Financial And Economic Determinants Of Nifty Next 50 Equity Pricing
Rohit Kumar Sharma
School of Business and Economics, University of Delhi, India
Ananya Meera Singh
School of Business and Economics, University of Delhi, India
Abstract
Investment valuation remains a critical aspect of financial decision-making, where investors must assess both the present and future worth of assets. While some consider equity valuation a precise science, others regard it as an art shaped by assumptions and subjective interpretations. Identifying the factors that drive equity market prices is therefore essential to improving valuation accuracy. This study investigates the role of internal financial and economic variables in determining the market price of equities listed under the NIFTY Next 50 (NN50) index. Using historical data spanning January 2017 to December 2022, the research employs multiple regression analysis to examine the causal relationships between selected financial indicators and equity pricing. The findings reveal that dividend rate (DR), return on net worth (RONW), book value (BV), and economic value added (EVA) significantly and positively influence equity prices, suggesting their robustness as determinants of firm valuation. Conversely, the debt-to-equity ratio exhibits a marginal negative effect, while earnings per share (EPS) do not demonstrate statistical significance in predicting market prices. These results provide new insights into the financial dynamics shaping equity valuation in emerging markets, emphasizing the relevance of firm-specific and economic factors over conventional profitability measures. The study contributes to the ongoing debate on whether equity valuation is an art or science by offering empirical evidence that highlights the explanatory power of selected financial variables. Furthermore, the findings have practical implications for investors, policymakers, and financial analysts seeking more reliable tools for equity valuation and investment strategy formulation