The effect of various factors on stock performance of fuel and energy sector

Abstract

The researcher has conducted this research in order to analyze the affect of internal factors on the stock performance of fuel and energy sector. Also the affect of macro economic factors has been seen on the stock performance. For this, the researcher has taken six companies on the basis of their closing stock price on February 28, 2003. This analysis has been done to see whether the internal factors of the companies affect their stock prices or not. Whether the investors follow the fundamental analysis or not. Is there speculation in the market and to analyze why the low performing companies are not performing as good as the low performing ones. The study therefore uses multiple regression analysis as a method to find that if significant relationship between the macro economic factors and stock prices exists or not. Also to find that if significant relationship between the internal factors and stock prices exist or not. The data for the study is collected from different sources on yearly basis so as to get better results. The researcher has analyzed that the stock prices are not affected by the internal factors of the company means that there is pure speculation in the market. The prices of stocks can go up and down by "satta bazi" which is called speculation. People, instead of using fundamental analysis, use technical analysis for making their decisions of investments. They strongly trust their brokers and invest on their recommendation. The analysis suggests that there is no significant relationship between the stock prices and the external factors of the company, only the Hubco, stock is being affected by GDP to some extent. The economy of Pakistan is affected by a few large companies I including Rubeo, P AKO, PTCL etc. but it is not affected directly by the stock but in the end the whole economy is always affected in one way or the other. These major stock prices are driving force behind the bullish and bearish trends in the stock market. Because of their vast operations in and outside Pakistan, economic policy and macro economic factors do directly or indirectly affect their stock prices. The mentioned macro economic factors do not affect the prices of stock but it is possible that other factors such as exchange rate, inflation etc. affect them.