Title: Relationship between Nifty 50 & NTPC Limited
Author: Neha Wadekar – 108
Introduction:
NTPC Limited (National Thermal Power Corporation) is India’s largest integrated power utility, established in 1975 under the Government of India. It plays a crucial role in electricity generation, contributing a significant share to the nation’s total power supply. The company operates across the entire energy value chain, including thermal, hydro, renewable energy, and coal mining. NTPC continues to drive India’s energy security and economic growth.
Objective: To calculate Beta and observe its significance
Literature Review:
1. According to Bodie, Kane, and Marcus (2014), individual stocks are influenced by overall market movements, which can be measured using beta. In the context of the Indian stock market, companies like NTPC Ltd. show a positive relationship with the NIFTY 50 index. This means that changes in the market index tend to affect the returns of NTPC. A positive beta indicates that NTPC moves in the same direction as the market.
2. Gupta and Basu (2019) stated that stocks in the energy sector, including NTPC Ltd., have a positive correlation with broader market indices like NIFTY 50. Their study also highlighted that sector-specific factors influence stock performance along with market movements. This suggests that while NTPC is affected by NIFTY 50, industry trends also play an important role in determining its returns.
Data Collection:
Data for Nifty 50 and NTPC Limited was downloaded from nseindia.com for the period 01/01/2025 to 31/12/2025. The data was manipulated to get Friday closing prices of Nifty 50 and your company. Weekly returns were calculated. Weekly returns of Nifty 50 are named as X and weekly returns of your company are named as Y. Y was regressed on X.
Data Analysis–
Equation:
Y= a + bx
a= Intercept
b= Beta
a: 0.294571849
b: 0.792579152
The Regression Equation:
Y = 0.294571849 + 0.792579152x
Description:
The regression equation obtained from the analysis shows the relationship between NIFTY returns (X) and the company returns (Y). The coefficient of X (Beta) is 0.7939, which is positive. This indicates that there is a direct relationship between the NIFTY returns and the company returns. This means that when the market return increases, the company return also tends to increase, and vice versa. The value of beta (0.7939) indicates that for every 1 unit increase in NIFTY return, the company return increases by approximately 0.7939 units. Since the beta value is less than 1, it shows that the company is less volatile and less risky compared to the market, and its movements are smaller than the overall market movements. The intercept value is 0.2665, which represents the expected return of the company when the NIFTY return is zero.
The R² value is 0.2047, which means that approximately 20.47% of the variation in the company returns is explained by the variation in NIFTY returns, while the remaining 79.53% is influenced by other factors.
The p-value of the regression model is 0.00124, which is less than 0.05. This indicates that the model is statistically significant, and the relationship between NIFTY returns and company returns is meaningful.
Conclusion:
Beta is less than 1, Invest in this company for long term investment.
Reference:
1. Bodie, Z., Kane, A., & Marcus, A. J. (2014). Investments (10th ed.). McGraw-Hill Education.
2. Gupta, R., & Basu, P. (2019). Relationship between sectoral indices and stock returns in India. International Journal of Financial Studies, 7(3), 45–52.