Factors Affecting the Stock Price Movement: A Case Study on Dhaka Stock Exchange

Abstract

Stock market is the mirror of the economy of any country. The strength of the economy reflects in the stock market numeric value. After crisis and fall down in different time over years Bangladesh Stock Market is going to settle in a slow speed. Investors are hoping a strong stock market and management beyond political influential and invincible hands. There may exist hundred or thousand causes and events to bring effect on stock price in the capital market of Bangladesh. The study has selected 17 variables which appear to be effective for the movement of stock price in Bangladesh capital market. From the 17 variables through SPSS dimension reduction (or factor analysis) the study got 5 core factors which affect the stock price. The obtained factors are: Industry Performance, Market Influences, Company Performance, Investor Decision, and Financial Consideration. Also to see the effect of selected variable on stock price movement, one variable – EPS is tested with stock price to see the effect. The result came that EPS is highly correlated to stock price movement in the capital market. As we have got different factors can affect the stock price movement. But investor should protect himself from the bad result of these factors. For this, before and after in stock market business the investors should consider about three main things which are acknowledged fully with company information & performance, risk management and continuous monitoring of stock performance.

Keywords: Dhaka Stock Exchange, Fundamental factors, Ideal Price of Stock, EPS, Stock Price, Stock Price Movement.