FACTORS AFFECTING STOCK PRICE VARIABILITY OF SUGAR SECTOR OF PAKISTAN

Abstract

Stock speculation is always a chancy scheme. Investors are hesitant to put in Stock Market. If investors come to make out concerning the accurate factors influence the stock price, they will spend in stocks self-assuredly. This thesis looked at the realistic relationship among the stock price and company’s fundamental factors of Karachi Stock Exchange. The intention of this study is to explore the factors that effect on share price variability of sugar sector of Pakistan. Panel analysis approach has been used in the study on ten companies of sugar sector of Karachi Stock Exchange over the period of time from Jan 2011 to Dec 2015, the scrutiny attempt to attain competent factor estimation as well as to authenticate the constancy of the association among stock price behavior and corporation fundamentals. Data information is examined via four methods: through descriptive statistics method, correlation analysis, regression analysis method and random and fixed effect model. To find out the research objective, fixed effect model and random effect model has been evaluated. The study has ROA (return on assets), ROE (return on equity), EPS (earning per share) and DPS (dividend per share) as explanatory variables and share prices as explained variable. Relationship among variables is determined by correlation; moreover the change in explained variable as a result of explanatory variables is explained by means of regression analysis. Outcome gives an idea about that 54.09% deviation in explained variable is explain through ROA, EPS and DPS. The study disclose that return on asset is negative and significant determinant of stock price in sugar sector at the same time as earning per share and dividend per share are positive and significant factors of stock price of sugar segment. The study reveals that in general the model is significant and additionally, a specification analysis is carry out to make a decision either a random effect or else fixed effect model is used and according to it random effect model is appropriate in sugar segment of Karachi Stock Exchange. Investors within Pakistan are required to make a decision about which stock be supposed to purchase. The outcomes of this paper provide instruction to the investors in stock selection. At the same time of taking decisions they must take into consideration about corporation information. The companies know how to put their policies as well as strategies by taking into account somewhat essential factors, meant for company continued existence and victory