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Influence of Financial Performance Indicators on Market Price of Shares of Nifty 50 Companies

Investing in equity shares is like taking a risk and investors seek those financial indicators and measures that have significant impact on share price to take investment decisions. Past studies have used various financial performance indicators and economic variables and have made an effort to define their relationship with on market price of equity shares. However they do not seem to have any consensus and are in some cases contradictory as well. The key objective of this study was to assess whether financial performance indicators of Nifty 50 stocks have a significant impact on the stock market price per equity shares. The financial performance indicators used were; Return on Investment (ROI), Return on Assets (ROA), Return on Equity (ROE) and Earnings per Share (EPS). The study used the Bloomberg terminal to get secondary data of both dependent and independent variables of Nifty 50 stocks. Result of the Pearson’s Correlation revealed a very strong and positive correlation of EPS and market share price. ROA, ROI and ROE unveiled a weak correlation with market share price. Multiple regression analysis explained 76.5% of the change in market share price was due do the chosen variables.

 

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Author: Khushboo Vora

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