How Do the Stocks React to Analysts’ Recommendations?

National Conference on Innovative Business Management Practices: Technology Enabled Learning Trends in 21st Century” on 21st & 22nd December 2018. ISBN: 978-93-88237-55-0.

12 Pages Posted: 7 Jun 2019

See all articles by Dr. Divyang Joshi

Dr. Divyang Joshi

Parul Institute of Management and Research, Parul University

Devang Parmar

affiliation not provided to SSRN

Date Written: December 23, 2018

Abstract

The purpose of this article is to study the impact of analysts’ recommendation on stock prices and to study whether profitable investment strategies could be designed or not. The impact of analysts’ recommendations to buy, sell and hold the stocks were studied. The Economic Times (print news paper) publish stocks’ recommendations of leading research houses/brokerage houses. The analysts give calls to buy, sell and hold the Indian stock. The performances of total 1178 research calls of 361 companies were analysed. The performance of buy, sell and hold calls were compared and analysed. The abnormal return of the stocks during analysts’ recommendations was measured for the all stocks. The impact of recommendations on volume was also analyzed. The study found that, sell calls offered higher AAR returns compared to the buy or hold calls.

Keywords: Analysts’ Recommendations, Abnormal Return, EMH, Event Study

JEL Classification: G02

Suggested Citation

Joshi, Dr. Divyang and Parmar, Devang, How Do the Stocks React to Analysts’ Recommendations? (December 23, 2018). National Conference on Innovative Business Management Practices: Technology Enabled Learning Trends in 21st Century” on 21st & 22nd December 2018. ISBN: 978-93-88237-55-0.. Available at SSRN: https://ssrn.com/abstract=3392263

Dr. Divyang Joshi (Contact Author)

Parul Institute of Management and Research, Parul University ( email )

14 C SHIVAM TENEMENTS
OPP GOVARDHAN TWONSHIP GATE 2
BARODA, 390019
India

Devang Parmar

affiliation not provided to SSRN

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