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How Individual Investors Select Stocks: A Case of Karachi Stock Exchange

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  • Ahmed, Faisal Shamim

Abstract

The research named as “How Individual Investors Select Stocks: A Case of Karachi Stock Exchange” will examine the individual investor’s views regarding making the decision while selecting the stock. This research will comparatively relate the influencing factors that are technical and fundamental analysis, financial statement information, valuation models, yield and profitability ratio analysis, and referral considered by the individual investors while making decision for the stocks that is to be bought or sell from the stock market. The main objective of this research is to find out the influence of the factors that are mostly concerned by the individual investors while stocks selection from the equity market. And to determine the result and analysis of the research the quantitative method has been used as it deals with the numeric facts and numbers and the data is being collected via survey i.e. questionnaire and deductive approach is applied as conclusion of the report is drawn stepwise i.e. starting from theory construction then building up hypothesis then further observation and finally leading to the conclusion. The result of the five independent and one dependent variables are drawn via the Pearson’s Correlation. The results of the Pearson correlation eventually determine that the all the results of the hypothesis on the bottom line is that the approach for the selecting the stocks varies between the individual investors. But, the most and dominating result in terms of percentage of the Pearson’s correlation test suggest that the financial statements information, yield and profitability ratio analysis and technical and fundamental analysis are mostly concerned and had the greater influence; while valuation models and referrals does not have that much influence on the individual investors while selecting the stocks from the Karachi Stock Exchange.

Suggested Citation

  • Ahmed, Faisal Shamim, 2015. "How Individual Investors Select Stocks: A Case of Karachi Stock Exchange," MPRA Paper 116423, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:116423
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    File URL: https://mpra.ub.uni-muenchen.de/116423/1/MPRA_paper_116423.pdf
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    References listed on IDEAS

    as
    1. Ahmad, Mashood & Ali, Syed Babar, 2008. "Technical Analysis in the Stock Markets of Pakistan: A Case of Commercial Banks," MPRA Paper 64521, University Library of Munich, Germany.
    2. Hussain, Zahir & Ali, Syed Babar, 2009. "Implementation of Operational Risk Regime: A Case of Commercial Banks in Pakistan," MPRA Paper 64469, University Library of Munich, Germany.
    3. Dimitrios I. Maditinos & Željko Šević & Nikolaos G. Theriou, 2007. "Investors' behaviour in the Athens Stock Exchange (ASE)," Studies in Economics and Finance, Emerald Group Publishing Limited, vol. 24(1), pages 32-50, March.
    4. Syed Babar Ali & Manzoor A.Khalidi, 2020. "Valuation of Equity Securities, Private Firms, and Startups," IBT Journal of Business Studies (JBS), Ilma University, Faculty of Management Science, vol. 16(1), pages 125-140.
    5. Rizvi, Aoun & Ali, Syed Babar, 2011. "Risk Taking Behavior of Investors of Pakistan," MPRA Paper 64342, University Library of Munich, Germany.
    6. Ahmad, Baseer & Ali, Syed Babar, 2012. "Do Individual Investors in Pakistan Prefer Dividends?," MPRA Paper 64205, University Library of Munich, Germany.
    7. Ali, Syed Babar, 2012. "Corporate Governance and Accounting Practices in Pakistan," MPRA Paper 64713, University Library of Munich, Germany.
    8. Ali Zaidi, Syed Najaf & Ali, Syed Babar, 2006. "Risk and Scope of Debit Check Card in Competitive Market of Pakistan," MPRA Paper 64456, University Library of Munich, Germany.
    9. Syed Babar Ali & Manzoor A.Khalidi, 2020. "Valuation of Equity Securities, Private Firms, and Startups," IBT Journal of Business Studies (JBS), Ilma University, Faculty of Management Science, vol. 16(1), pages 16-19.
    10. Ali, Madiha & Ali, Syed Babar, 2014. "The Impact of Working Capital Management on Firm Profitability and Fixed Investment in Pakistan," MPRA Paper 64520, University Library of Munich, Germany.
    11. repec:eme:sef000:10867370710737373 is not listed on IDEAS
    12. Baker, H Kent & Haslem, John A, 1974. "Toward the Development of Client-Specified Valuation Models," Journal of Finance, American Finance Association, vol. 29(4), pages 1255-1263, September.
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    More about this item

    Keywords

    Small Investors; Stock Exchange;

    JEL classification:

    • G0 - Financial Economics - - General
    • G1 - Financial Economics - - General Financial Markets

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