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Sensitivity of Stock Pricing to the Optimistic and Pessimistic Sentiment of Social Media: A Shreds of Evidence from Nifty Indices

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Data Science and Applications (ICDSA 2023)

Part of the book series: Lecture Notes in Networks and Systems ((LNNS,volume 818))

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Abstract

With technological advances, share prices are becoming increasingly volatile. In the context of these unpredictable trends, businesses, investors, and consumers use social media to make investment decisions or share their thoughts and opinions. In this article, we explored the impact of social media news on equity prices through sentiment analysis. Sentiment analysis indicated how social media impacted the sentiments (both optimistic and pessimistic) of the investors when there was the dissemination of specific news on social media related to a particular sector or stock. The present study analyses the positive and negative sentiments in the stock market created by social media. The observation of NIFTY indices for five categories was constructed and analysed. The impact of investors’ positive and negative feelings emerges from the spread of social media stock prices in the Indian market. We collected data on stock price changes in the top five companies across five Nifty index categories in the last quarter of FY 2020–21, i.e. 21 January–21 March, when the effects of a pandemic had diminished, and industries were slowly returning to normal. Share price movements are tracked in three ways, i.e. percentage change in the price, average changes in a normal situation, and average percentage increase or decrease in the last three months. Based on the computed values, the correlation between expected and observed changes was tested using the chi-square test. The test result indicates the sensitivity of stock pricing to the optimistic and pessimistic sentiment of social media with at least a 10% change in stock price.

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Authors and Affiliations

  1. Department of Management Studies, Rajarambapu Institute of Technology, Islampur, Maharashtra, India

    Hemlata Vivek Gaikwad, Krishnaji Sarjerao Patil, Shrikant Sharad Karanjkar & Digvijay Satish Patil

Authors
  1. Hemlata Vivek Gaikwad
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  2. Krishnaji Sarjerao Patil
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  3. Shrikant Sharad Karanjkar
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  4. Digvijay Satish Patil
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Corresponding author

Correspondence to Hemlata Vivek Gaikwad .

Editor information

Editors and Affiliations

  1. Department of Electronics and Communication Engineering, Malaviya National Institute of Technology, Jaipur, Rajasthan, India

    Satyasai Jagannath Nanda

  2. Department of Electronics and Communication Engineering, Malaviya National Institute of Technology, Jaipur, Rajasthan, India

    Rajendra Prasad Yadav

  3. Department of Engineering and Information Technology, University of Technology Sydney, Ultimo, NSW, Australia

    Amir H. Gandomi

  4. Department of Computer Science and Engineering and Information Technology, Jaypee Institute of Information Technology, Noida, Uttar Pradesh, India

    Mukesh Saraswat

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© 2024 The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd.

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Gaikwad, H.V., Patil, K.S., Karanjkar, S.S., Patil, D.S. (2024). Sensitivity of Stock Pricing to the Optimistic and Pessimistic Sentiment of Social Media: A Shreds of Evidence from Nifty Indices. In: Nanda, S.J., Yadav, R.P., Gandomi, A.H., Saraswat, M. (eds) Data Science and Applications. ICDSA 2023. Lecture Notes in Networks and Systems, vol 818. Springer, Singapore. https://doi.org/10.1007/978-981-99-7862-5_37

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