Pakistan Institute of Development Economics

Daily Stock Market Movements: From the Lens of News and Events
Publication Year : 2017

There are various factors that affect movements of the stock market. Month to month variations in stock market can be studied using several fundamentals such as interest rate, prices, exchange rate etc. However, daily movements can only be determined by different signals or news/events. This study analyzes the effect of daily movements in KSE-100 Index due to different policies announced as well as incidents/events happened in the country. Therefore daily data is collected on the movements in stock market and reason for major change in that day from the Sunday edition of the Daily Newspaper “The News” It is concluded that global news and political news can effect stock market index ferociously. Investment in Blue chips is a safe haven for the investors. It is not the determinant of KSE index, instead it is the outcome of the movements in KSE index. Moreover, panic attack is always higher than the herd behaviour as far as day to day transactions are concerned. Investors react quickly to negative news than to positive news, which makes them risk averter. ARCH/GARCH model explain KSE movements better than simple OLS method.