Title: Relationship between NIFTY 50 and TATA Consumer Products
Author:
Tanvi Jadhav (69)
Introduction:
Tata Consumer Products is a leading company in India’s fast-moving consumer goods (FMCG) sector. It offers a wide range of products including tea, coffee, and packaged foods. The company has a strong presence in both domestic and international markets. Its stock performance is influenced by overall market movements such as NIFTY 50.
Objective:
To calculate beta and observe its significance between NIFTY 50 and Tata Consumer Products.
Literature Review:
Eugene F. Fama (1970), analyzed that stock prices reflect all available market information, and therefore individual stocks tend to move in line with overall market trends. In the case of Tata Consumer Products Ltd., being part of the NIFTY 50 indicates that its returns are influenced by general market movements. However, as a consumer goods company, it often shows stable performance with lower volatility, suggesting that while market trends impact its returns, the effect is relatively moderate compared to cyclical stocks.
Sharma and Banerjee (2015) analyzed that while market influence is strong, sector-specific factors also play a key role in determining stock performance. For Tata Consumer Products, factors such as consumer demand, pricing power, and raw material costs significantly affect returns. Thus, the company’s performance is shaped by both market trends and industry-specific dynamics, leading to consistent long-term growth..
Data Collection:
Data for NIFTY 50 and Tata Consumer Products was downloaded from NSE India.Com site for the period 01-01-2025 to 31-12-2025. The data was manipulated to obtain Friday closing price nifty 50 and TATA Consumer Products weekly returns were calculated. Weekly return of NIFTY 50 is taken as X and Tata Consumer Products as Y. Y is regressed on X.
Data Analysis:
Equation:
N = 48, F = 7.22, P-value = 0.01, R Square = 0.14, X = 0.57
Y = 0.40 + 0.57X
- Description:
The equation above shows the relationship between Market Return (X) and the return of Tata Consumer Products (Y). The R Square value is 0.14, which means 14% of the variation in Tata Consumer Products’ returns is explained by market returns, while the remaining 86% is due to other factors not included in the model. The F value is 7.22 and the p-value is 0.01, which is less than 0.05. This means the model is statistically significant at the 5% level. The p-value of the coefficient is also 0.01, which indicates that market return has a significant impact on Tata Consumer Products’ return. intercept is 0.40, which means if market return is zero, the company’s return will be 0.40 units. The coefficient of market return (Beta) is 0.57, which means for every 1 unit increase in market return, the company’s return increases by 0.57 units. The number of observations is 48.
Conclusion:
Beta is less than 1, so the stock is less volatile than the market. Invest in this company for long-term investment.
Reference:
1. Fama, E. F. (1970). Efficient capital markets: A review of theory and empirical work. The Journal of Finance, 25(2), 383–417.
2. Sharma, R., & Banerjee, S. (2015). Stock market behavior and sectoral influence in India. International Journal of Financial Studies, 3(4), 120–135.