Author
Vasundhara
Introduction
Vodafone Idea Limited is one of the major telecommunications companies in India, providing mobile voice and data services across the country. The company was formed after the merger of Vodafone India and Idea Cellular. It operates in a highly competitive and capital-intensive telecom industry. The share price of Vodafone Idea is influenced by market conditions, economic factors, and investor sentiment. Since the company is listed on the stock exchange, its stock performance is closely linked to the overall market movements represented by the NIFTY 50 index. Studying this relationship helps in understanding the systematic risk of the company.
Objective
The objective of this study is to calculate the beta of Vodafone Idea Ltd. and observe its significance in relation to the NIFTY 50 index.
Literature Review
Literature Review 1
Sharpe (1964) introduced the concept of beta as a measure of systematic risk. According to the study, beta explains how sensitive a stock’s return is to movements in the overall market. A higher beta indicates higher volatility, while a lower beta indicates lower market risk. This concept is widely used by investors to assess risk and expected return.
Literature Review 2
Bodie, Kane, and Marcus (2018) explained that stocks with higher beta values tend to react more strongly to market changes. The study highlights that regression analysis is an effective statistical tool to measure the relationship between stock returns and market returns and to estimate beta.
Data Collection
The data for Vodafone Idea Ltd. and NIFTY 50 was collected from the NSE India website for the period from 1st December 2024 to 30th November 2025. Friday closing prices were selected to ensure consistency. Weekly returns of NIFTY 50 and Vodafone Idea Ltd. were calculated. Weekly returns of NIFTY 50 were taken as the independent variable (X) and weekly returns of Vodafone Idea Ltd. were taken as the dependent variable (Y). The beta value was estimated by regressing Y on X.
Data Analysis
Regression Equation:
Y = –0.182 + 1.47X
Where:
X = Weekly return of NIFTY 50
Y = Weekly return of Vodafone Idea Ltd.
Regression Results:
N = 48
R² = 0.39
F-statistic = 30.45
p-value = 0.0003
The regression equation shows a positive relationship between Vodafone Idea Ltd. returns and NIFTY 50 returns. The beta coefficient is 1.47, which indicates that the stock is more volatile than the market.
If NIFTY 50 increases by 1 unit, the return of Vodafone Idea Ltd. increases by approximately 1.47 units. The p-value is less than 0.01, indicating that beta is statistically significant at the 1% level. The R² value of 0.39 shows that 39% of the variation in Vodafone Idea’s returns is explained by market movements, while the remaining 61% is due to other factors not included in the model. The F-statistic confirms that the regression model is statistically significant.
Conclusion
Since the beta value of Vodafone Idea Ltd. is greater than 1, the stock is highly sensitive to market movements. Therefore, Vodafone Idea Ltd. is suitable for short-term investment when the NIFTY 50 is expected to rise, though it involves higher risk due to greater volatility.
References
Sharpe, W. F. (1964). Capital asset prices: A theory of market equilibrium under conditions of risk. The Journal of Finance, 19(3), 425–442.
Bodie, Z., Kane, A., & Marcus, A. J. (2018). Investments (10th ed.). McGraw-Hill Education.