Relationship of NIFTY 50 with Avenue Supermarts Limited (DMart).
Author: Ajinkya P. Sherki
Introduction
Avenue Supermarts Limited is an Indian retail company best known for operating the DMart chain of supermarkets. Established in 2002 and headquartered in Mumbai, the company follows a low-cost, high-efficiency business model to offer products at competitive prices. It primarily deals in food, groceries, apparel, and household essentials, catering to value-conscious consumers. Avenue Supermarts has demonstrated strong financial performance and steady expansion, making it a significant player in India’s organized retail sector. Its consistent growth has also attracted investor attention, linking its stock performance with broader market indices like the NIFTY 50.
Objective: Calculation of β (Beta) of Avenue Supermarts Limited and its significance.
Literature Review
Sharpe (1964) explains through the Capital Asset Pricing Model (CAPM) that beta measures the sensitivity of a stock’s return to market movements. It establishes that higher beta stocks are more responsive to changes in market indices like NIFTY 50.
Gupta and Sehgal (2015) found that stock returns in the Indian market are significantly influenced by benchmark indices, highlighting the importance of beta in understanding systematic risk. Their study supports the use of regression analysis to measure the relationship between individual stocks and market indices.
Data Collection
Data for NIFTY 50 and Avenue Supermarts Limited was downloaded from nseindia.com for the period 01-01-2025 to 31-01-2025. Closing prices for NIFTY 50 and the company were segregated. Weekly returns of NIFTY 50 and the company were calculated. Weekly returns of NIFTY 50 were taken as X and weekly returns of the company were taken as Y. Y was regressed on X.
Data Analysis
Equation: -0.3042+1.4223X
N = 49; R square = 0.3751; F = 28.2098;
P-value = 2.92×10-6; β = 1.4223; t-stat = 5.3113
The above equation shows the relationship between NIFTY 50 and Avenue Supermarts Limited, there is positive relationship, which means if NIFTY 50 rises, Avenue Supermarts Limited rises and vice-versa, if NIFTY 50 rises by 1 unit the Avenue Supermarts Limited will rise by 1.422 units. Number of observations is 49, t-stat for beta is 5.311, the P-value for which is 2.91505E-06, which is less than .05, meaning beta is statistically significant at 5% level means NIFTY 50 impacts at 5% level. R square is 0.375, meaning 37.5% of Avenue Supermarts Limited is explained by NIFTY 50. 62.5% is the error due to the variables not included in the model. F is 28.2098, and the P-value is 2.91505E-06 which is less than .05 it means overall the model is statistically significant at 5% level.
Conclusion
Invest for short-term, if NIFTY 50 is rising.
References
Gupta, O. P., & Sehgal, S. (2015). Market risk and return: Evidence from Indian stock market. Asian Economic Review, 57(2), 211–230.
Sharpe, W. F. (1964). Capital asset prices: A theory of market equilibrium under conditions of risk. The Journal of Finance, 19(3), 425–442.