Title: Relationship of Nifty 50 with SBFC Finance Limited
Author: Sathvika Shetty
Introduction:
SBFC Finance Limited is a systemically important NBFC, incorporated in 2008 and headquartered in Mumbai. It focuses on providing secured loans to MSMEs, self-employed individuals, and small entrepreneurs who have limited access to formal credit. The company operates mainly in Tier-II and Tier-III cities across India. SBFC follows a tech-enabled yet relationship-driven lending model. It became a listed company after its IPO in 2023.
Objective:
To calculate Beta of SBFC Finance Limited and observe its significance .
Literature Review:
View 1 K.P. Venugopala Rao; MS Tadi (2024). Evaluations of Factors Affecting Profitability – A Study on Listed NBFC-Ds in India
The non-banking financial company (NBFC) sector forms a crucial part of India’s shadow banking system and has grown significantly due to regulatory reforms and improved prudential norms. Existing studies analyze the profitability of listed NBFCs by examining firm-specific and macroeconomic factors over long periods. Findings indicate that operating income, financing cash flows, lending rates, and capital structure significantly influence NBFC profitability, while high debt–equity ratios negatively impact performance. These insights provide a broad framework to evaluate NBFC performance and enable comparative analysis with market benchmarks such as major stock indices.
View 2 Kamaljit Singh & Vinod Kumar (2020) – Dynamic linkage between Nifty-50 and sectoral indices of national stock exchange
This study examined how the Nifty 50 index and sectoral indices (including financial sector indices, which encompass banking and NBFC-related stocks) moved together. Using correlation and regression analysis, it found significant positive relationships between the Nifty 50 and financial sector indices, indicating that financial stocks (including NBFC-linked firms) tend to move with broader market trends.
Data Collection:
Data for Nifty 50 and SBFC Finance Limited was downloaded from NSEINDIA.COM for the period 01/12/2024 to 30/11/2025. Then Friday closing prices are calculated. Weekly return of Nifty and SBFC Finance Limited were calculated. Weekly Returns of Nifty were taken as “X” and Weekly return of SBFC Finance Limited were taken as “Y”.
Y was Regressed on X.
Data Analysis:
The regression equation is:
SBFC Finance Limited= 1.2620 + 0.1639 Nifty
The above regression equation explains the relationship between the dependent variable(company stock returns) and the independent variable (NIFTY 50 index values) using 49 weekly observations.
· The beta (slope) coefficient of 0.1639 indicates a very weak positive relationship between Nifty 50 weekly returns and the company’s weekly returns. This implies that a one-unit increase in Nifty 50 weekly returns results in only a 0.16 unit increase in the company’s weekly returns, showing low sensitivity to market movements.
· The t-statistic for the beta coefficient is 0.19, with a corresponding p-value of 0.8504, which is much higher than 0.01 conventional significance level. This indicates that the relationship between Nifty 50 weekly returns and the company’s returns is statistically insignificant.
· The R-square value of 0.00078 suggests that less than 1% of the variation in the company’s weekly returns is explained by movements in the Nifty 50 index. This highlights the poor explanatory power of the regression model and suggests that Nifty 50 Returns do not meaningfully explain the company’s return behavior.
Conclusion:
The regression results show a very weak positive relationship between Nifty 50 weekly returns and the company’s returns, as indicated by the low beta value (β = 0.1639). This suggests that the SBFC Finance Ltd. stock is minimally influenced by overall Nifty 50 movements. The positive intercept (1.262) indicates a small expected return even when Nifty 50 returns are zero; however, since it is statistically insignificant, it cannot be relied upon. Overall, the stock’s returns are largely driven by firm-specific factors rather than market performance.
References:
K.P. Venugopala Rao; MS Tadi (2024). Evaluations of Factors Affecting Profitability – A Study on Listed NBFC-Ds in India
Kamaljit Singh & Vinod Kumar (2020) – Dynamic linkage between Nifty-50 and sectoral indices of national stock exchange