Reserach on Stock Market Volatility
1. Introduction
The proposed topic is “A study on impact of stock market volatility on individual investorsinvestment decisions”. This project would give the understanding of the reasons for the volatility in stock markets and its impact on investment decisions of the individual customers.
The study also focuses on the various factors that play role in investment decisions of the individual investors in stock markets.
1.1 Background
Volatility in equity market has become a matter of mutual concern in recent years for investors, regulators and brokers. Stock return volatility hinders economic performance through consumer spending(Kaur, 2002). Stock Return Volatility may also affect business investment spending.
Further the extreme volatility could disrupt the smooth functioning of the financial system and lead to structural or regulatory changes. However, increase in volatility per se is not a problem but increased volatility reflects underlying problems in fundamental forces affecting economic activities and expectations about them. In fact the more quickly and accurately prices reflect the available information; the more efficient would be pricing of securities and thereby allocation of resources. A market in which prices fully reflect available information is called “efficient” where share prices fluctuate randomly around their “intrinsic” values. In this project we will find the various parameters those are taken into consideration by individual investors while investing in stock markets and weather stock market volatility have an impact on investment decisions of the individual investors or not.
1.1.1Indian Stock Market
The Indian stock market is represented by two most prominent stock indices, viz., Bombay Stock
Exchange’s (BSE) Sensitive Index (Sensex) and NSE’s S&P CNX Nifty (Nifty). The Sensex is generally considered to be the bellwether of the Indian stock market. It is the older and the more often quoted index. However, of
The proposed topic is “A study on impact of stock market volatility on individual investorsinvestment decisions”. This project would give the understanding of the reasons for the volatility in stock markets and its impact on investment decisions of the individual customers.
The study also focuses on the various factors that play role in investment decisions of the individual investors in stock markets.
1.1 Background
Volatility in equity market has become a matter of mutual concern in recent years for investors, regulators and brokers. Stock return volatility hinders economic performance through consumer spending(Kaur, 2002). Stock Return Volatility may also affect business investment spending.
Further the extreme volatility could disrupt the smooth functioning of the financial system and lead to structural or regulatory changes. However, increase in volatility per se is not a problem but increased volatility reflects underlying problems in fundamental forces affecting economic activities and expectations about them. In fact the more quickly and accurately prices reflect the available information; the more efficient would be pricing of securities and thereby allocation of resources. A market in which prices fully reflect available information is called “efficient” where share prices fluctuate randomly around their “intrinsic” values. In this project we will find the various parameters those are taken into consideration by individual investors while investing in stock markets and weather stock market volatility have an impact on investment decisions of the individual investors or not.
1.1.1Indian Stock Market
The Indian stock market is represented by two most prominent stock indices, viz., Bombay Stock
Exchange’s (BSE) Sensitive Index (Sensex) and NSE’s S&P CNX Nifty (Nifty). The Sensex is generally considered to be the bellwether of the Indian stock market. It is the older and the more often quoted index. However, of
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