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How Sentiment Analysis in Stock Market Used for Right Prediction?

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Social Media Contents Based Sentiment Analysis and Prediction System

The stock market is one of the most sensitive fields, where sentiments of the people can change the trend of the entire market. Actually, there are many factors, affect the movement of the stock market and, the sentiments of the traders are also one of them drive the market.

At the present time, stock market investment plays an inevitable role in the finance sector, as high stock market value is considered as the parameter of high economies. The volatile nature of the stock market has equal chances for earning money and losing money as well. But if the situation can be predicted, investors can make a profit or minimize their losses. 

Hence, AI companies are now using sentiment analysis in the stock market to predict the market trend or movement of a particular stock. And social media is one of the best platforms to understand the sentiments of the people trading or investing in the stock market or other financial instruments that are traded on the various exchanges.

What is Sentiment Analysis and How it Works?

Sentiment analysis is basically the process of analyzing the sentiments of people through various platforms like social media and similar websites, where people can freely express their feelings and opinions about anything they think.  

What is Sentiment Analysis and How it Works

And classification of such sentiments can be done at the phrase level, sentence level, and document level. The sentiment analysis uses Natural Language Processing (NLP) to divide the language units into three categories: Negative, Positive and Neutral.

Also Read: Sentiment Analysis: How it Works & Everything You Need to Know

Sentiment Analysis in Social Media

Facebook, Twitter, and Linkedin are the leading social media networking sites, where people share their opinions and express their feelings that show their sentiments. Here people also discuss what they think whether they are experts in that field or not. 

sentiment analysis stock market

And access to social media platforms through portable devices like smartphones is making easier for the people to post the contents and spread their views on various topics. And here sensitive news including fake news or rumors also spread at a very fast pace

Such news or information influences the people around the globe and if the news is from the stock market, investors will be also influenced and they will take the decision of buying or selling of stock accordingly, that will have a positive or negative impact on the price of the stocks trading on exchanges.

How Sentiments Analysis Used in Stock Market Prediction?

Actually, sentiment analysis and the stock market is a well-researched problem. As there are already lots of forces behind the movement of the stock market or particular share of a company. Maybe due to negative sentiment, the stock price goes down or if there is any positive sentiments the stock prices increased because of this optimistic sentiments.

sentiment analysis stock market predicition

Although, there is no single technique to predict the stock movement accurately, so researchers have done lots of experiments to get better results. But due to the universal use of social media websites, they can be considered as important in the prediction of stock movements, as investors share their opinions and thoughts in the media.

And when you analyze such social media platforms or microblogging websites using sentiment analysis you can get some idea what people are talking about and what they think about a particular stock. The contents of Social Media such as posts, tweets, photos are analyzed by people of different communities such as politicians, marketers, and analysts, etc, to make the right decision while investing in such markets.

Social Media Contents Based for Real-Time Sentiment Analysis in Stock Market Predictions

Social media is playing a key role in sentiment analysis on the stock market. Even, over the past few years, the influence of social media sites on everyday life has become so large that even information on large and small incidents or disasters is obtained through social media sites.

And due to the influence social ripple effect of social media sites, diverse studies are in progress to analyze the contents generated online. Social media content analyses are conducted in diverse methods, and for diverse purposes.

Among several contents, especially those texts that are firsthand written by the users contain the most direct and important information. Since contents are created according to the user’s intentions the time of creation time also becomes an important factor in social media contents based on real-time sentiment analysis in stock prediction.

In the current era, the internet user’s popularity has grown fast equivalent to emerging technologies; that actively use online review sites, social networks and personal blogs to express their opinions. And this provides an opportunity to know the positive and negative attitudes about people, organizations, places, events, and ideas.

The tools provided by natural language processing and machine learning along with other approaches to work with large volumes of text make it possible to begin extracting sentiments from social media.

Social Media Impact on the Stock Market

As we can see that in the modern world, people make judgments about the world around them when they are living in the society. They make positive and negative attitudes about people, products, places and events. These types of attitudes can be considered as sentiments.

social media impact on stock market

Sentiment analysis is the study of automated techniques for extracting sentiments from written languages. The growth of social media has resulted in an explosion of publicly available, user-generated content moderation service to control such contents.

While such data and information can potentially be utilized to provide real-time insights into the sentiments of people. Blogs, online forums, comment sections on media sites and social networking sites such as Facebook and Twitter all can be considered as social media that can capture millions of peoples’ views or word of mouth.

Hence, communication and the availability of real-time opinions from people around the world make a revolution in computational linguistics and social network analysis. And with time being, social media is becoming an increasingly more important source of information for anyone including investors trading in the stock markets.

Actually, when a piece of news comes in the market, people start talking about and give their positive or negative opinions that show their sentiments. That can be used by the sentiment analysis experts to predict the movement of the stock market or particular stock of a company.

While on the other hand people are more willing and happy to share the facts about their lives, knowledge, experiences, and thoughts with the entire world through social media more than before any platform of media sources.

Twitter Sentiment Analysis Machine Learning for Stock Prediction

The sentiment analysis task is very much field-specific. Tweets are classified as positive, negative, and neutral based on the sentiment present. Out of the total tweets are examined by humans and annotated as 1 for Positive, 0 for Neutral and 2 for Negative emotions. For the classification of nonhuman annotated tweets, a machine learning model is trained whose features are extracted from the human-annotated tweets.

twitter sentiment analysis machine learning

Such data is extracted from twitter and various other similar platforms, and then used a training data set to train the AI model through sentiment analysis algorithms to predict the price of stocks in different scenarios. Except, in extreme or unexpected conditions, most of the time, machine learning or deep learning-based models predict at very high accuracy helping stock market investors to earn money.    

Summing-up

They actively participate in events by expressing their opinions and stating their comments that take place in society. This way of sharing their knowledge and emotions with society and social media drives the businesses to collect more information about their companies, products and to know how reputed they are among the people and thereby make decisions to go on with their businesses effectively.

To understand the sentiments of people you need an expert, Cogito is providing the sentiment analysis services for the business enterprises, companies and organizations to understand their customers and offer them the most suitable product or services for better response.

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How Shares Are Allotted in Oversubscribed IPO: Allocation Process

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How Shares Are Allotted in Oversubscribed IPO

Equity shares offered in Initial Public Offer (IPO) sometimes give lucrative returns in a short span of time. Yes, I’m talking about the shares you can get in oversubscribed IPOs that can give you the listing gains in secondary stock markets.    

Usually IPO are oversubscribed when the valuation of stock of the issuing company is cheaper than compare to its peer group companies. Or there is huge potential growth in the company in terms of high revenue and profit growth or various other favorable aspects making the shares of company attractive for the investors.    

What happens if IPO is oversubscribed?

If such growing companies’ shares are available at cheaper rates in primary markets (IPOs), every investor tries to put his money into the company with expectations to get good returns to compare to other shares, resulting in IPO is oversubscribed.    

Also Read: How to Check IPO Allotment Status on NSE BSE & ICICI DIRECT

While issuing the shares through IPO, the company allocates the proportion of equity shares to different types of investors like QIB, HNI, FIIs, DIIs and Retail Investors. And shares are allotted as per the subscription status into different categories of investors.

How Shares are allotted in Oversubscribed IPO?

As I’ve already told you in the previous section, IPO oversubscription allocation is done differently for the different categories of investors, let’s find out below.

IPO Oversubscription Allotment Process:

Qualified Institutional Buyer (QIB): If IPO is oversubscribed in QIB category, shares are allocated proportionally. For example, if the issue is subscribed by 10 times, then a QIB applicant who has applied for 20 lakh shares will be allotted 2 lakh shares only.

High Net worth Investors (HNI): HNI also receives allotment on a proportionate basis.

How IPO Shares are allocated to Retail Investors?

Though, as per the regularity authority SEBI’s guidelines, if an IPO is oversubscribed in the retail category, the shares are to be allotted in a manner that ensures that every retail bidder gets at least one minimum lot. The remaining shares, if any, are then allotted on pro rata basis. But companies follow the different criteria as disused below.  

If RII Applications are Less or Equal to Offered Lots: In this case, each applicant first gets at least minimum 1 lot. And, the rest available lots are allocated proportionally.

If RII Applications are Greater than Offered Lots: In this case, the allotment is done through a computerized draw to pick applicants for IPO allotment.

Also Read: What is Cutoff Price in IPO Application: Why Bid at Cutoff Price

Usually, IPOs offered by companies having good prospects and the potential to grow in the future are very often oversubscribed. The demand for shares of such companies is also high in the secondary markets. And getting shares allotted in an oversubscribed IPO is very much depends on your luck. If you get allotments you can enjoy the listing gains on the first day.

Also Read: How to Increase Chances of Getting Shares in IPO: Allotment Tips

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How to Increase Chances of Getting Shares in IPO: Allotment Tips

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tips for ipo allotment

An oversubscribed IPO means investors are willing to invest in the shares of a company having promising business growth prospects and can give lucrative returns in the stock market. And in such cases most IPO applicants including retail investors not get the allotment to become disappointed with the money returned into their account.

If you are one of them not get the shares in IPOs, you need to read this article to know how to ensure IPO allotment. Actually, when an IPO is oversubscribed multiple times, the chances are very low, but if you follow the rules discussed below you will maximize your chances of getting an allotment and enjoy the lucrative returns in the short-term.

Also Read: How Shares Are Allotted in Oversubscribed IPO: Allocation Process

5 Tricks & Tips for IPO Allotment

Tricks & Tips for IPO Allotment

#1 Fill the Correct Details in the Form

The first criterion of rejecting the IPO applications is incomplete or mismatch information provided in the form. So make sure while filling the IPO application form fill all the details like your name, PAN & Demat Number, etc. to become eligible. 

#2 Apply with Multiple Demat Accounts

You cannot apply multiple applications in an IPO using the same PAN number, if you do this, your first application could be also rejected. But you can open multiple demat accounts in the name of your family members and friends. 

Yes, applying through multiple accounts increases the change of allotment significantly in case of oversubscribed IPO. For example, if an IPO is oversubscribed 5 times, your chances of getting the allotment are 20%. But if you apply in the IPO using 5 family members’ names, there is a high chance that you will get an allotment in any of the applications.

#3 Always Bid at Cut-off Price

IPOs offered with the book building process have price bands and you have to bid for either bid for upper band limit or opt for cut-off price. If you bid at a lower bid price your application could be rejected or would be not eligible for the allotment.

Also Read: What is Cutoff Price in IPO Application: Why Bid at Cutoff Price

#4 Avoid Last Moment Subscription

Some investors wait for the subscription levels in HNI, QIB and retail categories before placing their bids. If the response is good then they are placing their bids on the last day. But if you are going to apply it on the last day but it might cause few issues like your bank account or net banking is not responding due to HNI and QIB high subscription.

#5 Buy Shares of Parent Company

Yes, this trick could be also workable if the IPO issuing company’s parent or holding company is already listed and giving a reservation to existing shareholders. If you have a few even single shares of a parenting company you would be eligible to apply for IPO and sometimes IPOs are offered at a discounted price to existing shareholders.

Reason for Not Getting IPO Allotment:

  1. Your application was not considered as valid i.e. invalid PAN No. or invalid Demat account number or multiple applications submitted from the same name.
  2. Your name was not selected in the lucky draw for allocation of shares (in case of huge over-subscription).

Let me tell you one thing, in oversubscribed IPOs, it is not confirmed that you will get the allotment of shares. As there are different types of allotment criteria, few of them follow the lucky draw and few companies go through the Pro-rata basis to make sure every investor can assuredly get the same amount share into their Demat account.   

In fact, luck draw is the most common reason and applied to 90% of the applicants for not getting shares. In all good IPO’s, due to oversubscription, the lucky draw process is followed and all investors don’t get allotment or get full allotment.

Also Read: How to Check IPO Allotment Status on NSE BSE & ICICI DIRECT

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How to Check IPO Allotment Status on NSE BSE & ICICI DIRECT?

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how to check ipo allotment

Applying in the Initial Public Offering (IPO) can be a profitable bet compare to buying the shares from the stock market. Yes, shares having potentials and offered at fairly priced at discounted rates surely get a positive response by investors and can give you the high returns on the listing with an option to monetize your shares on that day.

And if you regularly apply for the IPO or applied for an IPO at the cutoff price, you can check your share allotment status before the listing day. Actually, after IPO closure day when the company decides the allotment process, the money is refunded to the applicants. So you can check here the various ways to check IPO application status. 

Also Read: What is Cutoff Price in IPO Application: Why Bid at Cutoff Price

How to Check IPO Allotment Status Online?

How To Check IPO Allotment Status BSE:

Step1: First of all visit at BSE India.

Step2: Here you will see two types of issues, just select “Equity”.

Step3: Now select issue name- ‘Company Name’.

Note: Please note the company will only appear once the allotment is done.

Step4: Now you have to enter your ‘Application Number’ of IPO.

Step5: After that, you have to enter ‘PAN Card No’ and click Search.

How to Check IPO Allotment Status NSE:

Apart from BSE, you can also check IPO status on the national stock exchange (NSE). Just follow the stepwise guidance given below.  

Step1: First of all visit at NSE India.

Step2: Now login with your user name and password.

Step3: If you don’t have registered just create an account.

Step4: Now login with the credentials and select the company symbol.

Step5: Your PAN detail will be visible just enter the application number and get data.

How to Check IPO Allotment Status in ICICI DIRECT?

If you have a trading account with ICICI Direct you can check IPO application status there also only when you have applied for the IPO from there.

Step1: Login into your ICICI Direct Account.

Step2: Now Navigate to the IPO section.

Step3: Here in IPO Section select order book.

Step4: Now find just below “Status Application No.

Step5: Click here on ‘Executed” and a popup window opens.

Step6: When you click on executed you can see the allotted quantity.

Note: If you have not allotted any share you can see the refund amount.

How to Check IPO Status Online on other Platforms:

On Linkintime

Step: First of all visit the Linkintime website click here.

Step2: Now click on the drop-down and ‘Select Company’.

Step3: Just enter your PAN card detail correctly.

Step4: Now enter the captcha and click on submit.

Once you fill all the required details and submit you will your name along with the status of your IPO application showing the total securities you have applied and securities you have been allotted. If IPO is oversubscribed multiple times, there are lesser chances of allotment as in such situations it is not possible to get confirmed allotments.    

Also Read: How Shares Are Allotted in Oversubscribed IPO: Allocation Process

However, if you have bid at less than the higher band or not cutoff price and the company decided to issue IPO at a lower band then you would be not eligible to get the allotment. Because first of all such applications are rejected then allotment is done.

Also Read: How to Increase Chances of Getting Shares in IPO: Allotment Tips

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