Title:
A Study on Relationship between Market Returns (NIFTY 50) and Stock Returns of Rail Vikas Nigam Limited and its Significance
Author:
Rehan Siddiqui (53)
Introduction:
Rail Vikas Nigam Limited is a public sector enterprise under the Ministry of Railways, Government of India. It is responsible for implementing railway infrastructure projects such as track doubling, electrification, and new railway lines. The company plays an important role in the development of the railway network in India. Being listed on the NSE, its stock performance reflects both company growth and market conditions.
Objective:
Calculation of Beta and observe its Significance
Literature Review:
According to William F. Sharpe, beta is a measure of systematic risk that indicates how a stock responds to market movements. It is widely used in financial analysis and investment decisions.
As stated by Eugene F. Fama, stock returns are influenced by market factors, and regression analysis helps in understanding the relationship between individual stock returns and market returns.
Data Collection:
Data for Nifty 50 and my company “Rail Vikas Nigam Limited” was downloaded from NSE India.com for the period 1-1-2025 to 31-12-2025 Friday closing prices for Nifty 50 and my company was segregated weekly and my company were calculated weekly returns of Nifty 50 was taken as X and weekly returns of my company was taken Y. Y was taken as regress.
Data Analysis:
Regression Equation
N = 48, F = 60.45, p = 0.00, x = 0.7714, R² = 0.57, Y = 0.0013 + 1.18X
Interpretation
The above equation shows the relationship between market return and company return. The positive sign of beta indicates that there is a direct relationship between NIFTY and the stock of Rail Vikas Nigam Limited, which means if market rises the company return also rises and vice versa.
If NIFTY return increases by 1 unit, the return of the company will increase by 1.18 units. Number of observations are 52. The value of β (Beta) is 1.18.
The p-value is less than 0.05 which means beta is statistically significant at 5% level. R² is approximately 0.62 which means 62% of variation in company return is explained by market return and 38% is due to other factors not included in the model.
Thus, the model is significant and there is a strong positive relationship between NIFTY and the company’s returns.
Conclusion:
Since beta is more than 1, it means the stock is suitable for short term investment when NIFTY rises.
References:
Sharpe, W. F. (1964). Capital Asset Pricing Model. Journal of Finance.
Fama, E. F. (1970). Efficient Market Hypothesis. Journal of Finance.
National Stock Exchange of India – Historical Market Data.