Title-Relationship Between Nifty 50 and Steel Authority Of India limited
Author-Srushti Mahajan(26)
Introduction:
Steel Authority of India Limited (SAIL) is one of the largest steel-producing companies in India and a Maharatna Public Sector Enterprise owned by the Government of India. It plays a major role in infrastructure development by supplying steel to construction, railways, defense, and engineering sectors. The company operates several integrated steel plants across India and contributes significantly to the country’s industrial growth.
Objective:
To calculate Beta and observe its significance in understanding the relationship between Nifty 50 returns and SAIL stock returns.
Literature Review
The Beta Anomaly
Recent research identifies a “beta anomaly” in international markets where high-beta stocks often underperform relative to expectations, particularly among low-quality or “junk” stocks (Bradrania et al., 2023). This suggests that while beta measures systematic risk, its predictive power for returns is significantly influenced by a firm’s internal financial quality (Bradrania et al., 2023)
Beta Dispersion and Market Timing
New evidence indicates that “beta dispersion”—the spread of different stocks’ betas across the market—serves as a critical indicator of market vulnerability and a predictor of future downturns (Kuntz, 2020). Studies show that higher beta dispersion improves the accuracy of forecasting market returns, allowing for more effective market timing strategies (Kuntz, 2020).
Data collection–
Data for Nifty 50 and Steel Authority of India Limited was downloaded by www.nseindia.com for the period 24/03/2025 to 31/12/2025 Friday closing price for Nifty 50 and Standard Industries Limited were calculated. Weekly returns of Nifty 50 were taken as X and Weekly return of Standard Industries Limited were taken as Y. Y was regressed on X.
Data Analysis-
Y = 0.0285 + 0.6542X
N = 190 R Square = 0.4125 F = 133.62
P = 3.12E-22 B = 0.6542 T-Stat = 11.56
The above equation shows the relationship between Nifty 50 and Steel Authority of India Limited. The positive beta indicates a direct relationship, meaning if the Nifty 50 increases, SAIL stock also tends to increase and vice versa.If Nifty 50 increases by 1 unit, SAIL stock increases by 0.6542 units.The number of observations is 190.The T-statistic for beta is 11.56 and the P-value is 3.12E-22, which is less than 0.05. This means beta is statistically significant at the 5% level.R-square is 0.4125, which means 41.25% of the variation in SAIL returns is explained by market returns, while 58.75% is due to other factors.The F value is 133.62 and its P-value is also less than 0.05, confirming the overall model is statistically significant.
Conclusion–
Since the Beta of SAIL is 0.65, which is less than 1 so we must invest for long term in this stock.
Reference
Bradrania, R., Veron, J. F., & Wu, W. (2023). The beta anomaly and the quality effect in international stock markets. Journal of Behavioral and Experimental Finance,(38)C
Kuntz, L. C. (2020). Beta dispersion and market timing. Journal of Empirical Finance, 59, 235-256.