• ISSN: 2010-023X
    • Frequency: Bimonthly
    • DOI: 10.18178/IJTEF
    • Editor-in-Chief: Prof.Tung-Zong (Donald) Chang
    • Executive Editor: Ms. Cherry L. Chen
    • Abstracting/ Indexing:  ProQuest, Crossref, Electronic Journals Library , EBSCO, and Ulrich's Periodicals Directory
    • E-mail: ijtef@ejournal.net
IJTEF 2018 Vol.9(4): 148-152 ISSN: 2010-023X
DOI: 10.18178/ijtef.2018.9.4.605

Sentiment Analysis: Gauging the Effect of News on Stock Prices in Indian Stock Market

Nikhil Vijay, Snimarpal Singh, and Gyanesh Malhotra
Abstract—This paper analyses the relationship between the financial news reported in the mass media and its effects on the stock market returns. We have devised an algorithm that successfully determines polarity in financial texts using web scrapping and machine learning techniques in python to gather news texts from major financial news websites like Economic Times, Money Control, Reuters, The Hindu etc. The data collected is divided into 3 sentiments namely positive, negative and compound. By correlating the closing prices of leading players of the major sectors (like ITC-FMCG, TCS–IT, HDFC-Banking, ONGC-Energy, SunPharma-Pharmaceuticals, Maruti Suzuki-Automobile and SBI-Banking) with the sentiment generated from our algorithm we were able to conclude that indeed stock market returns are largely affected with the news and any significant news or shocks about a company can affect its stock price in the short run even though the news doesn’t have any bearing on the company’s fundamentals. Algorithms like the one used in this paper can be used to predict stock market returns in the event of any news by extrapolating the results of market behavior from the past.

Index Terms—Financial markets, python, web scrapping, sentiment.

The authors are with Birla Institute of Technology and Science, Pilani, Goa, 403726, Indian (e-mail: f20130606@goa.bits-pilani.ac.in, f20140646@goa.bits-pilani.ac.in, f20140495@goa.bits-pilani .ac.in).

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Cite: Nikhil Vijay, Snimarpal Singh, and Gyanesh Malhotra, "Sentiment Analysis: Gauging the Effect of News on Stock Prices in Indian Stock Market," International Journal of Trade, Economics and Finance vol.9, no.4, pp. 148-152, 2018.

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