This study examines the empirical relationship of explanatory variables namely, dividend per share, earnings per share, price-earnings ratio, book value per share, size, cover, return on capital employed and payout ratio on the market price of the shares in the post-reform era. The relationship between independent and dependent variables of 160 companies is studied over a period of five years spanning from 2001 to 2005. The results reveal that earnings per share and book value per share are important determinants of share price as they are the indices of healthy financial position of companies. Dividend per share is an important determinant of share price which shows that the companies should adopt a liberal dividend policy to activate the primary as well as secondary market. A high dividend rate may also help in increasing the market price and result in high capital appreciation to the shareholders as depicted by the payout ratio and cover. Price-earnings ratio reflects investor expectations of growth in a firm's earnings that vary from industry to industry.

Share price is the most important indicator readily available to the investors for their decision to invest or not in a particular share. Theories suggest that share price changes are associated with changes in fundamental variables which are relevant for share valuation like payout ratio, dividend yield, capital structure, earnings, size of the firm and its growth [Wilcox (1984), Rappoport (1986), Downs (1991)].Investigations of share price changes appear to yield evidence that changes in fundamental variable(s) should jointly bring about changes in share prices both in developed and emerging markets. However, the actual fundamental factors found to be relevant may vary from market to market. The changes in asset growth of firms are significant in case of Japanese shares while earnings appear to be universally a relevant factor (Ariff et al., 1994). However, it is widely agreed that a set of fundamental variables as suggested by individual theories is no doubt relevant as possible factors affecting share price changes in the short and the long run (Ariff and Khan, 2000).

Knowledge of relative influence of fundamental factors on equity share prices is helpful to corporate, management, government and investors (Chandra, 1981). To the corporate management an understanding of the valuation mechanism in stock market is essential for the sound financial management of the company. An understanding of determinants of share prices is useful in the formulation of management policies relating to dividend payment, bonus declaration, right issues, etc. Investors can also form better judgments and make intelligent and rational investment decisions (Sachdeva, 1994, p. 5).

Applied Finance Journal, Management Policies, Corporate Management, Indian Capital Market, Liberalization, Privatization and Globalization, LPG, Financial Sector, Financial Markets, Empirical Studies, National Stock Exchange , NSE, Market Capitalization, Bombay Stock Exchange, Indian Corporate Sector, Australian Stock Exchange, ASE, Research Methodology, Centre for Monitoring Indian Economy, CMIE.