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The share price has a profound effect on the company overall: for
example, a declining share price will make it hard to secure credit, attract
further investors, build partnerships, etc. Also, when employees are often
holding stock options, a declining share price can severely dampen
morale. In an extreme case, if the share price plummets too far, the
company can be delisted from the stock market.
There are a larger number of factors that effect stock price. One of the
major factors affecting stock price is demand and supply. The
trend of the stock market trading directly affects the price. When
people are buying more stocks, then the price of that particular
stock increases. On the other hand if people are selling more
stocks, then the price of that stock falls. So, you should be very
careful when you decide to invest in the Indian stock market. In
this study we are trying to analyse the factors that effect to
change in share price which lead us to the research question i.e.
effect of demonetisation on Share price
LITERATURE REVIEW:
Tibebe A. Assefaa,, Omar A. Esqueda b, Andr Varella Mollick(Stock returns and interest
rates around the World)The article examine quarterly stock returns of 21 developed and 19
developing economies from 1999 to 2013. , we find statistically significant negative effects
of interest rates on stock returns in the developed countries, consistent with the expected cash
flow hypothesis. In the developing markets, we find statistically significant negative effects
of interest rates on stock returns in the developed countries, consistent with the expected cash
flow hypothesis. The contrasting effect of interest rates change on stock returns can be
partially attributed to differing monetary policies and to the more mature capital markets
inherent in developed economies.
Chung-Rou Fang , Shih-Yi You(The impact of oil price shocks on the large emerging
countries' stock prices: Evidence from China, India and Russia
) This article investigates how explicit structural shocks that characterize the endogenous
character of changes in oil prices affect three large NIEs' stock-market returns we find that
the impact of oil price shocks on the three large NIEs' stock prices has been mixed. Firstly, as
long as the oil price is not driven by the increasing oil consumption of India, the oil prices
always have a negative impact on India's economy.
Amado Peir(Stock prices and macroeconomic factors: This paper analyses the dependence
of stock prices on macroeconomic variables. Stock prices anticipate movements in production
one year in advance but move simultaneously with interest rates. Future changes in industrial
production and current changes in long-term interest rates account for approximately one half
of stock returns.
RESEARCH QUESTION:
RESEARCH METHODOLOGY