Nifty 50: Investor Sentiment vs. Market Performance
Author : T Likhitha N Rao and Dr. Parul Tandan
Abstract :
Stock market performance is influenced by both fundamental economic factors and investor sentiment, with the Nifty 50 serving as a key benchmark for India’s financial markets. While corporate earnings, interest rates, and macroeconomic policies shape long-term trends, short-term price fluctuations are often driven by investor psychology, media narratives, and external events. Sentiment-driven market behavior-ranging from optimism during bull runs to panic-driven sell-offs-can result in volatility, speculative trading, and deviations from fundamental valuations. This study examines the correlation between investor sentiment and Nifty 50 market movements, exploring how psychological factors, macroeconomic developments, and speculative tendencies influence stock prices. Based on sentiment indicators, including trading volumes, the volatility index (India VIX), news sentiment analysis, social media trends, and investor sentiment surveys, the study aims to understand how emotions influence market behavior. The study also explores how behavior-based biases such as herd mentality, overconfidence, and loss aversion influence investment choice. Investors, analysts, and policymakers must comprehend the relationship between sentiment and market performance to forecast trends, mitigate risks, and develop effective investment strategies. By combining both behavioral finance and conventional market analysis, this research provides a more profound insight into how psychological and emotional forces influence stock market volatility and financial decision-making. The results contribute to broader knowledge of sentiment's influence on market efficiency and stability.
Keywords :
Nifty 50, market sentiment, stock volatility, behavioral finance, investor psychology.
