The Dual Index Model : Augmenting Technicals to Fundamentals in Auguring Returns from Vacillant Stock Prices - Empirical Evidence of IT Sector in India

At last they have found the gene that causes shyness. They could have found it earlier, but it was hiding behind some other genes. The same is the case with Sectoral indices of reputed bourses, the power of which had been overlooked, may be because it had been hiding behind major indices such as Dow Jones, Standard and Poor, FTSE, Sensex etc. With single index model and multi factor model at the two extremes, an intermediate model, that augments the technicals of a stock to its fundamentals, is the critical idea postulated here, to predict future prices. The model referred to as Dual Index Model, empirically tests the security returns of all three securities that are constituents of India's premier stock exchange the Bombay Stock Exchange general market index namely BSE- Sensex and its sectoral index called BSE-IT (Information Technology). The experimental result on predictive potential of the postulated model is a conclusive evidence of high degree of precision in forecast. The use of multiple regression analysis with the postulated model can be effectively applied on any securities listed in the stock exchange irrespective of the fact whether it is included in computation of market index or not