Title: Relation of Nifty 50 with Aditya Birla
Author: Aditya Kapse – 17
Introduction:
This study examines the relationship between the performance of the Nifty Fifty index and the stock returns of Aditya Birla. The objective is to analyze how movements in the overall market influence the returns of Aditya Birla. For this purpose, secondary data on daily or monthly returns of both Nifty Fifty and Aditya Birla is collected and analysed 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) developed the Capital Asset Pricing Model, stating that expected return is based on systematic risk (beta) relative to the market.
This model highlights the direct relationship between risk and return in financial markets.
Stephen A. Ross (1976) proposed the Arbitrage Pricing Theory, suggesting multiple macroeconomic factors impact stock returns.
This theory provides a broader alternative to CAPM by including various risk sources
Data collection:
Data for Nifty 50 and Aditya Birla was downloaded by Nseindia.com for the period 1/1/2025 to 31/12/2025 Friday closing price for Nifty 50 and Aditya Birla were calculated. Weekly returns of Nifty 50 were taken as X and Weekly return of Aditya Birla were taken as Y. Y was regressed on X.
Data Analysis:
Y=1.14+1.70X
N= 48 R Square= 0.34. F= 23.82
P=1.3097E-05 B= 1.70 T-Stat= 4.88
The above Equation shows the relationship between Nifty50 and Aditya Birla. Positive means their Direct relation which means if Nifty50 stock rises Aditya Birla stock rise and vice versa. If Nifty50 stock increases by 1 unit, the Aditya Birla stock increases by 1.70 unit. Number of observations is 48. T-stat for beta is 4.88. The P value is 1.3097E-05 less than 0.5 meaning Beta is statistically significant at 5% level. R square is 0.34 meaning 34% of stock return explained by 66% is the error due to the variable not included in the model. F is 23.82 and P value is 1.3097E-05 less than 0.5 meaning Beta is statistically significant at 5% level.
Conclusion:
B>1, Hence invest for short term if Nifty 50 rise
Reference:
Sharpe, W. F. (1964). Capital asset prices: A theory of market equilibrium under conditions of risk. Journal of Finance, 19(3), 425–442.
Ross, S. A. (1976). The arbitrage theory of capital asset pricing. Journal of Economic Theory, 13(3), 341–360.