An Explicit Model on Fundamental Factors Affecting Stock Prices of BSE Listed Companies in India: An Inter Industry Approach

Abstract

This paper presents an explicit model for the role of fundamental factors in price movement of shares with the annual performance of companies. Studying the fundamental factors which influence the market price and also the performance of the company is a part of any investor before going for investment. The investor should look at the price movements of the particular company over the years and should go for better portfolio. The objective of this paper is to examine inter industry differences with regard to the impact of fundamental factors on stock prices. The study concludes that Book Value, Dividend Per Share and Growth are main determinants of share prices of banking and financial companies. PER, Book Value, COVER and Growth are the important determinants of share prices of Petroleum and Mining companies. PER, Book Value, COVER and DPS are also the significant determinants of share prices of Infrastructure Companies. In case of Metal and Chemical Companies, Book Value, DPS and PER are being the key determinants of share prices. Book Value, ROCE and Earning Per Share are the chief determinants of share prices of IT and communication Companies.

Keywords: Fundamental, Stock Prices, Book Value, DPS, PER, COVER.