Report: Relationship between Nifty 50 and PB Fintech
Author: Poonam Dwivedi (61)
Introduction:
PB Fintech Limited is the parent company of India’s leading online insurance platform, Policybazaar, and credit comparison portal, Paisa bazaar. As a major player in the Indian fintech ecosystem, the company represents the digital financial services sector. This report analyzes PB Fintech’s stock performance and its sensitivity to the broader market index (Nifty 50).
Objective:
to calculate the (β) of PB Fintech and observe its significance.
Literature Review:
Sharpe (1964): In the Capital Asset Pricing Model (CAPM), Beta serves as a measure of a security’s volatility relative to the market as a whole.
Fama & French (1992): Their research indicates that while Beta is a key risk factor, other variables also influence the cross-section of expected stock returns.
Data Collection:
Data for Nifty 50 and PB Fintech was downloaded from nseindia.com.
Period: 01-jan-2025 to 31-Dec-2025
Data Manipulation: The data was filtered to obtain Friday closing prices for both Nifty 50 and PB Fintech.
Variables: Weekly returns were calculated. Returns for Nifty 50 are designated as X and returns for PB Fintech as Y.
Methodology: A simple linear regression was performed where Y was regressed on X.
Data Analysis:
Based on Summary Output:
Intercept (α): 0.3604
β (β / X Variable 1): -0.1218
P-value: 0.7648 (Note: Since P > 0.05, the relationship is not statistically significant).
1. Equation
The regression equation is:
Y = 0.3604 – 0.1218(X)
Description:
The regression analysis was conducted using the weekly returns of PB Fintech as the dependent variable (Y) and Nifty 50 as the independent variable (X). The Summary Output reveals a Multiple R of 0.0443, indicating a very weak correlation between the stock and the market index. The Coefficient of Determination (R^2) is 0.0019, which implies that only 0.19% of the variation in PB Fintech’s returns can be explained by market movements. Furthermore, the P-value of 0.7648 is significantly higher than the standard 0.05 threshold, suggesting that the relationship is not statistically significant. The calculated Beta (beta) of -0.1218 shows a slight inverse relationship with the market during this specific period.
Conclusion:
The calculated Beta for PB Fintech is -0.1218, β is negative, ignore this company.
Reference:
1.Sharpe, W. F. (1964). Capital Asset Pricing: A Theory of Market Equilibrium. Journal of Finance.
2.Fama, E. F., & French, K. R. (1992). The Cross-Section of Expected Stock Returns. Journal of Finance.