EXAMINING THE RELATIONSHIP BETWEEN STOCK PRICES AND ANALYST FORECASTS: EVIDENCE FROM AHMEDABAD INVESTORS
DOI:
https://doi.org/10.55829/m7p6zs70Keywords:
Stock Prices, Analyst Forecasts, Investment Decisions, Market PsychologyAbstract
This study explores the relationship between stock prices and analyst forecasts, focusing on their influence on investment decisions among financial professionals and individual investors in Ahmedabad. Drawing on a sample of 120 participants, including financial advisors, portfolio managers, retail investors, and institutional stakeholders, the research examines diverse investment behaviours and practices. Key factors influencing reliance on forecasts, such as analyst credibility, historical accuracy, and alignment with market trends, are analysed, along with the frequency of stock price monitoring and its impact on investment strategies.
The findings reveal a significant correlation between analyst forecasts and stock price movements, particularly when forecasts are backed by strong company fundamentals and favourable market conditions. Accurate and timely forecasts are shown to guide investor behaviour, reduce uncertainty, and enhance market transparency and stability. The study also highlights behavioural tendencies among investors, such as overreactions to optimistic forecasts and hesitations in decision-making during periods of uncertainty, offering insights into market psychology.
In conclusion, the research underscores the pivotal role of analyst forecasts in shaping investment strategies and emphasizes the importance of accuracy and ethical responsibility in forecasting practices. By adhering to these principles, financial professionals can foster investor confidence and contribute to the stability and efficiency of financial markets.
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