An Analytical Study on Stock Market Returns in India Measuring Impact of Corporate Earnings and Financial Leverage

Abstract

This research work pertains to some of the most reputed companies which are even referred to as the backbone of Indian economy. The current study is extremely relevant in the domain of comprehending and identifying the factors that could impact the stock prices and the successive stock market returns for the stocks listed on the most important market index in India.The study basically revolves around some prominent components which are corporate earnings, financial leverage, stock prices, stock market returns and Nifty 50 stock exchange. This study aims to find the relationship between given parameters pertaining to top-10 stocks based on market capitalization for a time period from 2010 to 2019 listed on Nifty 50. The study attempts to examine the impact of corporate earnings and financial leverage on the stock market prices and eventually the stock market returns. Hypothesis was accordingly formulated and tested using analytical techniques such as multiple regression. The research design followed in the study is of conclusive research as well as causal research. Study is based on the financial data provided by the companies and the stock market. The results of the study clearly show that there is statistically significant impact on variable basis for different companies.The hypothesis testing clearly leads to the conclusion that independent variables document an uneven impact on the dependent variable from one company to another. Majority of the firms in the study documented a statistically significant role played by the corporate earnings over the stock prices. Majority of firms in the study did not exhibit significant impact of the leverage over the stock market prices of the firms as well as stock market returns. Also, majority of the firms exhibited insignificant role played by the corporate earnings over the stock market returns. The study attempts to fill in various research gaps by covering the recent data and variables such as profitability and financial leverage. Also, it has provided fresh insights in