Relationship between Nifty 50 and United Breweries Limited (UBL)
Author: Umar Shaikh Suhail – 102
Introduction
United Breweries Limited (UBL) is one of India’s leading beverage companies and the flagship company of the UB Group. It is best known for its flagship brand Kingfisher and holds a dominant position in the Indian beer market. With a strong distribution network and brand presence, UBL plays a significant role in the FMCG and alcoholic beverage sector.
This report analysis UBL’s stock performance and examines its sensitivity to the broader market index (Nifty 50), helping understand how closely the company’s stock moves with market fluctuations.
Objective: To calculate Beta and observe its significance.
Literature review:
1. Market Sensitivity and Consumer Goods Sector
Studies suggest that companies in the FMCG and beverage sector often show relatively stable demand patterns, but their stock performance can still be influenced by macroeconomic conditions and market sentiment. Compared to IT or banking sectors, their beta may vary depending on consumer spending cycles.
2. Risk-Return Relationship in NSE Stocks
Research indicates that stocks with beta greater than 1 are more volatile than the market and suitable for investors with higher risk appetite. Conversely, stocks with beta less than 1 are considered defensive. Understanding beta helps investors align their investment strategies with market movements.
Data Collection:
Data for Nifty 50 and United Breweries Limited (UBL) was downloaded from nseindia.com for the period 01/01/2025 to 31/12/2025.
- Weekly (Friday) closing prices were considered
- Weekly returns of Nifty 50 were taken as X
- Weekly returns of UBL were taken as Y
- Regression analysis was performed with Y regressed on X
Data Analysis:
Regression Equation:
y=a+bx
- Regression Equation:
y=-0.18+1.22x
|
N |
48 |
|
R square |
0.31 |
|
F |
21.80 |
|
P- value |
1.2E-05 |
|
t Stat |
4.67 |
|
B |
1.22 |
The above Equation shows the relationship between Nifty 50 and United Breweries Limited. Positive means their Direct relation which means if Nifty 50 stock rises United Breweries Limited stock rise and vice versa. If Nifty 50 stock increases by 1 unit, the United Breweries Limited stock increases by 1.22 unit. Number of observations is 48. t-stat for beta 4.67. The P value is 1.2E-05 less than 0.05 meaning Beta is statistically significant at 5% level. No. of observations are 48. R square is 0.31 meaning 31% of United Breweries Limited Returns is explained by Nifty 50 Returns 69% is the error due to the variable not included in model. F is 21.80 and P value of which 1.2E-05 less than 0.05 meaning Beta is statistically significant at 5% level.
Conclusion:
B > 1, Hence UBL is more volatile than market, invest for short term if Nifty 50 rise.
References:
Kumar, S., & Bansal, R. (2022). A study on the risk and return analysis of FMCG sector stocks in India. International Journal of Management and Commerce Innovations, 10(2), 45–52.
Sharma, V., & Gupta, A. (2021). Beta analysis and volatility of selected stocks listed on NSE. International Journal of Research in Finance and Marketing, 11(4), 23–30.