Title: Relationship between Nifty 50 and Nesco.ltd
Author: Nabhaneel Pradeep Karambat. (0225077)
Introduction:
Nesco Limited is a Mumbai-based diversified company established in 1939 as New Standard Engineering Company Ltd.
It has evolved from an engineering firm into a multi-business enterprise.
The company operates across real estate, exhibitions, hospitality, and engineering services. Its key divisions include Nesco Realty, Indabrator, Nesco Foods, and exhibition services. A major asset is the Bombay Exhibition Centre, one of India’s largest private exhibition venues. Overall, Nesco plays a significant role in India’s commercial infrastructure and event ecosystem.
Objective:
To calculate Beta and observe its significance.
Literature Review:
1. Beta as a Measure of Systematic Risk
William F. Sharpe (1964) introduced the Capital Asset Pricing Model (CAPM), where Beta was explained as an important measure of risk. In simple terms, Beta shows how much a stock’s price moves compared to the overall market. Sharpe suggested that stocks with higher Beta are riskier but also have the potential to give higher returns. This idea helped investors understand how risk and return are connected, making Beta a widely used tool in investment and portfolio decisions (Sharpe, 1964).
2. Limitations of Beta in Explaining Returns
Eugene F. Fama and Kenneth R. French (1992) studied whether Beta alone can explain stock returns. They found that while Beta is useful, it does not give the complete picture. Other factors like company size and market value also affect returns. Even with these findings, Beta is still considered an important indicator of market risk and is commonly used by investors and researchers in financial analysis (Fama & French, 1992).
Data Collection:
Data for Nifty 50 and Nesco Ltd. was downloaded from nseindia.com for the period 1-1-25 to 31-12-25. The data was manipulated to get Friday Closing Prices of Nifty 50 and Nesco Ltd . Weekly Returns were calculated. Weekly Returns of Nifty 50 were named as Y and Weekly Returns of Nesco Ltd were named as X. Then X was regressed on Y.
Data Analysis:
y= 0.39+0.76x
|
N |
48 |
|
R square |
0.09 |
|
F |
4.48 |
|
P- value |
4.00E-02 |
|
t Stat |
2.12 |
|
B |
0.76 |
The above Equation shows the relationship between Nifty 50 and Nesco Ltd. Positive means their Direct relation which means if Nifty 50 stock rises Nesco Ltd stock rise and vice versa. If Nifty 50 stock increases by 1 unit, the Nesco Ltd stock increases by 0.76 unit. Number of observations is 48. t-stat for beta 2.12. The P value is 4.00E-02 less than 0.05 meaning Beta is statistically significant at 5% level. No. of observations are 48. R square is 0.09 meaning 09% of Nesco Ltd Returns is explained by Nifty 50 Returns 91% is the error due to the variable not included in model. F is 04.48 and P value of which 4.00E-02 less than 0.05 meaning Beta is statistically significant at 5% level.
Conclusion:
B<1, Hence invest for long term.
Reference:
§ Fama, E. F., & French, K. R. (1992). The cross‐section of expected stock returns. Journal of Finance, 47(2), 427–465.
https://doi.org/10.1111/j.1540-6261.1992.tb04398.x
Sharpe, W. F. (1964). Capital asset prices: A theory of market equilibrium under conditions of risk. Journal of Finance, 19(3), 425–442.
https://doi.org/10.1111/j.1540-6261.1964.tb02865.x