Relationship Between Nifty 50 and Senco Gold Ltd
Author: Shivam Ingle (67)
Introduction:
Senco Gold Ltd is a leading jewelry retailer in India, offering gold, diamond, and precious stone jewelry. Established in 1994, it has a strong presence, especially in eastern India. The company is known for combining traditional craftsmanship with modern designs. It focuses on quality, customer trust, and continuous growth in the jewelry market.
Objective: To calculate Beta and Observe its significance.
Literature review:
1. Beta Stability in Indian Market
Sathyanarayana & Harish (2018) state that Beta is used to measure the sensitivity of stock returns to CNX Nifty 50 movements. The study shows that Beta values are not stable over time, indicating that systematic risk in the Indian stock market changes with market conditions.
2. Market Influence on Stock Returns
Sinha & Pan (2007) explain that stock returns in the Indian market are influenced by overall market movements, showing strong interdependence among stocks. This supports the use of Beta as a measure of systematic risk using indices like Nifty.
Data Collection:
Data for Nifty 50 and Senco Gold 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 Senco Gold Ltd. Weekly returns were calculated. Weekly returns of Nifty 50 are named as X and weekly returns of Senco Gold Ltd are named as Y. Y was regressed on X.
Data Analysis:
N (Observations): 48
Intercept (α): -2.18
Beta (β / X Variable 1): 1.09
t Stat (β): 1.31
Adjusted R Square: 0.02
F: 1.72
P-value: 0.20 (Note: Since P > 0.05, the relationship is not statistically significant)
The regression equation is:
Y = -2.18 + 1.09(X)
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 1.09, 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 (1.09) indicates that for every 1 unit increase in NIFTY return, the company return increases by approximately 1.09 units. Since the beta value is greater than 1, it shows that Senco Gold Ltd is more volatile and riskier compared to the market, and its movements are larger than the overall market movements. The intercept value is -2.18, which represents the expected return of the company when the NIFTY return is zero.
The R² value is 0.04, which means that approximately 4% of the variation in the company returns is explained by the variation in NIFTY returns, while the remaining 96% is influenced by other factors.
The p-value of the regression model is 0.20, which is greater than 0.05. This indicates that the model is not statistically significant, and the relationship between NIFTY returns and company returns is not meaningful.
Conclusion:
The Beta value of Senco Gold Ltd is greater than 1 (β = 1.09), meaning invest in Senco Gold Ltd for short term.
References:
Sathyanarayana, S and Harish, S. N., An Empirical Study on Stability of Beta in Indian Stock Market with Special Reference to CNX Nifty 50 (June 6, 2018). The IUP Journal of Financial Risk Management, Vol. XIV, No. 1, March 2017, pp. 16-35.
Sinha, Sitabhra and Pan, Raj Kumar, Uncovering the Internal Structure of the Indian Financial Market: Cross-correlation Behavior in the NSE (April 17, 2007). arXiv Working Paper No. 0704.2115.