Determinants of Equity Share Prices in National Stock Exchange of India: A Panel Data Approach

Abstract

The movement of share price depends upon some indicators that investors consider while making investment decisions. The study aims to analyse the determinants of share prices in National Stock Exchange of India. It covered a period of five years and used panel data approach on twenty-five Nifty representative stocks to establish the determinants of share prices. The data were analysed with the help of MS Excel 2013, stata-13 and SPSS-2 software. The study reveals that 58% of the fluctuations of share prices in India is affected due to the variables like Earnings per Share, Price to Earnings Ratio, Price to Book Ratio, Return on Net Worth, Dividend Per Share, Price to Net Profit Ratio, Profit Before Dividend, Interest and Tax and Gross Domestic Product. The study suggests that investors can make profitable decision by considering the determinants that have a significant bearing on share prices.