Forecasting of market capitalization through arima (with special reference to Indian information technology firms) Dr. (Mrs). Jaya M.*, Dr. Sundar K.** *Assistant Professor, Department of Commerce, Asan Memorial College of Arts & Science, Chennai, Tamil Nadu. **Associate Professor, Commerce Wing, DDE, Annamalai University, Annamalai Nagar, Tamil Nadu. Online published on 6 October, 2012. Abstract Companies use forecasting techniques to make strategic decisions about sales, production, market capitalisation, etc. The past data are used by managers to make prediction about the future. Time series analysis can be used to predict the future. This study individually analyses the market capitalisation of 19 I.T. firms. Quarterly data of market capitalisation for the study period have been taken for the purpose of time series analysis. ARIMA time series models are used to obtain the post-sample forecast. Market Capitalization represents the aggregate value of a company or stock. Market capitalisation gives a clear picture of the market value of a company by taking into account the current market price, which reflects the current value and the total number of shares which reflects the size,. The market capitalisation of I.T. Industry plays a key role in the economy. Hence, the I.T. Industry has been chosen for the study. ARIMA analysis applied for 19 firms isolated the firms into three categories i.e. companies on an upward trend, companies on a linear trend and companies on a downward trend. The analysis further probed into the financial statements of the company to find out the reason for the movement of market capitalization during the study period and also the forecast period. Accordingly those companies on an upward trend have to continue to practise the strategies currently followed to combat recession and those on linear and downward trend have to uncover new market; expand existing product line; add new products; leverage existing clients to the optimum result to emerge out of the red. Further, they have to figure out ways and means of cutting cost and managing waste and to resume paying dividend to enhance their market capitalisation. Top Keywords ARIMA, Information Technology Firms, Market Capitalization, Stock Market. Top |