Stock-Specific Factors and its Influence on Investors’ Sentiment: Evidence from Indian Stock Market

Abstract:     
The investors’ sentiment can be defined as investors’ attitude and opinion towards investing in the Stocks. The aim of this research is to analyse the individual investor’s sentiment. This study also analyses the influence of Stock Specific Factors on investors’ sentiment. The investor’s attitude towards investing is influenced by rumours, intuition, herd behaviour among investors and media coverage of the stock. A sample of 400 Equity Investors in Tamil Nadu, India were chosen for the study. These investors were administered a Structured Schedule, containing pre-validated scales to measure the investor sentiment. Once the constructs were found to be both reliable and valid, the impact of Psychological Factors, Past price performance, Price earnings and familiarity with products, Price earnings and familiarity with products, Recommendation of the financial community, Expected events surrounding the stock and Book Value, Who else is buying, Quality of Management, Financial Characteristics and Price cut off rules were tested by using the Bootstrapping method. The overall Stock Specific Factors did not have much influence on the investors’ sentiment in India.

Number of Pages in PDF File: 19

Keywords: Investors’ Sentiment, Best Game, PLS Path Modeling, Stock Specific Factors, Psychological Factor, Financial Community, Quality of Management

working papers series