Research Article | Open Access
Investor Sentiment and Market Volatility: An Analytical Study in the Context of Indian Stock Market
Ajay Kumar Saini
Pages: 3081-3085
Abstract
Market volatility and investor sentiment are key elements of the financial markets that have a significant
impact on asset price and investment choices. Investor sentiment is the term used to describe the group
psychology and emotional state of market participants that affect their sense of hopefulness, pessimism,
or uncertainty on upcoming market moves. It is influenced by a wide range of variables, such as
economic data, current affairs, and investment behavior. Positive emotion can boost demand and
potentially reduce volatility, whilst negative sentiment might encourage selling pressure and raise market
volatility. The amplitude and regularity of price swings in financial markets are gauged by market
volatility. It depicts the degree of risk, uncertainty, and price volatility that investors encounter. Investors
worry and caution result from high volatility, whereas confidence and risk-taking are promoted by low
volatility. Investor sentiment and market volatility have a cyclical and mutually reinforcing relationship.
A feedback loop can develop between investor sentiment shifts and market volatility changes. Positive
sentiment can help to reduce volatility and promote a favorable market environment, whilst negative
sentiment can raise volatility and cause periods of greater market instability. Market players and investors
could more successfully manage market circumstances, reduce risks, and grasp chances for possible
returns by understanding the complicated interplay between these components.
Keywords
India, Investor, Market, Sentiment, Stocks, Volatility