Title: Relation of Nifty 50 with Panama Petrochem Ltd.
Author: Priyam Mohan Kusundal – 24
Introduction:
This study examines the relationship between the performance of the Nifty Fifty index and the stock returns of Panama Ltd. The objective is to analyze how movements in the overall market influence the returns of Panama Petrochem Ltd. For this purpose, secondary data on daily or monthly returns of both Nifty Fifty and Panama Ltd is collected and analyzed using regression analysis. The methodology helps estimate the beta value and determine the extent to which market fluctuations affect the company’s stock performance.
Objective: Calculation of Beta and observe it’s significance
Literature review:
William F. Sharpe (1964) explained through the Capital Asset Pricing Model that the expected return of a stock depends on its systematic risk (beta) in relation to market movements.
Eugene F. Fama and Kenneth R. French (1992) found that beta alone cannot explain stock returns completely and suggested that other factors like firm size and book-to-market ratio also affect stock performance.
Data collection:
Data for Nifty 50 and Panama Petrochem Ltd was downloaded by Nseindia.com for the period 1/1/2025 to 31/12/2025 Friday closing price for Nifty 50 and Panama Petrochem Ltd were calculated. Weekly returns of Nifty 50 were taken as X and Weekly return of Panama Petrochem Ltd were taken as Y. Y was regressed on X.
Data Analysis:
Y = 0.6489 + 0.0050X
N = 48 R Square = 0.00000276 F = 0.000126
P = 0.991063 B = 0.0050 T-Stat = 0.01126
The above Equation shows the relationship between NSE and Panama Petrochemicals. Positive means their Direct relation which means if NSE stock rises Panama Petrochemicals stock rise and vice versa. If NSE stock increases by 1 unit, the Panama Petrochemicals stock increases by 0.0050 unit. Number of observations is 48. T-stat for beta is 0.01126. The P value is 0.991063 more than 0.05 meaning Beta is not statistically significant at 5% level. R square is 0.00000276 meaning almost 0% is explained by the model and the rest is due to other variables not included in model. F is 0.000126 and P value is 0.991063 more than 0.05 meaning Beta is not statistically significant at 5% level.
Conclusion:
B < 1 , Hence not advisable to invest based on this relationship.
Reference:
Fama, E. F., & French, K. R. (1992). The cross-section of expected stock returns. Journal of Finance, 47(2), 427–465.
Sharpe, W. F. (1964). Capital asset prices: A theory of market equilibrium under conditions of risk. Journal of Finance, 19(3), 425–442.