COMPARATIVE IMPACT OF RECESSION ON FUNDAMENTAL DETERMINANTSOF BSE STOCK PRICES IN INDIA

Abstract

The Global Economic Slowdown had a recessionary impact on the financial market leading to decline in share prices and indices in India. Asignificant decline in activity across the economy, lasting longer than a few months is called recession. A global recession is a period of global slowdown in economy. The objective of this paper is to compare the impact of fundamental factors on Stock prices of BSE listed companies in normal period and recession period. The study employs panel data consisting of annual time series data over the period 1998-2013 and cross section data pertaining to BSE listed eighty companies. The panel data techniques, viz. Fixed Effects model and Random Effects model have been employed to investigate the objective. The empirical results reveal that Earning per Share has positive and significant impact on the share price at five percent level in the normal period (pre recession period). PER has positive and significant impact while Growth has a negative and significant impact on the share price at five percent level during recession period. While PER and ROCE have positive and significant impact on the share price at five and ten percent level. The variable BV, DPS, EPS, DPR and Growth have a positive relationship with share price and statistically insignificant in post recession period.