance Returns} = 2286.86 – 0.0424(NIFTY 50)
The regression analysis explains the relationship between the dependent variable (Reliance stock returns) and the independent variable (NIFTY 50 index) based on 49 weekly observations.
- Coefficient (Beta): The coefficient for X Variable 1 (Beta) is $-0.0424$. This indicates a negative relationship between the market index and the stock price during this specific period. It implies that a one-unit increase in the NIFTY 50 leads to an average decrease of approximately $0.0424$ units in the Reliance stock price.
- Statistical Significance: The t-statistic for the coefficient is $-3.2785$ with a P-value of $0.00197$. Since the P-value is significantly lower than $0.05$ (and even $0.01$), the relationship is statistically significant at both the 5% and 1% levels.
- Explanatory Power: The R-square value of $0.1861$ shows that approximately 18.61% of the variation in Reliance’s returns is explained by changes in the NIFTY 50. While the relationship is statistically significant, the explanatory power is moderate, suggesting that other firm-specific factors contribute to over 81% of the price movement.
- Model Fit: The F-statistic of $10.748$ with a significance value of $0.00197$ confirms that the overall regression model is statistically significant.
Conclusion:
The study concludes that for the period under review (Dec 2024 – Nov 2025), Reliance Industries exhibited an atypical inverse relationship with the NIFTY 50. While Reliance is usually a driver of the index, the negative correlation and low Beta suggest that company-specific developments (such as major investments in New Energy or Retail restructuring) or specific market conditions caused it to diverge from the broader market trend. Investors should note that RIL acted as a partial hedge against the index during this timeframe, given its negative correlation.
References:
· Abhijit Biswas (2018). Impact of Reliance Industry Stock Price on NIFTY 50 – Granger Causality Test. RESEARCH REVIEW International Journal of Multidisciplinary, 3(11), 367-376. [DOI: 10.5281/zenodo.1490556].
· Pawan Kumar Gupta (2024) . Analysing the Dynamic Interrelationship Between Nifty-Fifty and Sectoral Indices Daily Returns of the National Stock Exchange. Globsyn Management Journal.