Title : Relationship between Nifty 50 and SBI Life Insurance
Author: Soham phadtare (97)
Introduction:
SBI Life Insurance Company Limited is one of the leading life insurance providers in India and a key player in the financial services sector. The company is promoted by State Bank of India and represents the insurance segment of the market.
This report analyzes SBI Life’s stock performance and its relationship with the broader market index, the Nifty 50.
Objective:
To calculate the Beta (β) of SBI Life Insurance and analyze its relationship with market movements.
Literature Review:
- William F. Sharpe (1964): In the Capital Asset Pricing Model (CAPM), Beta measures the sensitivity of a stock’s returns relative to the market.
- Eugene F. Fama & Kenneth R. French (1992): Their study suggests that although Beta is important, other factors also influence stock returns.
Data Collection:
- Source: NSE India (nseindia.com)
- Period: 1-Jan-2025 to 31-Dec-2025
- Data Filtering: Only Friday closing prices were selected
- Variables:
- X = Returns of Nifty 50
- Y = Returns of SBI Life Insurance
Data Analysis:
1. Regression Output (Key Values):
- Intercept (α): 0.54
- Beta (β): 1.10
- R²: 0.35
- P-value (Beta): 0.00
2. Equation:
The regression equation is:
Y = 0.54 + 1.10(X)
3. Interpretation:
- Beta = 1.10
👉 SBI Life is more volatile than the market
👉 If Nifty increases by 1%, SBI Life increases by ~1.10% - R² = 0.35
👉 35% of SBI Life’s movement is explained by the market - P-value = 0.00 (< 0.05)
👉 The relationship is statistically significant ✅
Conclusion:
The Beta of SBI Life Insurance is positive and greater than 1, Invest in this company
for short term
Reference:
· Sharpe, W. F. (1964). Capital Asset Pricing: A Theory of Market Equilibrium.
Journal of Finance.
· Fama, E. F., & French, K. R. (1992). The Cross-Section of Expected Stock Returns. Journal of Finance.