Financial Performance Drives Market Performance-An Evidence from Indian Industries

The use of technical analysis enables the practitioners such as investors, financial analysts, and traders, to formulate a basic trendline, to help identify how the prices of the stocks would change. Fundamental analysis, on the other hand, uses the resources provided by the company’s financial reports such as annual growth, Revenue, and expenses etc., to provide evidence of price fluctuation in the near future. The paper aims to understand the trends in the market fluctuation of three major sectors of the Indian market. The paper investigates the dependence of the change in the market price of a share due to factors such as Eps and Profit. A correlation analysis is carried out to understand the extent to which the earnings per share and the profits of the company affect the average prices of the same company. Overriding the significance of the correlation between the factors a regression analysis is also conducted to identify the association between the prices and EPS/Profit. Further, a regression analysis is conducted to analyze the relationship between Average Price of a share and the following factors: Dividend Paid per share, Dividend Yield per Share, Book value of the share, EPS, Profit and Return on Equity