REPORT
Title: Relationship between Kotak Mahindra Bank Returns and NIFTY 50 Returns
Author: Kanak Singh
Introduction:
Kotak Mahindra Bank Limited is one of the leading private sector banks in India, offering a wide range of financial services including retail banking, corporate banking, wealth management & investment banking. Established in 1985, the bank has built a strong presence across the country with a focus on customer-centric services. Kotak Mahindra Bank is listed on the NSE & is a constituent of major stock market indices. Due to its strong market position, the stock is widely tracked by investors &analysts.
Objective: To calculate the beta of Kotak Mahindra Bank & examine its significance.
Literature Review:
A. Ungvarsky (2025) explained that the Capital Asset Pricing Model (CAPM) establishes a relationship between expected return and systematic risk, where beta measures the sensitivity of a stock’s return to market movements. The study highlights that beta is an important indicator for investors to assess market-related risk while making investment decisions.
B. Bodie, Kane, and Marcus (2014) stated that beta reflects how strongly a security responds to changes in the overall market and is used to evaluate the risk-return tradeoff of an investment. Their study emphasizes that stocks with higher beta tend to show greater volatility compared to the market portfolio.
Data Collection:
The data for Kotak Mahindra Bank and NIFTY 50 were collected from the official website of NSE India for the period from 1st December 2024 to 30th November 2025. Friday closing prices were selected to compute weekly returns. Weekly returns of NIFTY 50 were taken as the independent variable (X), and weekly returns of Kotak Mahindra Bank were taken as the dependent variable (Y). A total of 48 weekly observations were used. Regression analysis was performed by regressing Y on X.
Data Analysis:
Equation of Y on X:
Y= -0.2371 + 0.8588 (X)
N= 48
R2 = 0.3063
F = 20.31
P-VALUE = 4.498E-05(0.5075556
The above equation shows the relationship between NIFTY 50 returns and Kotak Mahindra Bank returns. The beta coefficient is 0.8588, which indicates a positive relationship between market returns and company returns. This means that when NIFTY returns increase, Kotak Mahindra Bank returns also tend to increase.
The value of beta (0.8588) suggests that if NIFTY returns increase by 1 unit, Kotak Mahindra Bank returns increase by 0.8588 units. Since beta is less than 1, the stock is less volatile than the market.
The T-statistic for beta is 4.5071 and the corresponding p-value is 0.00004498, which is less than 0.01. Hence, beta is statistically significant at the 1% level, indicating a strong relationship between NIFTY returns and Kotak Mahindra Bank returns.
The number of observations (N = 48) represents the total weekly data points used in the study. The R² value is 0.3063, which means that 30.63% of the variation in Kotak Mahindra Bank returns is explained by movements in NIFTY returns, while the remaining 69.37% variation is due to other factors not included in the model.
The F-statistic is 20.31 and the corresponding significance F value is 0.00004498, which is less than 0.01. This indicates that the overall regression model is statistically significant.
Conclusion:
Since the beta value of Kotak Mahindra Bank is less than 1, the stock is less volatile compared to the market.
References:
https://www.ebsco.com/research-starters/business-and-management/capital-asset-pricing-model-capm
https://www.ebsco.com/research-starters/business-and-management/investment-analysis