Twitter sentiment & IPO performance – A cross-sectional examination in Indian context

Abstract

Globally, the importance of social media has expanded in the recent decade. Twitter became one of the most popular platforms since its inception in 2006, especially due to its restriction on specificity. Twitter delivers a rich blend of news and public opinions because to its large userbase who submit brief messages on the network 24 hours a day, seven days a week. People's views have long been scrutinised in order to forecast election outcomes or promote new companies. The goal of this behavioural finance study is to look at the link between people's emotions and IPO (Initial Public Offering). D-day performance using Twitter data. Previous research has been done in this area on a global level, however, this study is unique as it is the first of its kind in the Indian environment. We investigated user sentiments around Indian IPOs in the last five years, such as Paytm, Nykaa, and Zomato. We used extensive exploratory research to find broad data trends, and then used regression modelling to determine the extent to which historical sentiment and twitter chatter impact the listing day performance (whether they are sold at a premium or discount) of these IPOs. Then, using Granger causality on sentiments and pricing, we want to see if these sentiments affect only launch day or is there a long-term implication on everyday performance. Key trends have been proposed based on these findings, which will be valuable in providing an advantage to capital market players such as financial institutions and dealers.