Abstract:

The paper investigated the behaviour of prices of stocks and stock fundamentals in the Nigeria Stock Exchange (NSE). Over the years, prices of equity have been volatile, quite unpredictable and bearish in nature. Individual investors might be worse off by making inappropriate decisions consequent upon the unpredictability of the movements of stock fundamentals in the Nigerian Capital Market. Despite the fluctuation in the stock prices in the market, the engagements of appropriate stock fundamentals by the investors could guarantee positive returns in the market. Panel data from thirty four (34) quoted firms on the floor of Nigerian stock market were obtained from the financial statements and Central Bank of Nigerian Fact Books from 1990 to 2016. In the study, the methods engaged were Descriptive Statistics and Pooled Ordinary Least Square. The model measured both the Fixed and Random Effects of the variables, however, the Hausman  test of 39.78 with p-value of 0.0000 is significant at 5% level, thus the coefficients of Fixed Effect (FE) models are recommended for prediction of stock prices in the NSE. To make choice of stocks to be included in a portfolio in the NSE, investors are encouraged to engage earnings per share (EPS) and capital gains (cag)  to choose return driven stocks.