INVESTORS’ SENTIMENT, VOLATILITY AND STOCK RETURN: EVIDENCE FROM THE NIGERIANEXCHANGE GROUP (NGX)

Abstract

For decades, theory has been put forward that investors in the market are rational and the price of assets fully reflects all available information in the market. Thus, when either good news or bad news about a firm’s prospect becomes public, both the firm's value and equity prices appreciate or depreciate. Sequel to this, this study examines investor sentiment, volatility and stock return in Nigeria. that Direct investor sentiment significantly affects stock risk return of companies listed on the NXG; indirect investors’ sentiments significantly affect stock risk return of company listed on the NXG; and selected macroeconomic indicator (inflation, exchange rate, oil price) significantly affect stock risk return of company's listed on the NXG. Thus, direct investors sentiment, indirect investor sentiment and selected macroeconomic indicators are responsible for stock risk return fluctuations and should therefore be taken as a systematic factor which place a critical role in predicting stock return and stop volatility in the Nigerian stock market.