Title: Relation of Nifty 50 with JK Tyre Ltd
Author: Jatin Santosh Patil 37
Introduction:
This study examines the relationship between the performance of the Nifty 50 index and the stock returns of JK Tyre Ltd. The objective is to analyze how movements in the overall market influence the returns of JK Tyre Ltd. For this purpose, secondary data on daily or monthly returns of both Nifty 50 and JK Tyre Ltd is collected and analyzed 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 its significance
Literature review:
William F. Sharpe (1964) explained through the Capital Asset Pricing Model that the expected return of a stock depends on its systematic risk (beta) in relation to market movements.
Eugene F. Fama and Kenneth R. French (1992) found that beta alone cannot explain stock returns completely and suggested that other factors like firm size and book-to-market ratio also affect stock performance.
Data collection:
Data for Nifty 50 and JK Tyre Ltd was downloaded from nseindia.com for the period 1/1/2025 to 31/12/2025. Friday closing prices for Nifty 50 and JK Tyre Ltd were calculated. Weekly returns of Nifty 50 were taken as X and weekly returns of JK Tyre Ltd were taken as Y. Y was regressed on X.
Data Analysis:
Y = 0.4754 + 1.1745X
N = 48 R Square = 0.1512 F = 8.19
P = 0.006295887 B = 1.1745 T-Stat = 2.8631
The above equation shows the relationship between Nifty 50 and JK Tyre Ltd. A positive value means a direct relationship, which means if Nifty 50 rises, JK Tyre stock also rises and vice versa. If Nifty 50 increases by 1 unit, the JK Tyre stock increases by 1.1745 units. Number of observations is 48. T-stat for beta is 2.8631. The p-value is 0.006295887, which is less than 0.05, meaning beta is statistically significant at the 5% level. R square is 0.1512, meaning 15.12% is explained by the model and the rest is due to other variables not included in the model. F is 8.19 and the p-value is 0.006295887, which is less than 0.05, meaning beta is statistically significant at the 5% level.
Conclusion:
B > 1, invest for short term if Nifty 50 is rising.
Reference:
Fama, E. F., & French, K. R. (1992). The cross-section of expected stock returns. Journal of Finance, 47(2), 427–465.
Sharpe, W. F. (1964). Capital asset prices: A theory of market equilibrium under conditions of risk. Journal of Finance, 19(3), 425–442.