Stock Price Volatility of NSE Thematic Consumption Index: An Econometric Analysis

Abstract

Had the Indian economy were a person, its income in 2020-21 and 2021-22 would be much less than what it was in 2019-20. This is what the recent World Bank predictions says. There is vast, perhaps unparalleled, economic pain ahead. The World Bank released its Global Economic Prospects report in the second week of June, expecting India’s gross domestic product (GDP) to contract by 3.2% in 2020-21. A moderate recovery growth is expected from 3.1% in 2021-22. India is not the only country which will face this quandary. As per the statistics, generally March and April each contributes to the sales turnover of 12% every year, but March 2020 has witnessed a downfall of 55% year on year amidst the corona- induced lockdown. Undoubtedly, the pandemic has a tremendous impact on these, but the industry certainly needs to cope us with the current situation and some key transitions should be made in their approach to sales, logistics, marketing to customer service. So, as an investor we need to know how the consumption market was just before the Covid-19 hit the Indian premise. The consumption industry is further segregates into durable, non-durable goods and services industry. This paper compares the price volatility of the stock prices of three firms who are into consumer goods with its related NSE Nifty consumption index. Data has been taken from NSE website and the time period of the study is 2015-2019. The data has further been treated with time series analysis using multiple regression which tries to test whether there is any connect between the trends of the stock prices of firms vis-à-vis the Nifty index of the sector. The study also attempts to identify patterns between the regressor and the regressands.