TEST OF SPECULATION IN THE INDIAN STOCK MARKET.

The stock returns of the stocks trading in the Indian stock market are majorly driven by speculation. With the help of the top twenty stocks (based on their market capitalization) listed in the Bombay Stock Exchange, the total return was divided into the fundamental return and the speculative return. The results revealed that the major component of the total return was the speculative return. As a result of this, the good stocks with good fundamental return have lower total return owing to high negative speculative return. On the other hand, bad stocks with low fundamental return have higher total return due to high positive speculative return. The investors need to be wise in choosing stocks with good fundamentals in order to enjoy the benefits in the long run and not be misguided by the fancy stocks.