An Empirical Analysis on Equity Share Price Determinants of Banking Stocks Public and Private Sector Listed in Stock Exchange

Abstract

The determinants of share prices are frequently a topic of debate. Economists and Investors hold different views as far as the pricing of a share is concerned. In an efficient market, share prices would be determined primarily by fundamental factors. Understanding the impact of various fundamental variables on share price movements is very much helpful to investors in taking profitable investment decisions. Besides, the Indian economy is an emerging economy. Understanding external factors affecting share markets, acts as a tool that investors must use to time the market. There are complex interrelated external factors affecting share market prices. Investors must be aware of the external factors that affect share markets. These factors interact deeply with the stock markets. As a result, market tend to under-perform or over-perform. The present study is an attempt to find out the relationship between Market Price of share and fundamental ratios and market price of the shares and economic variables. It focuses on studying and analysing the impact of bank specific intrinsic factors (Dividend per share, earning per share, price to earnings ratio, dividend yield, dividend pay-out ratio, book value, return on net worth, size i.e. deposits and Non-performing assets.) and the impact of the most important macro-economic factors (GDP, industrial production, inflation, interest rates, crude oil prices, exchange rate fluctuations and foreign institutional investments) on the stock prices of the selected banking stocks both public and private sectors listed in stock exchange during a 12 year study period i.e. from 2006-07 financial year to 2017-18 financial year. newline