Financial Risk Management

Global Cues and People's Reactions: A Twitter Sentiment Analysis

Article Details

Pub. Date	: June, 2021
Product Name	: The IUP Journal of Financial Risk Management
Product Type	: Article
Product Code	: IJFRM10921
Author Name	: V Vijaya, Ravi Thodla and Seeboli Ghosh Kundu
Availability	: YES
Subject/Domain	: Finance Management
Download Format	: PDF Format
No. of Pages	: 14

Price

Download

Abstract

In the current scenario, every investor has to be alert to local information as well as glocal (global and local) news and cues. Social media and microblogging are some online platforms where the information is shared and gathered quickly involving less cost. Twitter is one such platform, where brief updates are available to the public or a selected circle of contacts. It conveys the author's mood and emotional status. Hence, the content can be regarded as a valid indicator for a temporary, authentic and instantaneous public mood state. The posting of news on social media also triggers stock market movements due to the knee-jerk reactions caused by investor sentiments. This study tries to find the relationship between the sentiments and global cues with respect to the Indian stock market. The large-scale data analysis gives a strong base to witness and predict values by taking into consideration the emotive moods and trends associated with social and economic indicators. The study reveals a significant relationship between public mood as a reaction to global cues and the stock market movement, with special reference to Nifty index. In particular, the Brexit Referendum, FOMC (Federal Open Market Committee) decisions and Bank of Japan monetary policy review are likely to have triggered volatility in the said market.

Introduction

"We are coupled but sufficiently insulated," said the Former Finance Minister P Chidambaram just before the 2008 March meltdown of the Indian stock market. In fact, he was enthused by the 21,207 points of BSE and 6,000 odd points of the NSE on January 21, 2008. Subsequently, however, there was enough indication of the impending stock market disaster as evidenced by the two IPO failures of EMAAR MGF (Dubai-based real estate company) and Wockhardt Hospital during February 2008. The direct causes for the same were explained in terms of liquidity suck out from the market by the Reliance Power's $2.5 bn IPO which was 72 times oversubscribed and $3 bn rights issue of the SBI.