INVESTOR SENTIMENT AND THE STOCK MARKET

Abstract

The aim of the study is to examine the effect of investor sentiment on Borsa Istanbul between January 2005 and August 2020. In this context, a regression analysis was conducted by using closed-end fund discounts and stock market returns. Stock market volatility was also taken into consideration to examine whether it moves with investor sentiment. At last, economic variables such as Consumer Price Index (CPI), Industrial Production Index (IPI) and Exchange Rate (XR) were included into the analysis to examine whether there is an additional effect on investor sentiment. The results of the analysis state that while investor sentiment affects stock market returns, no relation is observed between market volatility and investor sentiment on Borsa Istanbul. Moreover, economic variables have no additional effect on investor sentiment.