Table of Contents

List Of Tables/Illustrations: …………………………………………………………………………………………………….. 5
1) Figure 1.1: Factors Influencing Stock Prices…………………………………………..
Acknowledgements ………………………………………………………………………………………………………………… 7
Chapter 1: Introduction ………………………………………………………………………………………………………….. 9
1.1 Introduction ……………………………………………………………………………………………………………….. 10
1.2 Investor Sentiment and Stock Market Volatility ………………………………………………………………. 10
1.3 Efficient Market Hypothesis ………………………………………………………………………………………….. 11
1.4 The Indian Stock Market ………………………………………………………………………………………………. 12
1.5 Objectives of This Research …………………………………………………………………………………………. 14
1.6 Research Structure ………………………………………………………………………………………………………. 15
1.7 Recipients of the research ……………………………………………………………………………………………. 16
1.8 Scope and Limitations to the research …………………………………………………………………………… 16
Chapter 2: Literature Review: ………………………………………………………………………………………………… 18
2.1 Literature Review ………………………………………………………………………………………………………… 19
2.2 Investor sentiment and the World…………………………………………………………………………………. 19
2.3 The Impact of investor sentiment ………………………………………………………………………………….. 20
2.4 Classical Finance and Investor Sentiment ……………………………………………………………………….. 21
2.5 Arguments against Classical Finance Theory …………………………………………………………………… 22
2.6 Behavioral Finance ………………………………………………………………………………………………………. 24
2.7 Studies taken up on the Subject of Behavioral Finance…………………………………………………….. 26
2.8 Terrorist activities and Investor Sentiments ……………………………………………………………………. 31
2.9 Impact of Oil Prices ……………………………………………………………………………………………………… 32
2.10 Volatility …………………………………………………………………………………………………………………… 33
2.11 Conclusion on Literature Review …………………………………………………………………………………. 36
Chapter 3: Research Methods and Methodology ……………………………………………………………………… 37
3.1 Introduction ……………………………………………………………………………………………………………….. 38
3.2 The Research Philosophy ……………………………………………………………………………………………… 40
3.3 The Approach Layer …………………………………………………………………………………………………….. 41
3.4 Research Strategy ……………………………………………………………………………………………………….. 43
3.5 The Choices Layer ……………………………………………………………………………………………………….. 45
3.6 Time Horizons Layer …………………………………………………………………………………………………….. 47
3.7 Data Collection and Data Analysis …………………………………………………………………………………. 47
3.7.1 Secondary data collection ………………………………………………………………………………………. 48
3.7.2 Primary Quantitative Data Collection ………………………………………………………………………. 48
3.8 Data Analysis ………………………………………………………………………………………………………………. 49
3.8.1 Population and Sample ………………………………………………………………………………………….. 49
3.8.2 Ethical issues in data collection ………………………………………………………………………………. 50
Chapter 4: Data Analysis and Findings …………………………………………………………………………………….. 52
4.1 An Overview ……………………………………………………………………………………………………………….. 53
Global Events ……………………………………………………………………………………………………………….. 53
Human Nature………………………………………………………………………………………………………………. 53
Market Scandals ……………………………………………………………………………………………………………. 53
Trends …………………………………………………………………………………………………………………………. 54
4.2 Analysis of Quantitative Data………………………………………………………………………………………… 55
4.2.1 Questionnaire for Sentiment of Investors and Further Details …………………………………… 55
6) How would you rate the effect that the increase in crude oil prices globally had on
your stock market sentiment? (rate- 1 being “not at all” and 5 being “ greatly” ) ………………… 61
7) How would you rate the effect that recent scams (Satyam, 2g, 3g) had on your
stock market sentiment? (rate- 1 being “not at all” and 5 being “ greatly” ) ………………………… 62
8) How would you rate the effect that Mumbai terror attacks of 2008 had on your
stock market sentiment? ( rate- 1 being “not at all” and 5 being “ greatly” ) ……………………….. 63
9) How would you rate the effect that the ever increasing inflation has had on your
stock market sentiment? ( rate- 1 being “not at all” and 5 being “ greatly” ) ……………………….. 64
4.3 Analysis of Secondary Quantitative data ………………………………………………………………………… 67
4.3.1 Volatility of BSE-Sensex from 2008-2012………………………………………………………………….. 67
4.3.2 OVERVIEW OF BACSI ……………………………………………………………………………………………… 68
Impact due to Fluctuations Oil Prices ………………………………………………………………………………. 71
Impact Due to Global Recession ……………………………………………………………………………………… 74
Impact due to terror attack…………………………………………………………………………………………….. 76
Impact due to Financial Scandal: …………………………………………………………………………………….. 79
Satyam Scandal: ……………………………………………………………………………………………………………. 80
RESULTS FOR PEARSONS CORRELATION………………………………………………………………………………. 83
Correlation between average daily return and investor sentiment ………………………………………… 83
Correlation between stock market volatility and average daily returns …………………………………. 85
Chapter 5: Conclusion …………………………………………………………………………………………………………… 87
5.1 Introduction ……………………………………………………………………………………………………………….. 88
5.2.1 Conclusion on Objective 1: To ascertain the attitudes and sentiments of the
investors in India in the current scenario as well as in the recent past…………………………………. 88
5.2.2 Conclusion to objective 2 and 3: To examine if there is any relationship between the
important events and Investor Sentiment and to examine if there is any relationship
between the important events and the Stock Market Volatility. …………………………………………….. 90
5.2.3 Research Objective 4: To examine the relationship between investor sentiment and
the stock market volatility in India taking the important events into consideration. …………………. 92
5.3 Conclusion on the research question …………………………………………………………………………….. 92
Chapter 6: Self Reflection on Own Learning & Performance………………………………………………………. 93
6.1 Introduction ……………………………………………………………………………………………………………….. 94
6.2 My personality Type…………………………………………………………………………………………………….. 94
6.3 Learning Styles ……………………………………………………………………………………………………………. 95
6.3 Skills acquired during the learning process …………………………………………………………………….. 97
6.4 My Learning Style Preference ……………………………………………………………………………………….. 99
6.5 Conclusion ………………………………………………………………………………………………………………… 101
References and Bibliography ……………………………………………………………………………………………….. 102
Appendices ………………………………………………………………………………………………………………………… 111
Appendix -1 ……………………………………………………………………………………………………………………….. 112
Appendix-2 ………………………………………………………………………………………………………………………… 114
Appendix 3 ………………………………………………………………………………………………………………………… 116