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How news can affect investment behaviour in the stock market?

 Investors are extremely sensitive to any news about macro and micro factors which may affect the prices of stocks.


Overreaction to good news can lead to a bubble or a speculative frenzy, where investors buy the stock at increasingly higher prices.


Overreaction to bad news can result in a rapid drop in stock prices.

Underreaction to good news can create an opportunity for investors, who identify the underreaction early to buy in at a relatively low price and profit.

Underreaction to bad news can lead to an eventual correction in stock prices.


Over and under reaction to the news results in panic in the stock market which can lead to wrong investment decisions.


It is necessary to understand the importance of patience and reacting rightly to market news.

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effect of news on stock market.

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In this article, we will make you understand how over, and reaction to news affects the stock market.

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How news can affect investment behaviour in the stock market?

In this article, we will make you understand how over, and reaction to news affects the stock market.

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